Year-End Tax Planning Strategies

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.