As the end of another tax year approaches, it is important to begin thinking about your 2014 income tax situation. We are advocates of a proactive and forward looking approach to income taxes. In other words, we believe that analysis and work done now prior to the end of the year can make the preparation of your 2014 income tax returns free of unwelcome surprises or missed opportunities.
Following are some time-sensitive questions to consider at year-end:
- Have I paid in a sufficient amount of income taxes via income tax withholding or quarterly estimated tax payments to avoid penalties or a large unexpected balance owed?
- Should I prepay my state income taxes prior to December 31, 2014 in order to get a federal tax deduction on my 2014 tax return or should I delay payment until 2015?
- Should I accelerate the receipt of taxable income into tax year 2014 (i.e. realizing capital gains, exercising stock options, completing a Roth conversion, receiving a discretionary distribution from a retirement plan, etc.) or delay the receipt into tax year 2015?
- Should I accelerate tax deductions (i.e. charitable contributions, real estate taxes, medical expenses, etc.) into tax year 2014 or delay into tax year 2015?
- Should I consider a Roth conversion for tax year 2014?
- Am I making my charitable contributions in a way that provides the most tax benefit?
- Am I paying for college tuition expenses in a way that provides the most tax benefit?
- Which account (i.e. tax-deferred, Roth, taxable) should I take distributions from to meet my cash flow needs?
- Has there been a material change in my taxable income or deductions in 2014 as compared to 2013?
- Do I expect a material change in my taxable income or deductions in 2015 as compared to 2014?
- Have I or should I utilize my available annual exclusion for gifts to family members?
At CCM, we incorporate tax planning conversations into the agenda of our regular progress meetings. However, we always welcome additional conversation at any time of the year as questions arise or as you become aware of changes in your situation. Feel free to set up a meeting or phone conversation with one of our tax team members at any time.