Some states allow state income tax deductions for contributions to Section 529 college savings plans. If your state does, and you’re planning to send a child to college, consider making one.
Convert a traditional IRA to a Roth IRA to obtain future tax-free investment returns from the Roth IRA while escaping minimum annual distribution requirements. Added benefit: You can reconsider and reverse the conversion if you later decide it is not in your best interest or that you can make the conversion at a lower tax cost later if the value of your account had dropped – as late as October 15, 2013. You may reverse a conversion only once in a single year.
Take capital losses to end up with a $3,000 net loss for the year. A loss of up to that amount is deductible against ordinary income.
