Today is the day American taxpayers all line up to be “counted.” It is also a time when we naturally think about what we own and whether it will be enough. Part of trying to make certain it is enough is to manage income taxes wisely.

This is a special challenge in 2025 because the Republican majority has promised all kinds of tax reform while suggesting it can balance the budget despite a $1.6 trillion annual deficit. Part of the challenge is that the administration is looking to tariffs to essentially replace income taxes. Needless to say, while that may seem a good thing it will certainly be a heavy lift in a world where the people who ship us $3.8 trillion are not excited to assume our income tax obligations. We shall see.

In the meantime, the dramatic shifts in the stock market this month are making people itchy to do something to protect their gelt. If we could see a clear path to what tax changes will come about before the tax year 2025 ends in December life might be easier. But it isn’t. So, this tax day epistle has got to work with the tax law we have today. The late Donald Rumsfeld summarized the current affairs best when he offered that: “There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know.”

If you are tempted to “sell off” rather than “stay the course” be aware that while the last few weeks have produce a big dip in share prices, chances are good that the stocks you have acquired in recent years are still trading higher than the prices at which you acquired them. That means eating the recent loss and paying tax on the gain. If you bought 100 shares of an S&P500 index fund three years ago you still have a $100,000  capital gain which is currently subject to tax. So, you need to set aside some of that money for income tax.

If you are a bear and think the market likely to continue falling, the better course may be to consider dollar cost averaging your way out of stocks rather than dumping them. This is a slower way of unwinding and, if prices stabilize you have not “hemorrhaged out” triggering a big capital gain event. Realize that the big news of April has been the bond market. Typically as stocks fall, bond yields decline as the stock sale proceeds are channeled into fixed income securities. But this month bond yields have risen probably because world markets (which hold huge amounts of American debt) have not been impressed with our tariff and tax policies. Again, we tend to forget that if we buy a $1,000 bond at 4% and bond yields rise, our bond will lose value if we try to sell it. It’s no big deal if you don’t ever want to sell your bond. But it is painful to learn that having sold stock to avoid more declines in value, your bond also declined in value when you want to sell it and resume buying stock. Tis’ a quandry.

We continue to see advertisements to convert your assets to Roth accounts, where you pay income tax at regular rates now so that the money can grow tax free in the future. That may have been a laudable idea until recently, but why would you pay tax at what is still a high market only to see the value decline in the future. Worse, would be to pay tax and convert only to learn that the Republicans do lower tax rates. Many taxpayers also don’t seem to get that if they have taxable income exceeding $200,000 a year (single), their conversion tax rate is 32%. At $300,000 its 35%. This writer finds “conversion” that takes a third of your stash in present income taxes is a pricey event. You really should talk to a tax adviser about how best to time any such transaction to minimize the burden.

The other creeping issue is capital gain on the homestead. When Congress last meddled with this calculation, it seemed as if none of us would ever pay cap gain income tax on selling our homes. The exclusion is $250,000 for single filers and $500,000 for joint returns. Needless to say, home prices have skyrocketed in recent years and while not many of us have seen half million dollar gains, that $250,000 exclusion is worth noting. In divorce world, the party who keeps the house gets stuck with any tax due when the house is sold. If you jointly sold the house before the divorce decree is entered a joint return allows $500,000 to be excluded. But if you are keeping the house post divorce and staying single, half of your exclusion goes away and anything over $250,000 will be taxed as capital gain rates. Here’s the official version of the rule. Topic no. 701, Sale of your home | Internal Revenue Service

If you’re still recovering from the Rumsfeld quote, we close with Sinatra;

Have yourself a merry little Tax Day
Let your heart be light
From now on, our troubles will be out of sight.