Unlike in previous years, Congress has yet to take action in 2014 to extend a number of tax provisions that expired at the end of 2013. While we are still waiting to hear whether many of these tax breaks will be retroactively reinstated and extended through 2014, there are a number of effective tax planning strategies that can be implemented before the end of the year to help reduce your taxable income and to help you be prepared for the impending changes.
Some potential strategies to consider:
• Gifting appreciated stock to a charitable organization or family member
• Paying your fourth quarter state estimated tax payment before December 31st so that it can be included in your itemized deductions for the year
• Deferring income or accelerating deductions to help minimize or avoid potential phase-outs of various tax breaks and additional taxes based on your projected tax bracket
• Reviewing and determining your potential retirement contributions for 2014 such as a traditional, Roth, or SEP IRA contribution or a traditional to Roth IRA conversion
• Utilizing tax carryovers from prior years such as capital loss carryovers, charitable contribution carryovers, or net operating loss carryovers
• For taxpayers age 70-1/2, reviewing your required minimum distribution (RMD) requirements for your IRA or 401(K) to make sure you are in compliance and avoid penalties
• For those saving for college, consider making a contribution to a 529 plan and utilizing your states tax incentives for higher education
Don’t wait until April to review your tax situation with your tax advisor. Contact your Watkins Meegan Account Executive today to learn more about the strategies above and to discuss what actions you can take before the end of the year to save on taxes.