Thoughts from the ZEN OF WEALTH

Still Time to be Tax-Smart for 2015

At Zen of Wealth, we are all about being Tax-Smart.

Managing your Adjusted Gross Income (AGI) and your itemized deductions are important to optimizing your long term tax strategy.

There is still much you can do between now and December 31.

Here are a few action ideas.

Above the AGI line

1.     Talk with your accountant to see where you stand for 2015.

2.     Max out your 401(k) contribution.  At a minimum, if your employer offers a match, contribute enough to receive the full match. 

3.     If you have a Health Plan with a Health Savings account, top off your HSA contribution.

4.     If you have a use it or lose it Medical Flex Spend plan, use it.

5.     Analyze your investment portfolio.  Take losses to offset any realized short term gains.  Net Capital losses can be deducted up to $3,000 per year to reduce AGI.  Such a deduction, will reduce any non-qualified dividends and taxable interest income. 

Itemized Deductions

If you itemize deductions, look to accelerate deductions into 2015, or delay them into 2016, depending on your tax situation.

1.     Accelerate medical expenses if they will exceed 10% of AGI (7.5% if over age 65).

2.     Accelerate a mortgage payment – to get the extra interest expense into 2015.

3.     Likewise, accelerate payments for real estate tax and state income tax.

4.     Increase your charitable contributions. Make sure you get a valuation receipt if donating personal items.

5.     Charitable donation of Appreciated stock is a powerful Tax-Smart strategy

Special Bonus Idea

IRA to Roth Conversion

There are circumstances where it makes sense to convert some of your IRA into a Roth IRA, paying a tax on the current converted value, in exchange for never paying a tax on the Roth. 

For example many oil and gas stocks have taken a beating this year.  You could convert these stocks to your Roth, pay a tax on the lower (current) value of the assets and benefit from any future appreciation totally free of any income tax.

HAPPY HOLIDAY SEASON & HAPPY NEW YEAR 

chester mayer rothman, founder     Contact chester directly at  201-232-2826 or by email at zenofwealth@gmail.com

Always consult with your accountant and attorney.                                                                                                      

Zen of Wealth llc, is a wealth strategy consultancy. We advise families businesses and non-profits on strategies to increase and protect their income and wealth. Always consult your accountant and attorney.

Being Tax-Smart is an important component of wealth creation.