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2014 Year-End Tax Planning

As the season for year-end tax planning approaches, it appears  that taxpayers will not experience any surprises. There’s been very little tax-related legislative change this year other than the possibility of a few last-minute tax extenders, which are unlikely to come up before the November elections have passed.

Despite the lack of significant changes, sound tax planning is essential to effective wealth management, and in today’s tax environment you’ll still want to consider a variety of options so that you’re well-positioned regardless of tax rule outcomes.

Among the issues most likely to affect taxpayers this year are:
•Election-year delays and tax law changes. Since 2014 is an election year for the House, a third of the Senate, and many governorships and state legislatures, it’s unlikely any tax law changes will come until after the general election on November 4. The last half of December could bring some surprises, so it’s a good idea to review the tax laws that might be impacted, stay alert for last-minute changes, and plan ahead so you can act accordingly.
•The net investment income tax (NIIT) and additional Medicare surtax. Now in their second tax season, the rates and thresholds for these taxes on higher-income individuals remain the same. Armed with a better bearing on each of the two, taxpayers and CPAs alike should be able to make better use of the associated planning opportunities for the 2014 tax year.
•Health insurance provisions for individuals and businesses. The Affordable Care Act continues to evolve, impacting both individuals and businesses. Though the employer mandate was delayed until 2015, individuals have been required to have health insurance since January 1, 2014. Those who did not could face a penalty of $95 or 1 percent of their gross income, whichever amount is greater.

With increasing predictability, we see Congress allow tax breaks to expire and then extend them for one or two more years, making it challenging for both individual and business taxpayers to plan ahead. With luck, Congress will extend some of the tax breaks that expired in 2013 before the year’s end in 2014. However, since there’s no guarantee that Congress will act, the best strategy is to understand how your taxes will be affected in either scenario and be prepared to pursue your preferred strategy if the opportunity arises.

We encourage you to talk with your Hysjulien and Associates tax professional and evaluate your options prior to 2014 year-end. While it can be tempting to put off thinking about taxes until the last minute, some of the tactics discussed here take time to implement, and your window of opportunity grows smaller as the tax year-end approaches.  Staying actively involved in tax planning year-round will keep you in a position to preserve and create longer-term wealth for yourself and your family.

Keep in mind that the strategies discussed in this article are based on current federal tax law. State taxes should also be considered since the tax laws of many states differ from federal tax laws.


October 31st, 2014

Posted in Advisory,Featured,Tax

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