Top Five Year-end Tax Planning Tips

With the end of the year fast approaching, put aside some time to plan your year-end strategies to minimize your 2014 tax liability. Here’s a top-five list of savvy tax-planning tactics that might apply to you.

1. Maximize retirement savings contributions. Take full advantage of contributions you can make to retirement plans. You may be eligible for tax-deductible contributions to traditional IRAs (depending on your modified adjusted gross income and tax-filing status) and your contributions to employer-sponsored retirement plans may be made on a pretax basis, both of which can help reduce your taxable income. For the 2014 tax year, you can contribute up to $17,500 (or up to $23,000 for individuals age 50 or older) to a 401(k) plan. You may also contribute up to $5,500 (or up to $6,500 for individuals age 50 or older) to a traditional or Roth IRA.

2. Time your income. If you receive year-end bonus pay or have other sources of income that you can control the timing of, examine your tax situation in both years to see if it’s better to receive the additional income in this tax year or postpone it until 2015. Estimating your income can help you plan ahead for other potential tax implications, such as whether you will be subject to a surcharge on your net investment income or if your Social Security benefits will be taxable.

3. Project investment income. It’s important to understand how your investment income will be taxed. In general, long-term capital gains and qualified dividends have a lower tax rate than short-term gains, nonqualified dividends and ordinary income. Holding an investment for more than one year before selling it usually results in a long-term gain as opposed to a short-term gain. Plan appropriately for any capital gains and consider “harvesting” your losses by selling underperforming investments to write off some or all of your capital gains. In particular, higher income investors need to be aware of the potential 3.8 percent surcharge on net investment income.

4. Take advantage of deductions. Be sure you understand all of the tax deductions you might be eligible for, particularly the “above-the-line” deductions that reduce your adjusted gross income (AGI). Those include items like alimony, self-employment health insurance or traditional IRA contributions. Much like timing your income, you can also accelerate and combine some itemized deductible expenses, such as property tax, local tax payments or medical services.

5. Make charitable contributions and gifts. Don’t forget that donations to charitable organizations that are mailed on or before December 31 count toward your 2014 charitable contributions. This common year-end tax strategy can use a variety of assets and can be set up in strategic ways to maximize tax efficiency. Additionally, taking advantage of your annual gift-tax exclusion can be a beneficial way to provide support to family members now and help reduce or avoid estate taxes later. You can gift up to $14,000 ($28,000 if both spouses make a gift) a year to an individual in the form of cash, stocks, bonds or other assets.

While all of these options may not apply to you, chances are good that you can consider some of these strategies as we close out the year. Please contact your tax professional for tax advice or contact us if you have questions about your investment and savings opportunities.

Selecting Mutual Funds for Performance

Specific quantifiable factors, such as net expense ratios, historical performance and risk management, can help an investor evaluate the probability of high performance. > Read research paper.

Determining Your Sustainable Withdrawal Rate

Are you concerned about outliving your retirement portfolios? That nest egg may have to fund a retirement lasting 30 years or more, which makes calculating a safe withdrawal rate very important. Withdraw too much and you risk running out of money early. Withdraw too little and you may deprive yourself unnecessarily of the retirement lifestyle you desire. [Read more...]

Patience: A Virtue In Life and Investing

Market volatility can be frightening. Even the possibility of volatility scares some investors. Anxiety is a natural reaction to the hyperbolic headlines calling for the next major market downturn due to the latest world conflict or catastrophe. The important thing to remember is that the primary goal of your portfolio is long-term returns. Shift your focus away from short-term performance and readjust your sights on the big picture instead. Patience will win in the end. [Read more...]

The Future of Social Security: An FAQ

If you’re concerned about the sustainability of Social Security, you’re not alone. Those who are far from retirement may wonder if Social Security benefits will be there for them at all. And, many people who are close to retirement or already retired are concerned about their benefits being cut when they need them most. But the reality may be less drastic than either of these scenarios. [Read more...]

Investment Insights Webcast

Alarming headlines warn that a market correction is coming. Is there merit to their argument? Watch the 15-minute recorded webcast held October 9 for a clear picture of the current state of the market. > Watch webcast.

Long Term Care Insurance: A Primer

Most health insurance plans — including Medicare — don’t cover custodial care, the type of care that people most often need when they’re unable to live independently. Custodial care provides assistance to do everyday things such as bathing, getting dressed, eating and using the bathroom. [Read more...]

Get Your Business Ducks In A Row

Business ownership can be very rewarding — but it can also be risky. If you’re an entrepreneur pursuing your dreams and forging your own success, it’s important to put some safeguards in place to ensure that your business doesn’t upend your personal financial plan. [Read more...]

Help Your Child Choose A Lucrative Career

Last year, a record 21.8 million students attended American colleges and universities, according to the Institute of Education Sciences. Incoming freshmen will take general courses at first, but will soon be expected to declare a major. Choosing a major greatly affects a student’s future career opportunities and earning ability. If you’re sending a child or grandchild to college this year, be sure they understand the importance of their decision. [Read more...]

Estate Planning Essentials

When you hear the term “estate planning,” you may think it applies only to the very wealthy. But the truth is that everyone should have a basic plan — and the sooner you start thinking about it, the better. [Read more...]