Between the holiday parties, hot chocolate, holiday shopping for gifts to friends and family, the end of the year is not only a wonderful time to spend with loved ones, but it can be a busy time and there is still so much to do before 2015 ends.
One of the most important things on your to-do list should definitely be squeezing in as many tax savings as you can before we say goodbye to 2015. You may have overlooked some of these items during the course of the year, but if you can get them in before the end of the year, you might save yourself a few dollars when tax season comes around early next year. Here’s a list of the top 10 end-of-the-year most-overlooked tax saving tips:
1) Bad Investments and Worthless Stocks.
Did some of your investments not perform as well this year? From time to time, every investor makes investments in stocks or securities that do not perform well, and if you have had substantial gains for some of your investments, selling some underperforming investments at a loss can offset your taxable gains. Just remember not to buy the same securities within 30 days, or it will be subject to the “wash sale” rule, which will bar you from claiming the loss if you buy the same or substantially identical investment within 30 days of the sale. In addition, there are some investments that underperform so greatly that they are considered “worthless investments.” If an investment you made has almost zero value, and there is very little hope of you getting anything for your holdings, he may be able to treat it as a worthless stock on your tax return, and write off the holding.
2) College Savings 529 Accounts
Contributions to a 529 plan for college savers are considered gifts for tax purposes, which means that up to $14,000 per year per individual will qualify for the annual gift tax exclusion. In addition to the federal tax benefits, approximately 34 states offer estate tax credit or deduction for 529 plan contributions. Although California does not have a separate additional tax credit or deduction, other states do. For example, Illinois allows $10,000 deduction individually and $20,000 joint per beneficiary and Indiana permits a 20% tax credit on all contributions up to $5,000 ($1,000 max credit).To obtain the tax benefit, the contribution needs to be received by December 31. This does not mean postmarked – it means actually received. The end of the year is an opportune time to make last-minute contributions.
3) Tax-Deductible Gifts
The end of the year is also a great time to make tax-deductible gifts to charity, especially to help reach the 2% threshold for itemized deductions. To qualify for a tax deduction, the charity in question must be a tax-exempt organization. Most tax-exempt organizations list that they are a 501(c) entity, and thus qualify to allow their donors to take the deduction for amounts gifted to the organization. If the organization is not tax-exempt, you will not be able to deduct the amounts you donate to it. Also, donations to political parties are not generally considered tax-exempt, so make sure to check before you list any of those types of contributions as a deduction.
4) Gas, Travel Expenses, Mileage for Charitable Volunteer Time.
Did you spend any time in 2015 volunteering for charity? Not only are funds donated to charity tax-deductible, but any out-of-pocket expenses you incurred during the course of volunteering for charity is also deductible. This could include transportation, mileage, uniforms, and other expenses. To get this deduction, you will need to itemize your deductions.
5) Your Flexible Health Spending Account.
Does your employer allow you to carry over your health flexible spending account? If your employer doesn’t allow carryovers or grace period, the end of the year’s a great time to clean out your flexible spending account to make the most of the pretax dollars you spent funding it. Qualifying medical expenses include a number of items, including acupuncture, ambulance expenses, annual physical exams, bandages, various medical-related home improvement expenses, chiropractors, contact lenses and fluid, dental treatments, diagnostic devices, eye exams, eye surgery, hearing aids, home care, hospital services and numerous others. It can also include a number of specialty medical expenses, including alcoholism treatment, drug addiction treatment, birth control pills, body scans, breast pump equipment and supplies, breast reconstruction surgery, fertility procedures, and a variety of others. For full list, check the IRS’ guidelines for this deduction.
6) Energy Efficient Upgrades.
The federal government has a variety of credits available for individuals who make their homes energy efficient by adding insulation, new windows and doors, or qualified energy efficient heating and cooling systems. Alternative energy sources, including solar energy equipment, also qualify. If you are thinking of upgrading any of your homes heating and cooling systems, now’s a great time to squeeze it in and get the tax credit this tax year.
7) Job-Hunting Costs.
Did you look for new job in 2015? If you spent money on resume preparation, outside placement agencies, subscriptions to job or career websites, printing and mailing search letters, ad placement fees, travel expenses, and telephone calls or other expenses incurred trying to look for a job, these may be deductible. Your job hunt must be in the same field in which you are currently or formerly unemployed. This deduction is not allowed if there was a substantial break between your last job and when you began looking for a new one. Finally, recent graduates cannot use this deduction either. The law only allows you to write off expenses incurred in searching for another position in your current job. To get this deduction, you must itemize your deductions and will be able to receive this deduction if your itemized deductions exceed more than 2% of your adjusted gross income.
8) Get Your Will or Trust Done.
Have you taken steps to provide for your family or children by putting a will or trust into place? If you have siblings, elderly parents, children, a spouse, or spouse or children from a former marriage, you need to have a estate plan in place to account for how your assets should be distributed. The state law rules that take over if no trust or will is in place are often perceived as being unfavorable to family members, and there is no substitute for person’s own decision as to how they would like their estate plan prepared. Now’s a great time to get these tasks done, and legal expenses can often be deducted if you itemize your deductions.
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AXIS Legal Counsel is a Los Angeles, California based law firm representing individuals, business, and entertainment clients in a variety of legal matters in a client-focus, results-driven and no-nonsense approach. Our Individual Rights Practice represents individuals, families, and children on a variety of legal matters, including accidents and injuries, bullying and harassment, defamation and slander, employee rights, civil rights, privacy, lawsuits & disputes, and wills, trusts, and estates.
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