Following is an excerpt from the November Baltimore Gay Life Personal Finance column by Amanda Wooddell Wilhelm, a Manager at SC&H Financial Advisors, the Personal Financial Planning practice at SC&H Group.
Year-end tax planning will again be challenging this year as Congress has yet to act on a number of tax breaks that expired at the end of 2013. Some of these tax breaks may be retroactively reinstated and extended, but Congress may not decide their fate until the very end of this year and, possibly, not until next year.
These breaks include the following for individuals:
- The option to deduct state and local sales and use taxes instead of state and local income taxes.
- The above-the-line-deduction for qualified higher education expenses.
- Tax-free IRA distributions for charitable purposes by those age 70-1/2 or older.
- The exclusion for up-to-$2 million of mortgage debt forgiveness on a principal residence.
Here are a few tips on ways to save tax dollars if you act before year-end:
- Realize losses on stock and other investments while substantially preserving your investment position.
- Postpone income until 2015 and accelerate deductions into 2014 to lower your 2014 tax bill.
- Consider converting traditional IRA money into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion could increase your adjusted gross income for 2014.
- Consider using a credit card to pay deductible expenses before the end of the year. Doing so will increase your 2014 deductions even if you don’t pay your credit card bill until after the end of the year.
These and other key insights are outlined on page 20 of the November issue of Baltimore Gay Life. If you have any questions about this content, or are interested in learning more about SC&H Group’s Personal Financial Planning services, we welcome you to contact Amanda here.