Tax-cutting opportunities likely can be found among your investment records.
Remember reinvestments. When you determine the cost of securities you sold last year, be sure to include any amounts you previously reinvested, such as reinvested dividends and capital gains distributions from mutual funds. If you don’t include them, you’ll be paying tax twice on those reinvestments.
Consider carryforwards. If you were unable to deduct all your capital losses in a previous year, see if you can use them to offset capital gains from 2002. Moreover, up to $3,000 worth of capital losses–including unused losses from prior years–can be deducted against ordinary income.
Similarly, if you were in a tax shelter that wound up last year, or if you sold rental property, you may be able to deduct all the accumulated but suspended losses you were not able to deduct in previous years.
