Thanksgiving, Christmas, New Year's, TAX SEASON?
As many of you may know I have married into an “accounting
family”. My mother-in-law and
father-in-law are both CPA’s who specialize in tax return preparation and small
business accounting. My wife is also an
internal accountant for a residential property management company local to the
Jersey City area. It was through my
in-laws that I was able to grow my tax and accounting knowledge, and now
include those services as part of our offering at Legacy Care Wealth. As you can imagine, many a family discussion has
evolved from this shared knowledge, which got me thinking, why not share some
of those tidbits with you?
Not everyone realizes this, but the holiday seasons
means something different for accountants and tax preparers. Counting down to the ball dropping and
kissing our loved ones at midnight is almost immediately followed by planning
for the tax season ahead. With that
being said, January 1st is often too late for most taxpayers to take
the actions necessary to reduce their bill to Uncle Sam. So what specifically can you do now?
Retirement Plan
Contributions: Make sure that you are aware of how much you have
contributed to your 401(k), 403(b), or 457 plan with your employer. If you have not maxed out your contributions
yet ($17,500 for 2014 and $23,000 for those over 50 years of age) consider if
you are able to increase your deferrals for that last pay period of the
year.
While you technically have until April 15th to
make 2014 contributions to your retirement accounts, the sooner you can get
your money working for you in retirement vehicles the better. In addition
to building yours savings, these plans can also offer tax advantages.
Check Your Eligibility for Tax Credits. Unlike tax
deductions, tax credits allow you to directly lower the amount you owe the
government come tax time. Consult with your accountant or tax
professional to see whether you’ve qualified (or can qualify) for any credits
in 2014.
For example, low-income taxpayers who are not full-time
students - a description that befits many young professionals - may qualify for
the Retirement Saver’s Tax Credit, in which the government provides anywhere
from a 10-50% credit (up to $2,000) for contributing to a retirement account
like a 401(k) or IRA.
Charitable
Contributions: At Legacy Care Wealth we are large supporters of charitable
giving. Not only can you deduct cash donations and feel good about contributing
to a cause you believe in, you can also deduct the value of non-cash donations
like food and clothing. Take some time
to find a cause you believe in and get involved.
Stock Loss Harvesting: Stock loss harvesting can be extremely
beneficial for those that have more active investment accounts. An individual with investment accounts that
have attained realized gains may benefit from selling out of those large loss
positions to offset their 2014 gains.
Speak with your investment professional to see how they handle tax
impact of trading activity.
Meet with your
Accountant: As you may have already gathered from my brief descriptions of
each of the above-mentioned topics, there are many considerations that need to
be made. I wish I could touch on a piece
of information that would apply to every person reading this article. Unfortunately, that is never the case as
everyone’s financial picture varies. However,
this is why it is important that you work with a trusted professional about how
these ideas best apply to your specific situation.
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