6 Tax Questions to Ask Before the End of the Year

Your holiday season “to-do” lists is already incredibly long, I know, but you really owe it to yourself to answer these six tax questions before year-end:

Should I defer or accelerate income? Will you be in a higher tax bracket next year? If so, you may want to pull more income into this year. Conversely, if it looks like you will be in a lower tax bracket in 2014, you should consider deferring income until January. In addition, it may be beneficial to accelerate deductions by immediately paying any income or property taxes not due until 2014.

Should I take any gains or losses this year? If you are in a lower tax bracket than you expect to be in next year and have gains on your investments in 2013, you may want to consider selling some of your investments to benefit from lower tax rates on those gains.

Should I do a Roth conversion? If you have a traditional IRA, you may want to convert all or some of those assets to a Roth IRA, especially if you are still years away from retirement. You will pay taxes on the converted assets now, but your earnings will grow tax-free in the Roth IRA.

Should I make any changes to my FSA or HSA for 2014? If you have a flexible spending account (FSA) or health savings account (HAS) through your employer and anticipate bigger medical expenses next year, you may want to increase the funds in those accounts which allow you to use pretax money for out-of-pocket medical costs.

Should I be making charitable contributions? If your income increased this year, you may want to think about reducing your taxable income with charitable contributions. You may also consider gifting appreciated securities, which allows you to avoid capital gains taxes while still deducting the full amount of the donation.

Should I be making gifts to family? In 2013, you can gift up to $14,000 (or $28,000 if you are married and your spouse participates) to as many individuals as you choose. This allows you to assist family members while removing taxable assets from your estate. It’s important that if you are giving large gifts, you set it up so those gifts are protected from bankruptcy, divorce and creditors forever. We can help you with that.

If you would like more information about year-end tax-saving strategies, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.