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3 Investment Strategies for Tax Season


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3 Investment Strategies for Tax Season

One month from now, countless hours of careful planning and analysis will come to a head as we put the 2016 tax season to bed. It will be a relief – if only for a moment. Because soon after that last form is filed, we will almost immediately start thinking about 2017 and the steps we can take to ease the pain next April.

Thankfully, you could potentially implement some strategies right now that will pay off when Uncle Sam comes calling again. Take a look at these three ideas, and reach out to our team or your financial advisor if you’d like to learn more about how they can work for you. As always, consult a tax advisor for information specific to your situation.

  1. Tax Loss Harvesting – When life gives you lemons...

    No one enjoys losing money on an investment. That said, realizing a loss on one investment can offset the gain on another. Let’s say you have an underperforming stock in your portfolio. Selling it while it’s down will bring a tax deduction that you can use to offset taxes on realized gains in other parts of your portfolio. Once you’ve sold the losing stock, you can buy a similar investment to maintain a consistent portfolio. The end result is negligible in your portfolio – you have virtually the same holdings you did before – but a net reduction in your tax obligation.

  2. Charitable Giving – Think twice before giving cash.

    Giving to charity is good. It serves the community and gives you further tax deductions. Next time you are preparing to give generously, consider which form of the gift would be most beneficial for you from a tax standpoint. In many cases it is beneficial to give an appreciated asset rather than cash. For instance, if you sold shares of a stock, then you would owe taxes on any realized capital gains. Instead, if the shares of stock were given to charity rather than sold, there is no realized gain and therefore no capital gains tax. Meanwhile, the market value of the shares donated can be used as an itemized deduction, up to certain limits based on income and the organization's classification.

  3. Coordination Among Advisors – Get a complete picture of your investments.

    Chances are, you have investments of many types in a lot of different places. Chances are also good that you have multiple advisors managing different pieces of your financial picture. Are they talking to one another? Are they taking full advantage of the losses, deductions and other tax benefits within your portfolio? Make sure each of your advisors knows who the others are and also make sure they are coordinating across divisions. That’s standard practice at Pinnacle, where our Wealth Advisors team is constantly in contact with our colleagues in lending, trust and other areas of the firm, as well as external advisors like CPAs. It’s vital for you and your team to have a complete picture of your portfolio before even thinking about tax time.

This is just a taste of practices you can consider today to give you less tax stress next spring. To learn more about these and other strategies, talk to your financial advisor or get in touch with us directly at Pinnacle Wealth Advisors.


Securities are not deposits, not insured by the FDIC or any other government agency, nor are they guaranteed by Pinnacle Bank. They are subject to risk and may lose value. Registration does not imply a certain level of skill or training.

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