4. WATCH YOUR BRACKET.
Carefully consider the consequences of any sale on your adjusted gross income.
Selling a substantial amount of assets could drive you into a higher tax bracket than you would have been otherwise, and this would skew your math on tax savings. And you don’t want to trigger the additional 3.8 percent surplus tax on a big chunk of investment income.
5. PRESERVE YOUR CAPITAL LOSSES.
Don’t rush to sell if you have capital tax losses carried over from earlier sales.
The technique known as tax-loss harvesting is generally a savvy way to reduce your tax burden. If you have sold shares of a stock or mutual fund for less than you paid, that created a capital loss for tax purposes. It can be used to offset a capital gain that you incurred by selling another stock or fund.
Taxpayers who have more losses than gains can carry them over to subsequent years indefinitely and apply as much as $3,000 per year against their regular income.
But using the tax losses this year wouldn’t go as far as they would in 2013 and beyond when you'd likely have more capital gains taxes to offset. So, no need to sell shares now just to have a gain to offset in 2012. Better to hang onto those losses and use them in later years, advises Jeff Saccacio, partner in PwC’s private company services practice.
Personal Finance Writer Dave Carpenter can be reached at www.twitter.com/scribblerdave .