Now that the mid term elections have passed, our hope is that Congress may go back and retroactively reinstate some of the expired tax deductions from 2013.
Nevertheless, there is still time before December 31, to reduce your tax bill. A good starting point is to sit down with your CPA and review your prior year income tax return to develop some tax savings strategies for yourself.
Outlined below are some areas to consider:
- Harvest capital losses to offset capital gains.
- Consider earning municipal interest income to regular interest income.
- Harvest passive gains such as rental property income to offset passive losses.
- Beware at what levels social security income is taxable. For married filing joint taxpayers, 85% of social security benefits is taxable when modified adjusted gross income is at $44,000.
As a taxpayer some of the steps you can do now:
If you report on a cash basis consider deferring income to the following year and accelerating business expenses and purchases in the current year.
- Maximize your 401k, IRAs and Simple retirement plan contributions.
- Donate goods and cash. You must have receipts for contributions in excess of $250. When performing services for tax exempt entity as a volunteer you can deduct your personal mileage.
- Consider opening and funding a health care savings account (HSA).
- Other tax deductions to review are the education credits, tuition deduction and student loan interest.
- Take advantage of an employer sponsored cafeteria and flexible spending plans for child care, health care and medical reimbursements.
In 2014 if you are not enrolled or covered in a health insurance plan you may have to pay additional income tax. Health care open enrollment period runs from November 15 to February 15.
When it comes to business and individual tax planning, please reach out to Jaya A. Naiken CPA to answer your tax questions.
Have a happy holiday!
