Fiscal cliff looming? Ten tax moves to make now.

Americans are facing an unprecedented tax increase of nearly $500 billion on Jan. 1, 2013, if the US plunges over the fiscal cliff and the Bush tax cuts are allowed to expire. On a dollar basis, this would be the largest tax increase in history. Are you ready? There is still time to position yourself to take advantage of the favorable tax rates in effect this year, but you need to act now. Since no one’s sure what will happen, the trick will be to remain flexible so you can be nimble should there be tax changes or delays. These are the 10 year-end strategies I recommend:

1. Harvest capital gains in 2012

Ann Hermes/The Christian Science Monitor/File
A poster hangs in the halls of the US Internal Revenue Service building in Washington, D.C., in this March file photo. Here are 10 tax strategies to protect yourself from the tax increases that make up part of the 'fiscal cliff.'

Harvesting gains is similar in some ways to harvesting losses. The concept is to sell appreciated securities you’ve held at least 12 months to realize the long-term gain for tax purposes. You can immediately repurchase the same asset because there is no wash sale rule for realizing gains. This allows you to pay tax on the gain in 2012, when rates are low, and establish a new cost basis in the asset to minimize increased gains that may be taxed at higher rates if tax increases related to the fiscal cliff occur.

Anyone in the 10 or 15 percent tax bracket this year should seriously consider realizing gains. Long-term capital gains are taxed at 0 percent this year and may be taxed at 8 to 10 percent in 2013.

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Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

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