Monday, October 19, 2015

Our 7 Need to Know Tax Strategies for End of Year Tax Planning

Cathy A. Robinson, CPA
Senior Manager
Last week, we shared some tax planning ideas for small businesses.  We recognize that it's just as important for individuals to have a tax strategy in place as well. This week, we share some ideas for individuals, though not all items are ideas individuals will be able to implement. 

1.       Review your filing status to ensure the change will not impact income. 

2.        Postpone income until 2016 and accelerate deductions into 2015, you believe you will be in a lower bracket next year.

a.        Accelerating deductions could be accomplished by bunching deductions together.  For example, you could pay three real estate taxes in one year versus two. 

b.      You could use your credit card to pay deductible expenses before the end of the year.

c.       You may consider if it is advantageous to defer your bonus to 2016.

3.        Consider realizing losses on stock or consider selling appreciated assets to offset pre-existing losses.  Of course, for either of these transactions you will need to consult with your investment advisor.

4.       Review your required minimum distributions from your IRA or 401(K).   You could delay first required distribution, but it might mean that you double up your distribution in the next year and push you into a higher tax bracket.

5.       Pay your fourth quarter state or local estimated payment before the end of the year.

6.       If you paid a balance with your state and/or local income tax returns in 2014, remember to include the amounts paid with your 2015 returns.

7.       If applicable, remember to consider the effect of any of your year-tax planning on AMT (alternative minimum tax).  A deduction may not save taxes if you are subject to AMT.

As always, contact your tax professional in order to begin the planning process so you do not have any surprises in April.