Phoenix CPA|Year End Tax Planning
Well it’s almost the end of 2014 and Congress has yet to act on a host of tax breaks that expired at the end of 2013, which is making tax planning especially difficult for most taxpayers and their tax professionals. Since some of these breaks could be extended and retroactively reinstated, it makes for an interesting end of the year. Congress could wait until the very end of 2014 or possibly into 2015 before they act, if at all.
Tax payers with higher income have even more to worry about when planning their year end tax decisions. They have to factor in the 3.8% additional tax on certain types of unearned income (net investment income tax) as well as the 0.9% Medicare tax on their W-2 wages. They especially need to be careful if they themselves don’t hit the threshold to be subject to it, but they and their spouse combined do.
Here is a brief list of things you could do before the end of the year to prepare for your 2014 income taxes:
Individuals
- Contribute to some of the many tax credits available in the state of Arizona
- Realize losses on stocks to help offset gains on stocks sold
- Postpone income to 2015 and accelerate deductible expenses into 2014
- Contribute to your traditional IRA account
- Maximize contributions to your HSA, 401k or SEP IRA
- Make gifts below the $14,000 gift tax exclusion threshold
- If you own an interest in an S-Corporation or partnership that is generating a loss, figure out if you need to contribute capital to increase your basis in order to make the loss deductible
Businesses
- Postpone income to 2015 and accelerate expenses into 2014
- Buy necessary machinery and equipment even though the section 179 deduction limit has been greatly reduced to $25,000 (unless Congress acts and increases this limit)
- Consider disposing of a passing activity that is losing money
This is just a small sample of some year end tax planning that you can do. Please don’t hesitate to contact us at Dusseau & Makris, PC, your Phoenix CPA firm to discuss specific plans and maneuvers you can make to minimize the amount of income tax you pay. Also, continue to check our blog as well as www.irs.gov, as this is where you will find updated information on current tax legislation.