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Year-End Tax Preparation (Part 2)

December 23, 2014

As another year winds down, I always like to advise clients on the value of lowering their tax liabilities for the year that just passed. In Part 1 of this series, we talked about deferring income, along with health care and home-related strategies. 


But there are more ways to keep your money in your pocket, not Uncle Sam’s!


For instance, harvest tax losses by selling assets that lost value. Dump your dud mutual funds and stocks, thereby recognizing the losses. This offsets capital gains taxes, and up to $3,000 can go towards reducing your earned ordinary income. If the loss is more than $3,000, you can carry it to future tax years.


Also, be sure to bundle deductible expenses like medical and dental services. These can’t be deducted unless they exceed 10 percent of adjusted gross income, so if you’ve been putting off that dental procedure, get it done soon to deduct it in 2014.


Charitable contributions are great ways to help others and minimize your tax burden. Package used, useful items like clothing, furniture or even vehicles, and donate them. The value of these items is tax deductible, so get a receipt!


Donations aren’t limited to goods or money. You can donate assets like stocks and mutual funds too. When gifting long-term securities (held 12 months+), you can claim their fair market value on the date of the gift. With a short-term asset, you can claim the cost basis if it’s less than the fair market value.


Lastly, much can be gained from literally preparing to file taxes. Organize receipts and other documents, and perhaps even do a filing “dry run.” And definitely compare 2014 data to past years. All this gives you an idea of where you stand and what tax-minimizing strategies to employ.

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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