Tax planning for 2014 year-end and 2015

With 2014 quickly coming to a close, now is the right time to analyze your income tax situation for 2014 and 2015. After the recent mid-term elections swung both houses of Congress to a Republican majority, the immediate year-end tax planning revolves around a "tax extenders" package of expired individual and business tax breaks that await retroactive reinstatement to the start of 2014. Final passage will not happen until later this month (any day now) or possibly January 2015 (which will cause tax-season delays for the IRS in accepting returns and issuing refunds). It's unclear which extenders will be affected, and whether they will be made permanent, extended for one or two years, or scrapped. Stay tuned...

With tax rates expected to remain the same for 2014 and 2015 as they were for 2013, traditional year end planning techniques remain important to maximize benefits, such as:

• Defer/receive bonuses before January.
• Hold/sell appreciated assets
• Accelerate income to use available carry-forward losses.
• Postpone/complete Roth conversions.
• Minimize/maximize retirement contributions.
• Bunch itemized deductions into 2014 and take standard deduction in 2015 or vice-versa.
• Pay bills in 2014/postpone payments until 2015.
• Pay 4th quarter 2014 state estimated tax installment in 2014 or delay payment until 2015.
• Watch AGI limitations on deductions/credits.
• Watch net investment income restrictions.
• Match passive activity income and losses.

The year end is almost here!  Don't wait to contact your tax professional if you have questions or need to make year-end tax planning decisions.

Jim Story
Manager - Tax Department