The tax deadline snuck up on me again!
TAX DEADLINES ARE COMING.
Stop worry about paying taxes.
Start dreaming about how to spend the money you save this year!
With the guidance of PK Tax Services, you will discover a Life Less Taxing!
INVESTING & STRATEGY PLANNING
- Realize losses on stock while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities at least 31 days later.
- Postpone income until the next year and accelerate deductions into the current year to lower your tax bill. This strategy may enable you to claim larger deductions, credits, and other tax breaks that are phased out over varying levels of adjusted gross income (AGI). Postponing income also is desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances.
- If you believe a Roth IRA is better than a traditional IRA, and want to remain in the market for the long term, consider converting traditional IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA. Keep in mind that such a conversion will increase your adjusted gross income.
- Depending on your particular situation, you may also want to consider deferring a debt-cancellation event until the upcoming year, electing to deduct investment interest against capital gains, and disposing of a passive activity to allow you to deduct suspended losses.
- It may be advantageous to try to arrange with your employer to defer a bonus that may be coming your way until the new year.
- You may be able to save taxes this year and next by applying a bunching strategy to “miscellaneous” itemized deductions, medical expenses and other itemized deductions.
- If you own an interest in a partnership or S corporation you may need to increase your basis in the entity so you can deduct a loss from it for this year.
- Consider using a credit card to prepay expenses that can generate deductions for this year.
- Consider extending your subscriptions to professional journals, paying union or professional dues, enrolling in (and paying tuition for) job-related courses, etc., to bunch into miscellaneous itemized deductions.
- If you expect to owe state and local income taxes when you file your return next year, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before year-end if doing so will not create an AMT problem.
- Estimate the effect of any year-end planning moves on the alternative minimum tax (AMT), keeping in mind that many tax breaks allowed for purposes of calculating regular taxes are disallowed for AMT purposes. These include the deduction for state property taxes on your residence, state income taxes (or state sales tax if you elect this deduction option), miscellaneous itemized deductions, and personal exemption deductions. Other deductions, such as for medical expenses, are calculated in a more restrictive way for AMT purposes than for regular tax purposes. As a result, in some cases, deductions should be deferred rather than accelerated to keep them from being lost because of the AMT.
- Businesses should consider making expenditures that qualify for the business property expense option. Businesses also should consider making expenditures that qualify for 50% bonus first year depreciation if bought and placed in service this year.
- If you are self-employed and have not done so yet, set up a self-employed retirement plan.
- Those facing a penalty for underpayment of federal estimated tax may be able to eliminate or reduce it by increasing their withholding.
- Accelerate big ticket purchases into the current year in order to assure a deduction for sales taxes on the purchases if you will elect to claim a state and local general sales tax deduction instead of a state and local income tax deduction.
- Increase the amount you set aside for next year in your employer’s health flexible spending account (FSA) if you set aside too little for this year.
- If you become eligible to make health savings account (HSA) contributions in December of this year, you can make a full year’s worth of deductible HSA contributions.
- If you are planning to buy a car, do so before year-end in order to nail down a deduction for state sales tax and excise tax on the purchase.
- You may want to pay contested taxes to be able to deduct them this year while continuing to contest them next year.
- You may want to settle an insurance or damage claim in order to maximize your casualty loss deduction this year.
- If you are age 70 1/2 or older and took a distribution from a retirement plan or IRA earlier this year, you may be able to avoid tax on the payout by rolling it over into an eligible retirement plan (including an IRA) before December 31.
- If you are receiving Social Security benefits, there are a number of steps you can take to reduce or eliminate tax on your benefits.
GIFT GIVING PLANNING
- You can save gift and estate taxes by making gifts sheltered by the annual gift tax exclusion before the end of the year. Know the maximum amount you can give to an unlimited number of individuals. You cannot carry-over unused exclusions from one year to the next.
- If you are age 70 1/2 or older, own IRAs (or Roth IRAs), and are thinking of making a charitable gift, consider arranging for the gift to be made directly by the IRA trustee. Such a transfer, if made before year-end, can achieve important tax savings.