Hyden, Miron & Foster, PLLC Law Blog

Friday, September 12, 2014

Fall: The Time to Start Tax Planning

Although most of us do not want to start thinking about our taxes until January, fall is really the best time to start your tax planning because it could save you money.  If you take certain steps now you might be able to meaningfully reduce the amount you owe in taxes come April.  If you are tax savvy, you might be able to work some of these things out on your own.  But, take caution!  You should consult with a tax professional and your accountant before doing any in depth tax planning.  Here are a few things you can do now to start preparing your tax strategy for the upcoming tax season.

Consider your investments and how they have performed thus far.  If there are losses, you might want to sell the corresponding assets now to take advantage of the offset they will give you.  If you have a mixture of gains and losses, you might want to sell the assets that made you money. You will be subject to capital gains taxes on these investments and therefore you might want to use the offset from the losses to minimize your liability. Be sure to consult with your investment advisor at the same time to understand what your gainers and losers look like. The investment advisor may want to “rebalance” your portfolio with this tax information in hand.  

Fall is also a good time to plan your charitable giving.  You should not overlook any investments that have been performing well.  For example, if you donate stock to a charity directly, you will not be subject to the capital gains taxes you would be if you sold the stock and then donated the money you netted.  In this way, the charity benefits much more from the donation since the sales proceeds will not have been subject to income tax.  You will also get the full value tax deduction for what the stock value is worth on the sale date and not just the amount of money you donated after selling it and paying the required taxes. You might also take this time to increase contributions to accounts that receive preferential tax treatment, such as IRAs, 401(k)s, 403(b), and other retirement plans.    For 2014, the elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is $17,500.  For employees aged 50 and over (who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan), they may make an additional $1,000 catch-up contribution limit.  The 2014 limit on annual contributions to an IRA is $5,500, with a $1,000 additional catch-up contribution limit for individuals aged 50 and over.

Lastly, this is a great time to start compiling your list of deductibles.  Talk to your tax professional to determine what might be deductible and how you can use those deductions in the most beneficial way.

If you would like to meet with a tax attorney for your fall tax planning, contact the attorneys at Hyden, Miron & Foster, PLLC, at (501) 376-8222 today to schedule a consultation. We have offices in Little Rock, Conway and Hot Springs, Arkansas.


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