Friday, December 26, 2014

The Four Best Year-End Tax Planning Tips

John Wasik for Forbes writes: I don’t know about you, but the time between Christmas and New Year’s I’m wrapping up the year by collecting receipts and statements for tax preparation.
It’s not fun, but I want to get a leg up on getting the best tax breaks for the year.
There’s still time to do some important tax moves to ensure that your tax bill is as low as possible for the 2014 tax year.
Here’s some timely advice from Atlantic Trust Private Wealth Management:
 Harvest capital losses to offset realized gains. The tax rate for long-term capital gains for those who are in the highest tax bracket is 20%, plus the Net Investment Income tax of 3.8%.
Let’s say you’ve lost money in a stock. You can sell some stock or mutual funds (that have had gains) to offset the losses. You can also donate appreciated stocks to charity for the full market value of the asset to avoid the capital gains tax.
Consider converting to a Roth IRA. A Roth IRA is a vehicle in which you pay taxes going in, but don’t pay taxes on withdrawals. They make sense if you think taxes are going up in the future.
Remember that all withdrawals out of 401(k)-type accounts are taxable. If you have limited taxable income for 2014 and the thresholds for the higher taxable income brackets do not apply, then a conversion may be beneficial.
Maximize retirement plan contributions. If you have an IRA or an employer-sponsored 401(k) or equivalent plan, consider making a contribution before year’s end, if you have not yet reached the limit. 

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