Here are three strategies to consider before December 31.
It's a good time to take some tax-saving investment steps. You may be able to use your portfolio to minimize your family's 2011 tax bill. Take advantage of some favorable rules and tax rates in effect this year that may not be available in the future.
Under tax law, there are some smart investment moves that might reduce the amount of taxes your family pays for 2011. But don't delay.
First, sell losing stocks held in taxable accounts. Selling losing investments held in taxable brokerage firm accounts can lower your 2011 tax bill because you can deduct the resulting capital losses against any capital gains from earlier in the year. Plus, you can deduct up to another $3,000 of net capital loss (or $1,500 if you are married and file separately) against ordinary income from salary, self-employment activities, alimony, interest or whatever.
Any excess capital net loss is carried forward to future years and puts you in position for tax savings in future years. (This year, Dec. 31 falls on a Saturday, so Friday will be the last day you can sell stock.)