The year 2014 is soon coming to an end. That means tax time is around the corner. End of the year tax tips are always greatly appreciated, especially ones that can help easily lower your tax bill. Here are a couple of tax breaks that you may find helpful if you will have a great deal of tax burden.
First, you may want to try delaying certain types of income. A possible bonus that you may be entitled to this year may be deferred until next year if it is a standard practice for your company to pay year-end bonuses the following year. Capital gains can be deferred until 2015 as well; however, if you plan on making more next year, deferring income may not be a good option.
Next, you may want to consider some last minute deductions such as giving to a charity or taking care of medical expenses due the beginning of next year, this year. You can also pay property tax due the beginning of next, this year as well.
A popular method that many investors use is selling loser investments to offset their capital gains. If there is a stock that just is not doing anything, now is the time to get rid of it. Any losses over $3000 can be carried over to 2015.
Finally, many individuals will increase the amount that they are contributing to their 401 (k). You have until April 15, 2015 to make contributions to IRAs and Keoghs. This is a win-win tip. You get a benefit now by the tax break and a benefit in the future for your retirement.
While these breaks are perfectly IRS compliant, one needs to be aware of the Alternative Minimum Tax (AMT). The AMT was originally made so that people with high incomes could not use legal deductions to lower their tax bill; however, the AMT is starting to affect the middle class as well. To avoid pitfalls such as the latter, it is best to have a tax professional do the work for you. Paying to have your taxes done by someone else is a deduction too. That is the best tax savings!
AllRight Consulting & Tax, LLC