2014 Year-End Tax Planning

When it comes to year-end tax planning, you need to have a good understanding of both your own financial situation and the tax rules that apply. It’s important to evaluate your tax situation now, while there’s still time to affect your bottom line for the 2014 tax year.

Choices, Choices, Choices: We’ve outlined some of the things to consider and then what to do about it:

Expecting a Refund?:
1. Accelerate income into 2014.
2. Reduce withholding on remaining paystubs.
3. Defer deductions/expenses into 2015.
4. Conduct gain harvesting within your brokerage account.
5. Convert portions of your IRA and/or 401k to a Roth IRA/Roth 401k
6. Should you skip the 4th Quarter Fed/State tax estimates?
7. Coast into 2015 with no action at all

Expecting a Liability?:
a. Pay a “safe harbor” amount in 2014/2015
b. Reduce your income
c. Increase your deductions or credits
d. Be aware of your alternative minimum tax (AMT) status

Tax Reduction – If Using Standard Deductions:
1. Defer income into 2015.
2. Increase withholding on remaining paystubs.
3. Increase your pre-tax 401k/403b contribution.
4. If over 70 1/2, use your IRA’s RMD to handle the payment.
5. IRA contributions IF you are eligible, until 4/15.
6. Education expenses -AOTC and loan interest.
7. Tax loss harvesting within your brokerage acct.
8. Have more children, including adoption!
9. Annual gifting opportunity of $14,000/person -transfer the gains?

Tax Reduction – If Itemizing Deductions:
1. What impact does a deduction have on your Fed/State taxes? How does that fit your tolerance?
2. Pay in necessary State taxes before 12/31/2014.
3. Business owner? What about Neighborhood Assistance Program Tax Credits? (click here for information about Kansas and Missouri credits)
4. Small Business Incubator Tax Credits? Maternity Home Tax Credits?
5. College Savings 529 Plan contributions by 12/31/2014.
6. Medical/Misc. deductions may help, but there’s a floor.
7. Make your January mortgage payment in December.
8. Charitable giving via checkbook and beyond.
9. Factor in the alternative minimum tax (AMT)? Think charitable and double check!

Charitable Planning for 2014:
1. Transfer appreciated stock directly to charity and/or Donor Advised Fund.
2. Loss harvesting, then donate cash.
3. Qualified Charitable Distributions if over 70 1/2?
4. Charitable Gift Annuity
5. Charitable Remainder Trust
6. Cars, boats, clothes, baseball cards, etc.
7. Click here to read an article that outlines all your options.

An Eye Toward 2015:
1. Tax planning starts on January 1st, then April 15th, then October 15th.
2. New employer retirement plan contribution limits.
3. IRA and Roth IRA have stayed the same.
4. Re-evaluate your business entity for the most efficient structure.
5. Watch for changes that have yet to materialize with the new Congress!

Next Steps to No Surprises:
1. Work with your CPA/Accountant before year-end to uncover your situation.
2. Use these calculators: Dinkytown Tax Calculator 2014 or Taxcaster 2014
3. Make your choices based on your unique opportunities.

We know there’s always a lot to think about when it comes to year end tax planning. Sound Stewardship can help you evaluate your situation, keep you apprised of any legislative changes, and determine whether any year-end moves make sense for you.

If you would like to schedule a meeting to discuss your unique situation, email Cindy St. John or call the office at 913-317-6000.

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