What can you do now that will make a difference in your tax liability? As promised, some tax strategies now that 2014 is coming to a close.
So you’ve completed your to do list from my earlier blog post. Now it’s time to put into action some of the strategies below to save time $$ and heartache at tax time.
1.Don’t think your withholding is enough to cover what you might owe? Use Form W-4 to adjust your withholding with your employer. You can enter an additional amount to have withheld from each paycheck until the end of the year on Line 6 of the W-4 form. Maryland MW508 for state tax withholding adjustments.
2.If you are self-employed or your employer won’t be able to adjust your tax withholding timely make an estimated tax payment. Use Form 1040-ES to figure the tax and then mail or pay through the IRS website by 01/15/2015.
3. Report life changes – if you purchase health insurance coverage through the Health Insurance Marketplace, you may receive advance payments of the premium tax credit in 2014. It is important that you report changes in circumstances to your Marketplace so you get the proper type and amount of premium assistance. Reporting changes will help avoid getting too much or too little premium assistance in advance.
4. It’s been a pretty good year for the stock market. If your income will be higher than expected due to capital gains consider selling some stocks that have declined in value. You can use capital losses to offset capital gains and any excess losses up to $3000 to offset wages and other ordinary income each year. Leftover losses can carryover to subsequent years.
5. No or little retirement funds? Contribute to an IRA if eligible to deduct you can make the contribution up until 4/15 (10/15 if you file an extension). Contribute the max to your health savings account if eligible. You have until 4/15 to make the contribution. And remember with both IRA’s and HSA’s if you are over 50 additional “catch-up” amounts apply.
And last but not least talk to your accountant. We are here to help you.
