Tag Archives: taxable income

Year-End Tax Planning Strategies

Source: http://www.venturacountycpa.com/tax-planning/

As we quickly approach the last quarter of 2014, we want to give you some tax planning strategies to help decrease your tax liability.**

 

A little planning can go a long way! Here’s an easy-to-read guide:

 

Max Retirement Plan Contributions

  • 401k’s – save up to $17,500 (+ $5,500 additional if over 50 years old)
  • Traditional IRA’s – save up to $5,000 (+ $1,000 additional if over 50 years old)

 

Max Health Savings Account Contributions

  • Single – save up to $3,300 (+ $1,000 additional if over 55 years old)
  • Family – save up to $6,550 (+ $1,000 additional if over 55 years old)
  • Remember contributions reduce your taxable income and account earnings are tax free!

 

“Bunch” Itemized Deductions

  • Prepay your February 2015 property tax installment in December 2014
  • Prepay your January 2015 mortgage payment by December 2014

 

Sell “Loser” Stocks

  • Get rid of those stocks that are worth less now than when you purchased them
  • Losses will offset other capital gains
  • You can deduct up to a $3,000 net loss per year

 

Donate To Charity

  • You’ve likely poured ice on your head for ALS, so why not continue to help out the charity of your choice!
  • If you are a “tither” on income as earned, prepay your 2015 tithes by December 2014

 

Consider Refinancing

  • Points paid on a previous refinance are fully deductible in the tax year of a new refinance
  • Rates are still at all-time lows!

 

Get Deductions For Your Hobby

  • Hobby-related expenses aren’t directly deductible, unless your hobby can be classified as a business
  • Business losses reduce other taxable income
  •  Click here for more info on how to turn your hobby into a business

 

Remember that any reductions in taxable income not only saves you taxes at your top rate bracket, but also helps you avoid phasing out of certain tax credits (i.e. – child tax credit, student loan interest deduction, education credits, etc.).

 

What tax planning strategies have you implemented in the past to lower your tax liability?

 

** Each situation should be analyzed individually. Alternative Minimum Tax rules may negate the impact of the strategies mentioned below. Most strategies mentioned help those who itemize deductions.