You have about a month left to impact your 2014 taxes. Tax planning throughout the year is the best way to strategize ways to save on taxes. However, now that we find ourselves up against the clock, there are still some last-minute tips that can be implemented.
1. Make the most of “expensing”
Think about purchasing equipment if you’ll be able to claim the Section 179 deduction for the equipment in 2014. If your total asset purchases for the year are close to the $25,000 limit, you may want to wait to make those purchases until 2015. If you choose to use the Section 179 election for only some of your asset purchases, and depreciate the others, use the election on the assets that have the longest depreciation periods.
2. Accelerate deductions
The day you charge a purchase to a credit card is the day the expense is deductible. If you have expenses that you know you will incur in 2015, you might want to consider paying for these expenses with your credit card by Dec. 31.
3. Set up and/or make your 2014 contributions
Are your retirement plan/health savings accounts in place as you read this? If not, get busy putting a plan in place. If you do, the maximum contribution you can make for traditional and Roth IRAs for 2014 is $5,500 ($6,500 if you’re age 50 or older). For HSAs, its $3,300 for an individual, $6,550 for a family. (If you are over age 55 you can do an additional catch up $1,000 contribution). The IRA and HSA contributions can be made up until the April 15 filing deadline.
Make your donations to your local charity by Dec. 31, and you can pay with a credit card and still take the deduction in 2014. Clean your closets or basement and donate your good-condition, unwanted items to Goodwill or Purple Heart for a tax deduction. Make sure to document your items on your receipt with the declared value.
Dale Hammernik is the owner of Hammernik & Associates in West Allis.