10 Basic tax to-dos before end of 2014

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 1. Make time to plan

There’s real opportunity for tax savings when you assess whether you’ll be paying taxes at a lower rate in one year than in the other.

 2. Defer income

Consider any opportunities you have to defer income to 2015, particularly if you think you may be in a lower tax bracket then.

 3. Accelerate deductions

If you itemize deductions, making payments for deductible expenses before the end of the year, instead of paying them in early 2015, could make a difference on your 2014 return.

 4. Know your limits

If your adjusted gross income (AGI) is more than $254,200 ($305,050 if married filing jointly, $152,525 if married filing separately, $279,650 if filing as head of household), your personal and dependent exemptions may be phased out, and your itemized deductions may be limited. If your 2014 AGI puts in this range, consider any potential limitation on itemized deductions as you weigh any moves relating to timing deductions.

5. Factor in the AMT

If you’re subject to the alternative minimum tax (AMT), traditional year-end maneuvers such as deferring income and accelerating deductions can have a negative affect. Essentially a separate federal income tax system with its own rates and rules, the AMT effectively disallows a number of itemized deductions, making it a significant consideration when it comes to year-end tax planning.

6. Maximize retirement savings

Deductible contributions to a traditional IRA and pretax contributions to an employer-sponsored retirement plan such as a 401(k) could reduce your 2014 taxable income. Contributions to a Roth IRA (assuming you meet the income requirements) or a Roth 401(k) plan are made with after-tax dollars, so there’s no immediate tax savings. But, qualified distributions are completely free from federal income tax, making Roth retirement savings vehicles appealing for many.

7. Take required distributions

Once you reach age 701/2,you generally must start taking required minimum distributions (RMDs) from traditional IRAs and employer-sponsored retirement plans (an exception may apply if you’re still working and participating in an employer-sponsored plan). Take any distributions by the date required. The penalty for failing to do so is substantial: 50% of the amount that should have been distributed.

8. Know what’s changed

A host of popular tax provisions expired at the end of 2013. Including: deducting state and local sales taxes in lieu of state and local income taxes; the above-the-line deduction for qualified higher-education expenses; qualified charitable distributions (QCDs) from IRAs; and increased business expense and “bonus” depreciation rules.

9. Stay up-to-date

It’s always possible that legislation late in the year could retroactively extend some of the provisions above, or add new wrinkles — so stay informed.

10. Get help if you need it

There’s a lot to think about when it comes to tax planning. That’s why it often makes sense to talk to a tax professional who can evaluate your situation, keep you apprised of legislative changes, and help you determine if any year-end moves make sense for you.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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