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7 Smart Strategies for Year End Tax Planning

October 19, 2015

Year-end is fast approaching, start planning now to save on taxes before the year is over.

Though it may be hard to believe, fall has officially arrived, which means we are only a few months away from the close of another year. It is helpful to start thinking about what actions can be taken to reduce your tax bill for 2015; there may be opportunities so substantially reduce what you owe!

7 helpful tax saving strategies

  1. Tax Extenders - In July, the Senate Finance Committee passed a tax extenders bill that extends more than 50 tax breaks for the next two years. Some of the more popular provisions extended are the $250 above-the-line tax deduction for educators, the deduction for mortgage insurance premiums and the-above-the line deduction for higher education expenses, to name a few. Stay tuned for updates on when/if these extenders officially become permanent.
  2. Capital Gains and Losses – To help minimize your net capital gains tax and maximize deductible capital losses, discuss the timing of gain/loss recognition with your tax advisor or your investment broker.
  3. Mutual Fund Distributions – Being that mutual fund dividends are typically taxed as ordinary income, think about redeeming them in taxable accounts before any year-end dividends are distributed.
  4. Charitable Contributions – This is the best time to give to charity – not only will you be benefiting those less fortunate around the holidays, but your donations can provide you with valuable tax deductions. Discuss the various charitable giving options with your tax advisor in order to maximize this deduction.
  5. Retirement Account Contributions – For 2015, individuals age 49 and under are eligible to contribute up to $18,000 to a 401(k) plan and up to $5,500 to an IRA (traditional or ROTH). Individuals over age 50 are able to “catch up” and contribute an additional $6,000 to a 401(k) plan and an additional $1,000 to an IRA. Discuss the deductibility of IRA contributions and income limitations with your tax advisor before making this contribution. If you haven’t already contributed to a retirement plan for 2015, now is a great time to consider it to ensure any contributions are made by year end.
  6. Energy Tax Incentives – thinking of getting around to some home improvements before year-end? There is a tax credit available if you use energy efficient materials. For 2015, this credit amount is $500 (subject to lifetime limits) and no more than $200 can be allocated to exterior windows and skylights.
  7. Gift and Estate Taxes – There are opportunities to give up to $14,000 per year, per recipient tax-free without using any of your lifetime gift and estate tax exemptions under the annual exclusion.

Questions? Contact any member of our Tax Services Team.

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