With 2013 coming to a close, now is the right time to implement some smart year-end tax planning that can make a big difference in your finances.
SC&H Group has developed the following tax tips to consider before December 31, 2013 to help make your life a bit less financially stressful during the hectic holiday season.
Tip #1: Use of Additional Withholding
- Request employer to withhold additional tax from year-end bonuses or payroll to satisfy additional tax liability and avoid underpayment penalties.
Tip #2: Acceleration of Deductions
- Make the payment of such expenses as 2014 real estate taxes and fourth quarter estimated state tax payments (after reviewing AMT impact) prior to year-end.
Tip #3: Roth Conversion
- While income tax is paid on pre-tax contributions and earnings, the converted amount continues to grow tax-free. Keep in mind that withdrawals are tax-free and penalty-free after you reach age 59½. You have until October 15, 2014 to undo the conversion if you are not satisfied with the tax result.