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
- 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.