Last-Minute Tax Planning
The tax year ends in just days, but there is still time to make a few moves that can protect your assets and make your life easier in 2016, and beyond.
Here are five good suggestions from the tax pros at Ernst & Young:
1) Stockpile money in tax-advantaged retirement accounts: You have until April 15 to contribute to an IRA, but you must arrange to deduct extra 401(k) plan contributions from your 2015 paychecks or year-end bonus by year end. Deductible contributions will reduce your taxable income and your adjusted gross income.
2) Gift your assets: In 2015, you can give cash, securities or other property valued at up to $14,000 to as many people as you want without filing a gift-tax return or dipping into the credit that will protect your estate from the federal estate tax.
3) Identify shares of stock and mutual funds that you want to sell: 2015 saw quite a bit of volatility in the stock market. If you want to sell shares that you purchased at different times, select those in which you have a high tax basis in order to reduce taxable gain or increase a tax loss that may be used to offset other taxable income.
4) Use your capital losses: If you had capital gains this year, consider offsetting those gains by selling property in which you have unrealized capital losses.
5) Donate to charity: Charitable contributions are an effective last-minute tax deduction, so consider giving appreciated stocks that you’ve held long term to public charities or donor advised funds to get the full value of a deduction.
Ernst & Young has published The EY Tax Guide 2016, with even more tips, suggestions and email alerts for information on up-to-the-minute tax law changes as they happen. Find out more HERE.
While we don’t file our taxes until April 15, it’s always good to keep in mind that the new tax year starts on January 1st each year. So if you need to make some changes before the 2016 tax year begins, you’d better get moving.
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