Year-End Tax Tips

1.      Review your portfolio.  Consider taking a loss if you have substantial capital gains.

2.      Max out your retirement plan contributions.  2014 maximum IRA contribution is $5,500 (plus $1,000 if age 50 or over).  2014 maximum 401(k) contribution is $17,500 (plus $5,500 if age 50 or over).

3.      Consider contributing to a 529 Plan if you have children or grandchildren.  For example, New York allows a deduction up to $5,000 (or $10,000 for married filing joint filers) for contributions made by an account owner to an account belonging to New York’s 529 College Savings Plan.

4.      Consider increasing your withholding if you anticipate owing tax.  This can help you to avoid an underpayment penalty since the government considers withholding to have been paid evenly throughout the year.  

5.      Save receipts for medical supplies and equipment such as prescriptions, doctor co-pays, dental expenses, insulin testing supplies, canes, braces, orthotics, eyeglasses, contact lenses and hearing aids, etc.  Medical expenses that exceed 10% (or 7.5% for those 65 and over) of AGI are deductible. 

6.      If you’re self-employed, try bunching expenses before year end.  Stock up on supplies or pre-pay some expenses.

7.      Prepay your state and/or local taxes.  However, if you are subject to AMT speak to your CPA first.

           

      8.      Make charitable donations and be sure to get a receipt.  Both cash and non-cash donations to a registered charity will get you a deduction.  Make sure you have documentation, receipts and acknowledgements as necessary.          

                                                                     

      9.      Volunteer!  It’s good for your spirit and your taxes if you keep records.  If you use your vehicle for volunteering and keep good records, you can deduct $.14 per mile or the actual cost of gas.  Tolls and parking are deductible whether you take a per-mile or actual cost deduction, too.     

                                                                                                         

10.  Save receipts for job search expenses, if you looked for a job in your present occupation.  Resume preparation and mailing and travel are examples of deductible expenses.  The portion of these expenses that exceed 2% of AGI are deductible.

By: Honorine M. Campisi, CPA