Tax Planning Part II.
The last quarter of the year is tax planning “season”. If you think you are going to owe, tax planning can be the answer. (See Tax Planning Part I)
If you do owe, I see it as “giving your money away” Most times it could have been prevented.
Here are some tax planning tactics that will help you pay the lowest tax rate.:
1)If you are getting a bonus at year end, ask your employer if you can get it on January 1st of the following year.
2)Contribute the max amount to your Health Savings Account
3)Contribute to a Traditional IRA
4)If you do not have a mortgage or very little mortgage interest paid, it is a good idea to pay your property taxes by 12/31/14
5)If you are a business owner and you think you will owe, think about your auto expenses. It may be to your benefit to purchase a new/used vehicle and take the actual depreciation.
6)Also, if you are a corporation and see that you will probably owe, think about your payroll. Pay yourself a bonus!!
7)If you have stock that you are losing money on and have for a few years, now is the time to let it go and get the tax benefits.
8)If you make charitable donations, now is the time to do it. The non cash contributions are always a good thing. And if you have a favorite charity and they have a cause you favor, now is the time to help them.
9)If you pay your auto insurance monthly, consider paying every 6 months by 12/31 so you will get the full amount of the deduction.
10)In regards to selling stock, think about how long you have held the stock. Most times, the long term capital gains tax is lower than ordinary tax rate. So if you hold it more than 1 year, you will get the capital gains rate.
So, if you have questions or concerns about your tax situation, I provide consulting services. If your situation is complicated, it’s a good idea to prepare an estimated tax return. But now is the time to do it. Time is of the essence !!