‐ 1 ‐ PEERSONAL TAX T YEAR EEND TIPS ou will need to o know your taxx rate. Business By Design caan help you prroperly To know the taax savings of any strategy, yo determine the e value of a ded duction or tax strategy by pre eparing a yearr‐end tax review w for your situ uation. All of th he following sugggestions should d be discussed with Business By Design to eensure maximu um tax value and proper implementatio on. A NOTE ON REDUCING YOUR Y TAXES: • Anyth hing you can do to lower your income usually is a good thing w when considerinng tax plaanning. • HOWE EVER, sometime es a case can be made for kee eping your incom me higher in onne year, an d postponin ng deductions to a later year, if you think neext year’s incom me d be much highe er. would • The only way to properly plan is to haave a tax review w prepared by Buusiness by Desiggn. We will help you dete ermine the best course of action n. TIP #1: MN M TAX PAYM MENTS: • Your M MN income tax p payments can be e a Federal tax d deduction. • NOTE: If you are subjject to Alternative Minimum Tax (AMT), you m ay not want to ppay your MN inccome taxes in th he year the AMT w will apply. TIP #2: STOCK LOSSEES: • You caan deduct up to $3,000 of stock losses each yeaar. • If you u have more thaan $3,000 in sto ock losses, the balance b will be ccarried forward to 2014 or useed to off‐set futture capital gains. • Capitaal losses can be ccarried forward for 20 years. • Real E Estate capital gains can offset otther capital losse es. TIP #3: ZERO PERCENNT FEDERALL CAPITAL GAAIN RATE: • Consid der taking a capital gain in 2014 4. • If you are in the 15% income tax braccket or less, yourr Federal capitall gain tax rate is Only state tax will apply. 0%. O • If you are in a 35% taxx bracket or lower, you will have e a 15% Federal capital gain tax rate, plus your sstate rate. EMBER: If your income is over $250K (MFJ) orr $200K (Single)) – you will havee an additional 3.8 Medicare tax on your • REME investtment income. TIP #4: CHARITABLE CONTRIBUTTIONS: • All donations must be e to a “Qualified Non‐Profit” orgganization. • Cash Contributions: You will need to be sure you u have a cancelled check for your cash contriibutions or a recceipt. • Non‐C Cash Contributio ons: A good way to pick up some tax savinggs is to go throuugh your storagge and donate any unused item ms (clothing, fu urniture, etc.) YYou can deductt the fair marke et value of these e items donated. Businesss By Design, Inc. | 4918 Lincolnn Drive, Edina, MN 55436 | ph: 952-3992-1200 | faxx: 952-392-12201 ‐ 2 ‐ TIP #5: INCREASE YOUR MORTGAGE INTEREST DEDUCTION: • If you make your January mortgage payment in 2014, you will increase your mortgage interest paid in 2014. • The interest you paid thru 12/31 will be on your 2014 form 1098 Mortgage Interest. TIP #6: PRE-PAY REAL ESTATE TAXES: • You can pay some or all of your 2015 real estate taxes to use as a deduction in 2014. • NOTE: If you are subject to Alternative Minimum Tax (AMT), you may not want to pay your Real Estate in the year the AMT will apply. TIP #7: HEALTH SAVINGS ACCOUNT CONTRIBUTIONS: • Max out your contribution to your Health Savings Accounts (HSA) and have your medical expenses be deductible for 2014. • Family Plan Max contribution is $6,550. Age 55 and over, Max contribution is $7,550. • Individual Plan Max contribution is $3,300. Age 55 and over, Max contribution is $4,300. • Must be in a “High Deductible” insurance plan by 12/1/14. Please contact your insurance provider to see if you are eligible for an HSA account. ($1,250 Deductible for Single, $2,500 Deductible for Family Plans) • HSA must be opened by 12/31/14. Last day to fund is 4/15/15. • If you have an HSA you should at the minimum contribute to the amount of medical expenses you had during the year 2014. You can reimburse yourself for the amount of expenses you had for the year. • For more information on the benefits of an HSA please contact Business By Design. TIP #8: IRA CONTRIBUTIONS: • Max contribution is $5,500. If you are over 50, your Max contribution is $6,500. • IRA must be opened and funded by 4/15/15. TIP #9: ROTH IRA CONTRIBUTIONS: • Max contribution is $5,500. This is a non‐deductible contribution. • If you are age 50 and over, your Max contribution is $6,500. • ROTH IRA must be opened and funded by 4/15/15. • ROTH IRA Phase out starts at $181K ‐ $191K (MFJ). If you make more than this, you can not contribute to a ROTH IRA. TIP #10: ROTH IRA ROLLOVERS AND CONVERSIONS: • There are no income limits on IRA rollovers to ROTH. • Consider converting some or all of your IRA’s to a ROTH if your income is low in 2014. Business By Design, Inc. | 4918 Lincoln Drive, Edina, MN 55436 | ph: 952-392-1200 | fax: 952-392-1201