Since Income Taxes are very likely to be the highest cumulative lifetime expenditures for most individuals, they definitely impact your accumulation of wealth. So, let’s see if we can provide you with some suggestions to minimize your taxes within the existing tax provisions.
Some Year End Tax Strategies To Consider
Review your investment portfolio for losses you might match against gains, or gains that you might be able to realize with no tax depending on your other income.
If the Alternative Minimum Tax is not an issue, pay your last State estimate in December, together with your property taxes.
There are a variety of charitable giving options to consider- if you do not always itemized deductions, then you could “bunch” your charitable giving with other payments, like the taxes mentioned above, so perhaps every other year or every third year you would itemize as opposed to using the standard deduction. For those itemizing each year, gifts of appreciated property, such as land or stocks, is an effective way to be benevolent and avoid the income taxes on the gains.
If you have a business and plan to purchase equipment, including vehicles, within the next six months, then you should consider accelerating the purchase to 2015 in order to accelerate the deduction(s).
Gifts to family members or others will reduce your income in subsequent years, and there are other tax benefits available for gifts. The annual gift limitation remains at $ 14,000 per recipient, but couples can agree to split gifts or simply make gifts separately so that a couple can effectively gift $ 56,000 to their married child and spouse. In addition, there is a special provision allowing for gifts up to $ 70,000 in a year to a child’s College Savings Plan (Section 529 Plans); those funds will grow tax free until used for education or withdrawn with a decision that no possible beneficiaries remain or the funds or otherwise needed.