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15 Best Year End Tax Tips To Activate Before Midnight December 31st



TaxConnections Member John Dundon

The 15 Best Year End Tax Tips To Activate Before Midnight December 31st are as follows:

1. You may want to pay contested taxes to be able to deduct them this year while continuing to contest them.

2. You may want to settle an insurance or damage claim in order to maximize your casualty loss deduction.

3. Give generously to both family and friends. Rich families stay rich by aggressively giving their money away to members in their clan. Remember you cannot take it with you when you go.

4. Make gifts sheltered by the annual gift tax exclusion before the end of the year to save gift and estate taxes. The exclusion applies to gifts of up to $14,000 made in 2015 to each of an unlimited number of individuals.

5. Give charitably to causes and organizations that you support or are passionate about.

6. If you consider the whole family and there is income earning property involved, gifting proportionally to family members in lower income tax brackets who are not subject to the kiddie tax saves the whole family.

7. Don’t forget about Alternative Minimum Tax (AMT) liability. Many tax breaks allowed for purposes of calculating regular taxes are disallowed for AMT purposes including: state property taxes on your residence; interest on private activity municipal bonds; state income taxes; miscellaneous itemized deductions; and, personal exemption deductions.

8. If you qualify and have extra $$ invest in a retirement plan.

9. If you qualify and have extra $$ invest in education savings type of account for a friend or loved one.

10. If you qualify and have extra $$ invest in a health savings type account for yourself.

11. 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 to pull the deduction of those taxes into 2015 if you won’t be subject to alternative minimum tax (AMT) in 2015.

12. Consider using a credit card to pay deductible expenses before the end of the year. Doing so will increase your 2015 deductions even if you don’t pay your credit card bill until after the end of the year.

13. 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 to avoid the “wash sale” rules.

14. If you believe a Roth IRA is better than a traditional IRA, consider converting traditional IRA money invested in “dogs” into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2015.

15. If you converted assets in a traditional IRA to a Roth IRA earlier in the year and the assets in the Roth IRA account declined in value, you could wind up paying a higher tax than is necessary if you leave things as is. You can back out of the transaction by re-characterizing the conversion — that is, by transferring the converted amount (plus earnings or minus losses) from the Roth IRA back to a traditional IRA via a trustee-to-trustee transfer. You can later reconvert to a Roth IRA.

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I am enrolled with the United States Treasury Department to practice before the IRS, governed by rules stipulated in United States Treasury Circular 230. As a Federally Authorized Tax Practitioner and a tax appeals specialist my Enrolled Agent License #85353 is issued by the United States Treasury. With this license I work for U.S. taxpayers everywhere to resolve tax matters and de-escalate stress about taxes or tax disputes for individuals and corporations with federal and state issues.

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