This issue of Perspective was contributed by BJ Soni of Backstrom, Gandhi and Soni, LLP, a Certified Public Accounting firm with offices in Palm Desert and Irvine, California.
BJ gives some great information about how to review your tax situation for 2014. He includes some ideas for Year
End Tax Planning and outlines the impact of the Affordable Care Act. If you’re looking for ways to cut your 2014 tax bill, you might check out his suggestions to see if any fit your individual situation.
Here are just four of the many tips that BJ outlines in his letter:
- Consider a health savings account (HSA). Investing in an HSA gives you a current-year tax deduction while providing a savings account to use to pay out-of-pocket medical expenses currently or in the future. An HSA is not a “use it or lose it” plan. Any funds in the plan at year-end can be used in future years. And be aware that you can fully fund your HSA up to April 15 of the following year.
- Beat the “kiddie tax.” Instead of transferring assets to your children to save for future education expenses, consider contributing to a 529 plan, which can limit exposure to the “kiddie tax” on unearned income.
- Use the new “streamlined” home-office rules. Many self-employed taxpayers declined to claim the home-office deduction because it was so complicated to compute. Now the deduction has been streamlined: It allows those who qualify to deduct $5 per square foot of a home office, up to a maximum of 300 square feet or $1,500.
- Use this year’s annual gift tax exclusion. Finalize any annual gifts you’re making for 2014 by December 31, 2014. There is no gift tax on gifts of up to $14,000 per recipient. Married couples can make joint gifts of up to $28,000 per recipient.
To find out more tax saving tips please read BJ’s letter: Tax Planning 2014.
But hurry; there’s not a lot of time left in 2014 to make a difference in the taxes you’ll pay this year.