6 Questions Every CEO Must be Able to Answer - Mackey AdvisorsAs the year begins to unfold we gain a clear­er idea of how things will be shap­ing up rel­a­tive to annu­al income and expens­es. From year to year things can change, and it is impor­tant to know and under­stand how these changes can affect your income tax out­come. Year-end tax plan­ning is a way to be sure you know your tax pic­ture each year and helps ensure you are proac­tive where it’s impor­tant. Some­times there are things that must be done by the end of the cal­en­dar year, that you would not do if you just looked at your sit­u­a­tion when doing your tax­es in the Spring. This also enables you to get a rough idea of how much you’ll owe in tax­es. In an effort to lessen the pain, it is wise to take cer­tain steps at year end.

Numer­ous strate­gies exist to help you, includ­ing review­ing pro­fes­sion­al­ly devel­oped year-end tax check­lists, per­form­ing a mar­gin­al tax rate analy­sis to ensure that you won’t be pushed into a high­er tax brack­et unnec­es­sar­i­ly, and post­pon­ing income and accel­er­at­ing deduc­tions (or vice versa).

Year-end tax plan­ning and invest­ment deci­sion mak­ing may some­times result in sub­stan­tial tax sav­ings. Of pri­ma­ry con­cern, is the tim­ing and the method by which you report your income and claim your deduc­tions and cred­its. You should work to time your income so that it is taxed at the low­est rate pos­si­ble, and to time your deduc­tions so they are claimed dur­ing tax years in which you are in a high­er tax bracket.

The fol­low­ing items are a few of the myr­i­ad of con­cepts your CPA should be dis­cussing with you:

  • Shift­ing income amongst fam­i­ly members
  • For spous­es, cal­cu­lat­ing both “mar­ried fil­ing joint­ly” and “mar­ried fil­ing sep­a­rate­ly” to deter­mine any advantages
  • Rec­og­niz­ing when to take cap­i­tal gains and losses
  • Con­sid­er­ing any chil­dren or elder­ly par­ents you may be able to claim
  • Restruc­tur­ing invest­ments that may be tax inefficient.
  • Using appre­ci­at­ed stock or invest­ments for char­i­ta­ble giv­ing instead of cash

While tax­es are not due until April 15th, the changes you can make to your tax sit­u­a­tion great­ly decrease upon the New Year. To be sure you get to make the most of the oppor­tu­ni­ty, engage your CPA this fall. They should be call­ing you if they believe there are adjust­ments that can be made in your favor. If you haven’t heard from them, call us, “The Pros­per­i­ty Peo­ple” and we can help add this impor­tant step to your annu­al tax routine.

Down­load our 2015 Key Num­bers sheet to get started.