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Hurry! Save Money on Your Taxes before 2015 Ends

Come January 1, the options to lower your 2015 individual tax return are severely limited.

Once 2016 begins, you can only make contributions to certain retirement and health-savings accounts to decrease the amount you owe. Consider the following before popping that New Year’s champagne:

Manage life changes. If you experienced a big life event such as marriage, divorce, birth, death or retirement, you should plan for tax season before the year ends. A significant increase or decrease in income calls for similar action.

Be aware of your adjusted gross income (AGI). Be very aware! For affluent people, certain taxes and phase-outs apply once your AGI reaches a specific limit:

  • The net investment income and Medicare surtaxes apply after a married couple surpasses $250,000 (or $200,000 if you’re single).
  • Itemized deductions are limited and the personal exemption of $4,000 begins to phase out at the $309,000 level for married couples and $258,250 for singles.

Many taxpayers try to keep their AGI as low as possible by making pretax contributions to IRAs, 401(k)s and other health, dependent-care or retirement plans. Keep in mind Schedule A deductions, such as mortgage interest and charitable giving, won’t lower AGI because these deductions occur after AGI is calculated.

Coordinate investment gains and losses. Try to offset capital gains with capital losses. Investors should concentrate on gains and losses in taxable accounts instead of tax-sheltered plans to offset surtaxes more efficiently. For example, some investors sell securities to show losses, and then purchase a similar investment.

Per the rules for “wash sales,” use of a loss is postponed if the investor repurchases a nearly identical investment within 30 days prior to or after a sale. However, since these investing rules don’t apply to gains on securities, an alternative to absorb losses could be to sell and repurchase the securities right away.

Be charitable. If you’re in the spirit of giving this holiday season, be smart about your gift-giving. During tax season, you’ll thank yourself. Consider donating appreciated assets—such as shares of stock—to a charity instead of cash. You could get a deduction for the full market value while avoiding tax on capital gains.

If you’re 70-and-a-half or older, the IRA Charitable Transfer is available to you. The gift can help lower Medicare premiums and taxes on Social Security payouts.

By donating up to $100,000 of IRA assets directly to a charity—and counting the amount as a part of your required annual withdrawal—you can feel good about where you donate your money, and benefit yourself financially at the same time.

If you need year-end tax planning help, contact the experienced tax accountant team at Patrick & Robinson CPAs: (904) 396-5400 or

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