Reduce Your Income Tax Liability Before Year-EndDecember 09, 2015
There is only about one month left to reduce your income tax liability, make sure you’re aware of all areas of potential savings.
2015 is nearing its end, but there are still significant opportunities to reduce your income tax liability if you start planning now. Our 2015 Year End Tax Planning Guide for Individuals and Businesses is a helpful resource for valuable tax savings tips for these last months of 2015. It will be worth your while to time a few different tax items specifically around year end, or defer to 2016, in order to reduce your overall liability for 2015.
How can I save?
Here are 3 areas where you can reduce your 2015 income tax liability:
- Consider the timing of certain expenses- It is typically a good idea to defer income and accelerate expenses to reduce tax liability, provided that you expect to be in the same tax bracket for next year. If you expect to be in a higher tax bracket for next year, reverse this and accelerate income and defer expenses. There are ways you can reduce or avoid the impact of certain taxes with a good timing strategy, too—like the 0.9% Medicare tax, for example. If you defer receiving a bonus until next year in order to stay below the applicable threshold for the tax, for example, you can then defer the 0.9% tax liability.
- Review your investments- Take time to review your investment strategy- Pay attention to the areas of restricted stock, incentive stock options (ISOs) and nonqualified stock options (NQSOs). With restricted stock, for example, a Section 83(b) election allows you to recognize the income when you receive the stock, rather than when you sell the stock, which can be valuable in certain instances.
- Shift income to family members- Gift money to relatives by transferring appreciated or income-producing assets to them. Tax on any gains from the sale of the asset(s) or income received from the asset(s) is subject to a lower rate.
Read our recent blogs on year-end tax planning:
Year End Tax Planning Tips for Individuals
Top 5 Year End Tax Planning Tips for Small Business Owners
Year End Tax Planning: 6 Tax Extenders Congress Could Renew for 2016
7 Smart Strategies for Year End Tax Planning
Contact any member of our Tax Services Team for further guidance.