Year End
Tax Strategies
brought to you by MetroIBA
presented by Pam Ricker, CPA
Ricker Accounting “Accounting for Life”
You’ll often find Pam teaching and
leading seminars and workshops on
taxes for individuals, for investors,
and for small business owners.
Pam’s loyal clients know her as
“a tax genius.” Her financial expertise
also extends to small business CFO,
accounting and bookkeeping.
An educator, teacher and healer at
heart, Pam’s mission is to help people
including independent business
owners understand and navigate their
financial circumstances.
Remember this…
There are only two ways to reduce taxes
1. Increase your itemized deductions
or
2. Reduce your adjusted gross income
Here’s a great article for your reference:
http://www.forbes.com/sites/baldwin/2013/11/01/10-year-end-tax-strategies/2/
Step One - Assess Your Situation
Adjusted Gross Income (or AGI) is
your total gross income
minus
specific allowable itemized deductions
http://en.wikipedia.org/wiki/Adjusted_gross_income
Step One - Assess Your Situation
Let’s start with estimating your AGI.
What is your estimated income this year? This includes
wages, tips, business profits, investment income and other
sources of income.
$ ___________ (write it down)
Your income taxes - both Federal and State - will be calculated based on
your “Adjusted Gross Income” or AGI.
Step Two - Know Your Options
Your AGI will be reduced by your
itemized deductions .
So, what specific itemized deductions
are you allowed?
Let’s look at some possibilities:
Itemized Deductions
Medical Expenses – These need to be over
10% of your AGI if you are under 65 years
State Income Taxes Paid or Withheld
Real Estate taxes paid
Sales Tax paid
Itemized Deductions
Mortgage Interest Paid
Investment Interest Paid
Charitable Deductions –
Cash and Non Cash
Charitable Miles
Itemized Deductions
Miscellaneous Itemized Deductions that are over
2% of your AGI
Job Expenses not reimbursed such as Union Dues or Licenses
Job Hunting Expenses
Tax Prep Fees
Safe Deposit Box
Investment Fees
Step Two - Know Your Options
12 Tax Tips for tax year 2014
1. Optimize your capital gains and losses.
●
Take advantage of capital losses to sell some stocks at gains –even if you buy them back at a higher value to increase
●
Take advantage of capital gains to clean up your portfolio and get rid of under performing stocks by selling at a loss.
●
Donate appreciated stock to a charity- gives you a charitable deduction without a taxable gain
2. Watch the Standard Deduction
●
If you are close to the standard deduction level consider moving deductions to this year or next to increase that years
amount and itemize in the higher year and still claim the standard deduction in the other.
3. Bunch Itemized Deduction
●
Like above, watch the itemized deductions to increase them in higher income years by doubling up where you can
Step Two - Know Your Options
12 Tax Tips for tax year 2014, continued
4. Increase Charitable Deductions
●
Increase itemeized deductions by prepaying next years pledge to the charity
●
Keep good records of non-cash items donated so that you claim the correct amount as a deduction
●
Keep track of your volunteer mileage
5. Prepay College Tuition Bills
Pay Spring semester now
6. Maximize your 401K Contribution
$17,500 under 50 and $23,000 over
Step Two - Know Your Options
12 Tax Tips for tax year 2014, continued
7. Contribute to a Health Savings Account if you are in a high deductible plan
Up to $7,550 for a family over 55
8. Pay State Taxes early – by December 31 to claim as an itemized deduction
9.
Make full use of your Flexible Spending Account
10. Postpone your year-end bonus
Step Two - Know Your Options
12 Tax Tips for tax year 2014, continued
11. If you are self employed, prepay expenses to lower the business income
12. Watch out for Alternative Minimum Tax (AMT)
Step Two - Know Your Options
We’ve all heard about the Affordable
Care Act. How will this affect you?
All Americans will be affected in some manner by the Affordable Care Act from 2010 (some people
call it ‘Obamacare’.) 5 new tax forms were released by the IRS as a result of this act for 2014. Every
individual with some exceptions are required to have qualifying health insurance coverage or
owe an individual responsibility payment. The payment is the greater of 1% household income
above the income tax filing threashold of $10,150 or a flat $95 per adult or $47.50 per child. The
payment will be due with your tax return. If you are uninsured for part of the year 1/12th of the
penalty applies per month. If you received a Form 1095 from any issuer or agency, you MUST have
all copies to prepare your tax return. If you did not receive a 1095, you have to answer a number of
additional questions about insurance coverage so that you avoid any penalties for failure
to have health insurance.
Step Three - Make a Plan
1: Get Organized
2: Meet with your CPA
3: Prepare a tax projection
4: Make a plan to pay or reduce the taxes owing
Year End
Tax Strategies
now is the time to take action on your tax
situation, to end the year on the right foot
Don’t give your
money away...
Learn the year end tax strategies that will put
you and your business in the best tax position
based on your unique financial situation.
There is still time to
take action
2014 is quickly drawing to a close. Fear not, there is still
time to take action, but you must act now to take
advantage of what you learn today.
Be sure to reserve
an appointment with
a CPA today
Whatever CPA tax expert you decide to work
with, be sure to call them and get on their
calendar as soon as possible.