8 Year-end Tax Planning Tips

Managing your tax obligations shouldn’t be left until April 15. With October almost over, we wanted to share a few money saving ideas to put into action before the end of 2014:

1. If you own a traditional IRA and reach 70-1/2 this year, consider whether it’s better to take your first required minimum distribution this year or by April 1 of 2015.

2. Take a look at your portfolio for any poor performers you may want to sell before year end. You can use this to offset any gains or take up to a $3,000 net capital loss (beyond that, carry it over into future years).

3. If you think you might owe taxes for 2014, consider increasing your federal withholding though the end of the year.

4. If you haven’t maxed out your employer’s 401k contribution, increase it today. Remember, you can contribute up to $17,500 as an employee (over age 50 can make an additional $5,500 catch-up contribution).

5. Pay attention to the Alternative Minimum Tax (AMT) because a good move for regular tax purposes may affect AMT in your return.

6. If you own an interest in a partnership or S corporation that will generate a loss this year, you may want to make a capital contribution before year end so you have a sufficient basis to claim a full deduction.

7. Get health insurance or face a penalty. The Affordable Care Act requires every individual to have qualifying coverage in 2014 or owe a penalty payable with your 2014 tax return.

8. Contribute to a charity to reduce taxes. Be sure to get a receipt and properly itemize the donations.

There’s much more to consider with a comprehensive tax plan and the process should be specific to your individual situation. As always, be sure to consult with an experienced tax professional l to ensure you are taking advantage of all the opportunities and following the proper IRS guidelines.