What You Can Do To Minimize Your Tax Burden For 2015
It’s now the time of year to consider what you can do to minimize your tax burden for 2015. Following are some of the tax tips you may want to consider to reduce the amount due to Uncle Sam next April.
- Make your charitable deductions before the end of year. Generally, you can deduct charitable contributions up to fifty percent of your adjusted gross income. Get rid of those unused items and receive a tax deduction.
- Remember that you can gift up to $14,000 per year to each individual with it being exempt from any gift tax reporting requirements to the IRS (or actual gift tax if you have exhausted all of your lifetime gift tax exemption). If you are planning to make any large gifts, at least make a gift of $14,000 before the end of December to take advantage of this gift tax exemption.
- Go to the doctor. If you itemize your deductions and have enough medical expenses (10 percent of AGI for most individuals), you can deduct these expenses. If you need new eyeglasses, hearing aids, etc., now is the time to do it.
- Prepay. You can prepay your January mortgage. You can prepay your property taxes. You can prepay your quarterly estimates taxes. These will all increase your deductions on your tax return.
- Maximize your retirement contributions. 401(k) and IRA contributions are tax deductible, and the allowable deduction for a traditional IRA is $5,500 or $6,500 if age 50 or older.
- Consolidate debt. With interest rates still at near historically low levels, pay off your credit card debt with a home equity loan, and use the interest on the home equity loan as a deduction.
- Sell losers. You can sell off your investment losers and offset the losses against taxable capital gains plus up to $3,000 in ordinary income.
- Buy equipment and supplies. If you own your own business, you can use equipment and supply purchases as deductions against business income.
Follow These Tax Tips For Less Tax Burden
Taking advantage of any or all of these tax tips now will result in a smaller tax burden come April and more money in your pocket.
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Joseph E. Balmer
Joseph Balmer manages the Probate, Trust and Estate Administration department at Dayton, Ohio, law firm, Holzfaster, Cecil, McKnight & Mues, and has been certified by the Ohio State Bar Association as a specialist in Estate Planning, Trust and Probate Law since 2006.