Year-end 2015 is approaching fast! You have only a very limited time to make tax-smart moves for 2015. Here are seven suggestions.
- If you believe you will owe state or local taxes, consider prepaying them before December 31 so you can claim the deduction in 2015. (Be aware of alternative minimum tax consequences.)
- Put necessary last-minute purchases on your credit card. Using a credit card lets you take a deduction when the purchase is made, not when the card balance is paid. You can use the credit card rule for both business and personal transactions.
- Are you a business owner in need of additional furniture, fixtures, equipment, and computers to operate your business? Consider making the purchases before the end of the year in order to qualify for the Section 179 expensing deduction.
- Stock losses can be used to offset stock gains. If you have unrealized losses for 2015, consider selling those positions to offset any gain transactions you might have made. You can also deduct up to $3,000 in net capital losses against other income. Net losses greater than $3,000 can be carried forward and used on your 2016 tax return.
- Consider making a deductible traditional IRA contribution. If you qualify, you can contribute up to $5,500 for 2015, plus an additional $1,000 "catch-up" contribution if you are age 50 or older. You have until mid-April 2016 to make your contribution and still take a deduction for 2015.
- Maximize your employer-offered tax-deferred retirement accounts, such as 401(k), 403(b), or 457 plans.
- Donate appreciated stock or mutual funds to charity. You receive a deduction for the appreciated value, but you don't have to report or pay taxes on any of the appreciation.
Call us for more tax-saving tips that you can fit in before December 31.