An Often Overlooked, but Important Process… Year-End Tax Planning

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An Often Overlooked, but Important Process… Year-End Tax Planning

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. 

About the Author:

Andy is Mackey Advisors personal finance whiz kid. Andy's specialty lies in his ability to help clients craft a financial plan that works for them. He is passionate about helping people create a brighter and more prosperous future.

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