Global Family Law Services

Consider every option in year-end tax planning

| Nov 19, 2015 | Charitable Donations, Retirement Planning, Tax Planning

This article originally appeared as a column for the Cleveland Jewish News.

As another calendar year comes to a close, it’s time again for last-minute year-end tax planning. True, there is just over a month left in 2015, but there is still time to take advantage of some smart planning.

Consider upping your retirement contributions to the maximum allowed amount. Annual contribution limits into common plans like 401(k), 403(b), or 457 plans are $18,000 in 2015. Or, if you are over the age of 50, you can make a catch-up contribution of an additional $6,000. For a simple IRA, the limits are $12,500 for anyone below age 50 and $15,500 for those over age 50. And the contribution limits are $5,500 for a traditional or Roth IRA, or $6,500 for those over 50.

Charitable contributions may be made up until the end of the calendar year. If you itemize your deductions, you may generally deduct up to 50 percent of your adjusted gross income, although 20- and 30-percent limits apply in some cases. Contributions of appreciated assets can be particularly beneficial inasmuch as you can generally both write off the appreciated value of the asset while avoiding capital gains on the appreciation – a win-win for both you and the charitable endeavor.

Be sure to make use of any money you set aside in a flex spending account throughout the year. While funds in a health savings account will generally carry over into the next year, funds in a FSA will be lost if not used in time. While the rules on what constitutes a qualified purchase have tightened a bit, items such as bandages, eye care, home diagnostic tools such as blood pressure monitors and thermometers, joint braces, incontinence products, and over-the-counter medications prescribed by a licensed health care professional can all qualify.

If you have a business, you still have the opportunity to time some moves to best help your bottom line. Depending on the nature of your business, you may shift taxable income into 2016 by delaying billing or the provision of goods or services into the new year. Similarly, you can accelerate deductible expenses into 2015 by doing things like upping the business use of a vehicle that doubles as a personal vehicle, or acquiring new equipment and supplies (that you would be purchasing anyway) in 2015.

Last, but certainly not least, make sure you are taking advantage of every available deduction. Do you work from home? Travel for work? Pay interest on student loans? Have a child in day care so you can work? Have medical bills that exceed 10 percent of your adjusted gross income for the year? Pay tuition? The list of available deductions seems endless. Talk to your tax preparer or, at least, do your own research to make sure you have captured all deductions that might apply to your situation.

They say the only certainties in life are death and taxes. But, with a little planning and forethought you can keep a little more of your money in your pocket into 2016.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.