It’s Taxing Time!

It’s Taxing Time!

Yes, time for 2015 year-end tax prep

BIG PICTURE: Interested in reducing your tax burden for 2015? If so, you’ve got to add one more thing to your year-end holiday gifting and partying! You’ve got shopping, and holiday parties, and family get togethers, and cleaning house, and wrapping and entertainment events, and New Year’s planning, and oh yeah…year-end tax moves. Who has time for those? (Let’s see, if you saved $40 on gifts in 3 hours on Black Friday, what could those 3 hours have net you in tax savings instead?)

Really, tax projections and strategies should be a year-long process.  It’s best done by creating a comparison spreadsheet at the beginning of the year and updating it quarterly.  That way, as income and expenses develop, you’ve got a good handle on what probable tax bracket you’ll be in. This will help you identify strategies and makeAnchor adjustments as you go. If you haven’t been doing this, it may take a little bit of time. But, remember, depending on your tax bracket (between federal and state) every strategy you come up with can save you 5% to 40% on your tax bill.  Now that’s a good discount!

Before you select any strategies, you need a basic calculation to start with. Here are our suggestions:

1. Gather information needed to project income this year and next. You will need pretty much the same material you gather for your accountant (assuming you use one):  all sources of income (including self-employment, capital gains, dividends), itemized deductions, etc.  If you don’t have last year’s list from yourself or your advisor, here’s a simple suggestion from Mike Cates, the tax Professor at the College for Financial Planning, and what he uses in his tax practice: Copy last year’s return and mark what may be different this year and next.  It’s an easy guide and can be put in a spreadsheet.

2. Project income for this year AND next.
Consider whether there will be year-end bonuses, stock grants, unique events such as business sale, home sale with gains over the limit (250k single/500k married over cost basis, if no depreciation), large stock or mutual fund transactions, major capital gains recognition from mutual funds in non-qualified accounts, etc. Software programs such as Tax Act will let you start a return for free to test this out. So, even if you plan on taking your taxes to an accountant, you can use this to help you determine what bracket and strategies may be beneficial for you. Another option is to meet with your tax advisor and have them do the projection and give you a list of strategies.

3.  The idea is to determine tax brackets for both this year and next.  If there’s going to be a difference in brackets, you can use strategies to take advantage of that fact.

4.  Determine how much money you could utilize towards goals to take advantage of strategies.  Remember, just because you can put $5,500 into a Roth IRA, it doesn’t mean you have to fully fund it.  Just $1,000, if that’s all you have, can make a difference!

5.  When you know your tax bracket, estimated taxable income, and goals, we (your Fiscal Fitness Clubs coaches) or your tax advisor can help you figure out which strategies you qualify for and how much they will save.

Follow this link for some goals and tax strategies that can help you get farther down that yellow brick road.

Remember that if you’re a club member, your coach is available to help you with year-end tax strategies. If you’re not a club member, it’s easy to become one. You can even surprise your spouse by making it a gift this holiday season! Call us today at 720-507-8535 or send us an email at

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  • John Reply

    Good tips for year end! Always better to get started in December before your CPA gets busy in January!

    December 8, 2015 at 3:03 pm

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