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# Tax Season 2008: Reviewing Your 2007 Finances and Capital Gains Strategies
- URL: https://www.smdp.com/market-matters-20080123/
- Published: 2008-01-23T16:00:00.000Z
- Updated: 2026-10-24T23:05:59.000Z
- Author: Guest Author
- Tags: Opinion, Santa Monica, #archive-import

*Brian Hepp It’s tax filing time all over again*

WITH THE HOLIDAYS NOW HISTORY, another annual tradition is starting to take shape, even though this one may not be as joyous of a season. It’s tax time once again, and deadlines are getting closer each day. But as you begin preparing to file your 2007 tax return,now is a good time to review your overall financial picture. As with all your investments, it’s important to have a good handle on your tax situation, so you can maximize any savings opportunities that may exist.

While many of your investment decisions won’t be made on the basis of tax planning alone, there are still several tax-related strategies you should consider to help minimize the effects of taxes on your finances, leaving you more money to put away for your own future. Following are some items to be aware of as you prepare your 2007 tax return, and also a few things to consider as you look to the future.

When figuring your taxes each year, it’s important to take note of all your capital gains and losses over the course of the year, and come up with a net gain or loss. For investments you’ve held for one year or less, you’ll be calculating what are known as short-term gains or losses. Long-term applies to those investments you’ve held longer than one year.

To calculate your overall gain or loss, you’ll need to start by comparing similar investments. First you’ll net your short-term gains versus short-term losses, and then net your long-term gains versus long-term losses. Once you have those two figures, you can then net short-term against long-term to come up with your total gain or loss for the year. If you’re left with a net loss, you can take a deduction for up to $3,000 against ordinary income on your taxes for that year. Any excess losses over that $3,000 amount can be carried over to the next year to go through the same netting process again.

Tax time is also a good opportunity to revisit a couple of long-term savings opportunities. The tax filing deadline is the last day to make contributions to a traditional or a Roth IRA and have them counted for the 2007 tax year. So if you haven’t already maxed out your contributions for last year, you still have time to get those in. The maximum contribution for 2007 is $4,000, and those aged 50 or older are allowed to make additional “catch-up” contributions of $1,000\. Looking ahead, that contribution limit will be raised to $5,000 in 2008, meaning the total contribution allowable for those nearing retirement will go up to $6,000 when their catch-up contributions are added to the mix.

Education Savings Accounts also need to be funded by the April filing deadline. The maximum contribution for these accounts is $2,000 per child, per year, and ESAs are also subject to certain income requirements. But if you’re eligible to contribute to an ESA, now is a good time to consider adding to — or simply establishing — a savings account for your child’s education. Keep in mind that contributions made during 2008 for 2007 are still considered gifts for 2008 for federal gift tax purposes. And although contributions to an ESA are not tax-deductible, the funds have the opportunity to grow tax-deferred and distributions are tax-free when used for qualified education expenses. Just be aware that withdrawals for non-qualified purposes may be subject to ordinary income taxes and a 10 percent IRS penalty.

While the process of filing our taxes is something we may not always enjoy, it’s important to take the time to seek out all the benefits you can find. Consulting with financial and tax-planning professionals could help you uncover opportunities you may not have been aware of before.

BRIAN HEPP is a financial consultant and (310) 453-0077 or at

*Originally published in the Santa Monica Daily Press print edition on January 23, 2008.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/012308.pdf?ref=smdp.com)