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Year End Tax Strategies brought to you by MetroIBA presented by Pam Ricker, CPA Ricker Accounting “Accounting for Life”

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Presentation on theme: "Year End Tax Strategies brought to you by MetroIBA presented by Pam Ricker, CPA Ricker Accounting “Accounting for Life”"— Presentation transcript:

1 Year End Tax Strategies brought to you by MetroIBA presented by Pam Ricker, CPA Ricker Accounting “Accounting for Life”

2 You’ll often find Pam teaching and leading seminars and workshops on taxes for individuals, for investors, and for small business owners. Pam’s loyal clients know her as “a tax genius.” Her financial expertise also extends to small business CFO, accounting and bookkeeping. An educator, teacher and healer at heart, Pam’s mission is to help people including independent business owners understand and navigate their financial circumstances.

3 Remember this… There are only two ways to reduce taxes 1.Increase your itemized deductions or 2.Reduce your adjusted gross income Here’s a great article for your reference:

4 Step One - Assess Your Situation Adjusted Gross Income (or AGI) is your total gross income minus specific allowable itemized deductionsgross income

5 Step One - Assess Your Situation Let’s start with estimating your AGI. What is your estimated income this year? This includes wages, tips, business profits, investment income and other sources of income. $ ___________ (write it down) Your income taxes - both Federal and State - will be calculated based on your “Adjusted Gross Income” or AGI.

6 Step Two - Know Your Options Your AGI will be reduced by your itemized deductions. So, what specific itemized deductions are you allowed? Let’s look at some possibilities:

7 Itemized Deductions Medical Expenses – These need to be over 10% of your AGI if you are under 65 years State Income Taxes Paid or Withheld Real Estate taxes paid Sales Tax paid

8 Itemized Deductions Mortgage Interest Paid Investment Interest Paid Charitable Deductions – Cash and Non Cash Charitable Miles

9 Itemized Deductions Miscellaneous Itemized Deductions that are over 2% of your AGI Job Expenses not reimbursed such as Union Dues or Licenses Job Hunting Expenses Tax Prep Fees Safe Deposit Box Investment Fees

10 Step Two - Know Your Options 12 Tax Tips for tax year Optimize your capital gains and losses. ●Take advantage of capital losses to sell some stocks at gains –even if you buy them back at a higher value to increase ●Take advantage of capital gains to clean up your portfolio and get rid of under performing stocks by selling at a loss. ●Donate appreciated stock to a charity- gives you a charitable deduction without a taxable gain 2. Watch the Standard Deduction ●If you are close to the standard deduction level consider moving deductions to this year or next to increase that years amount and itemize in the higher year and still claim the standard deduction in the other. 3. Bunch Itemized Deduction ●Like above, watch the itemized deductions to increase them in higher income years by doubling up where you can

11 Step Two - Know Your Options 12 Tax Tips for tax year 2014, continued 4. Increase Charitable Deductions ●Increase itemeized deductions by prepaying next years pledge to the charity ●Keep good records of non-cash items donated so that you claim the correct amount as a deduction ●Keep track of your volunteer mileage 5.Prepay College Tuition Bills Pay Spring semester now 6.Maximize your 401K Contribution $17,500 under 50 and $23,000 over

12 Step Two - Know Your Options 12 Tax Tips for tax year 2014, continued 7.Contribute to a Health Savings Account if you are in a high deductible plan Up to $7,550 for a family over 55 8.Pay State Taxes early – by December 31 to claim as an itemized deduction 9.Make full use of your Flexible Spending Account 10. Postpone your year-end bonus

13 Step Two - Know Your Options 12 Tax Tips for tax year 2014, continued 11. If you are self employed, prepay expenses to lower the business income 12. Watch out for Alternative Minimum Tax (AMT)

14 Step Two - Know Your Options We’ve all heard about the Affordable Care Act. How will this affect you? All Americans will be affected in some manner by the Affordable Care Act from 2010 (some people call it ‘Obamacare’.) 5 new tax forms were released by the IRS as a result of this act for Every individual with some exceptions are required to have qualifying health insurance coverage or owe an individual responsibility payment. The payment is the greater of 1% household income above the income tax filing threashold of $10,150 or a flat $95 per adult or $47.50 per child. The payment will be due with your tax return. If you are uninsured for part of the year 1/12th of the penalty applies per month. If you received a Form 1095 from any issuer or agency, you MUST have all copies to prepare your tax return. If you did not receive a 1095, you have to answer a number of additional questions about insurance coverage so that you avoid any penalties for failure to have health insurance.

15 Step Three - Make a Plan 1: Get Organized 2: Meet with your CPA 3: Prepare a tax projection 4: Make a plan to pay or reduce the taxes owing

16 Year End Tax Strategies now is the time to take action on your tax situation, to end the year on the right foot

17 Don’t give your money away... Learn the year end tax strategies that will put you and your business in the best tax position based on your unique financial situation.

18 There is still time to take action 2014 is quickly drawing to a close. Fear not, there is still time to take action, but you must act now to take advantage of what you learn today.

19 Be sure to reserve an appointment with a CPA today Whatever CPA tax expert you decide to work with, be sure to call them and get on their calendar as soon as possible.


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