Financial News

Year-End Tax Planning For Individuals

by Santoro & Sinnamon, Certified Public Accountants


As the 2014 year-end quickly starts to approach, it is time to consider doing some tax planning to ensure you are lowering your 2014 tax bill as much as possible.  This article contains a list of tax planning moves you can make before the end of the year that just might save you some valuable tax dollars.

1. General Tax Planning Rule:  As a general rule, it is often recommended that you postpone income into 2015 and accelerate deductions into 2014.  This philosophy will generally reduce your 2014 tax bill.  With that being said, it is important to consider what changes might be happening to your 2015 income and expenses, depending on your circumstances, the reverse of the general rule may serve you better.

2. Delay Incoming: Examples include delaying bonus payments from your employer, selling stock with a gain after year-end, deferring receipt of installment note income, deferring collection of rental income, deferring collection of payment for self-employed services, etc.

3. Accelerating deductions:  Examples are paying or maybe prepaying medical expenses, real estate taxes, mortgage interest, charitable contributions, investment fees, certain education expenses for those that take the education deduction (vs the credit), state income taxes, etc.

4. Stock Losses:  Consider realizing stock losses before the end of the year if you have gains to offset.  This is a good time to meet with your financial advisor to discuss year-end moves.

5. Roth IRA Conversions:If you are interested in moving some of your current traditional-IRA money into a Roth IRA and you are eligible to do so, review your portfolio for low preforming investments and consider converting.  This will increase your adjusted gross income for the year but may save you taxes in the long run.

6. Roth IRA Conversion Re-characterization: If you decided to convert to Roth IRA earlier in the year and now want to change your mind, you can still back out of the transaction.  Contact your financial advisor before the end of the year to make this change.

7. Energy Efficient Improvements: A homeowner may be eligible for an energy tax credit if they have certain improvements done to their home before year-end, such as extra insulation, installing energy savings windows or certain HVAC energy savings systems.

8.Qualified Small Business Stock:  If you are thinking of investing in stock of a small business, there are great tax advantages when selling such stock but this stock needs to be purchased before the end of the year.  Be sure to discuss the details of such a transaction with a tax professional.

9.Required Minimum Distributions: At the age of 70 ½ the requirement begins to take required minimum distributions from your IRA or 401(k) plan.  Penalties for failure to do so are 50% of the required distribution amount.  You may be able to delay the first distribution into the following year.  Contact your financial advisor or tax professional for assistance.

10.Gifts: Each year you can make a gift to someone for a certain exclusion amount and not have to worry about gift and estate taxes.  For 2014 you can give up to $14,000 per person free and clear.

11.Flexible Spending Accounts:  Although it is too late to change your 2014 amount,consider the need to increase your 2015contribution if you set aside too little this year.

12. Health Savings Accounts:  If you become eligible for a HSA late in the year, consider making the full year’s worth of deductible contributions for 2014.

 These year-end moves are right for some individuals but not for all.  This is when having a tax professional by your side can be very beneficial as they will review your personal situation, guide you through what moves to make and can estimate your tax bill so there are no surprises when filing your 2014 tax return.Understanding your tax situation before the end of the year allows you to take some control over your 2014 tax bill and feel prepared for filing your taxes.


This article has been provided to give you a general overview, you should always consult a tax advisor as individual circumstances may vary.

Should you have any questions, please contact Lorena Sinnamon, CPA, at Santoro & Sinnamon Certified Public Accountants at one of our locations:

Commerce Corner Building            or      Bayside Village Building
   43 South Road, Suite 200                      51 Mill Street
   Deerfield, NH 03037                              Wolfeboro NH 03894.

Call 603-569-5255, or email:, or visit us at and sign up for our newsletter.














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