Many retirement plan contribution limits increase slightly in 2015; thus, you may have opportunities to increase your retirement savings:

Other factors may affect how much you can contribute (or how much your employer can contribute on your behalf). For example, income-based limits may reduce or even eliminate your ability to take advantage of IRAs. For more information on how to make the most of your tax-advantaged retirement-saving opportunities in 2015, please contact us.

On Dec. 16, the Senate passed the Tax Increase Prevention Act of 2014 (TIPA), which the House had passed on Dec. 3. TIPA extended many valuable tax breaks that expired at the end of 2013 — but only through Dec. 31, 2014.

Here are three types of extended tax breaks that you may want to take action on before year end:

1. Small business stock gains exclusion. Gains realized on the sale or exchange of qualified small business (QSB) stock acquired in 2014 will be eligible for an exclusion of 100% if the stock has been held for at least five years. So you may want to consider purchasing QSB stock by Dec. 31.

2. Tax-free IRA distributions to charities. Taxpayers age 70½ or older can make direct contributions from their IRA to qualified charitable organizations without incurring any income tax on the distribution, up to $100,000 for the 2014 tax year. You can even use the distribution to satisfy a required minimum distribution. But the distribution must be made by Dec. 31.

3. Depreciation-related breaks. Businesses can enjoy larger 2014 deductions if they invest in property that qualifies for enhanced Section 179 expensing, 50% bonus depreciation, and/or accelerated depreciation for qualified leasehold-improvement, restaurant and retail-improvement property. But the property must be placed in service by Dec. 31.

Additional rules and limits apply to these breaks, so please contact us to find out which ones you can benefit from.

The 2014 gift tax annual exclusion allows you to give up to $14,000 per recipient tax-free without using up any of your lifetime gift tax exemption. If you and your spouse “split” the gift, you can give $28,000 per recipient.

The gifted assets are removed from your taxable estate, which can be especially advantageous if you expect them to appreciate. That’s because the future appreciation can avoid gift and estate taxes.

The exclusion is scheduled to remain at $14,000 ($28,000 for split gifts) in 2015. But that’s not a reason to skip making annual exclusion gifts this year. You need to use your 2014 exclusion by Dec. 31 or you’ll lose it.

The exclusion doesn’t carry from one year to the next. For example, if you don’t make an annual exclusion gift to your daughter this year, you can’t add $14,000 to your 2015 exclusion to make a $28,000 tax-free gift to her next year.

We can help you determine how to make the most of your 2014 gift tax annual exclusion.

To take a 2014 charitable donation deduction, the gift must be made by Dec. 31, 2014. According to the IRS, a donation generally is “made” at the time of its “unconditional delivery.” But what does this mean? Is it the date you, for example, write a check or make an online gift via your credit card? Or is it the date the charity actually receives the funds — or perhaps the date of the charity’s acknowledgment of your gift?

The delivery date depends in part on what you donate and how you donate it. Here are a few examples for common donations:

Check. The date you mail it.

Credit card. The date you make the charge.

Pay-by-phone account. The date the financial institution pays the amount.

Stock certificate. The date you mail the properly endorsed stock certificate to the charity.

Many additional rules apply to the charitable donation deduction, so please contact us if you have questions about the deductibility of a gift you’ve made or are considering making. But act soon — you don’t have much time left to make donations that will reduce your 2014 tax bill.

Appreciating investments that don’t generate current income aren’t taxed until sold, deferring tax and perhaps allowing you to time the sale to your tax advantage. Review your year-to-date gains and losses now to see if selling any additional investments by Dec. 31 can reduce your 2014 tax liability.

For example, if you’ve cashed in some big gains during the year, look for unrealized losses in your portfolio and consider selling them to offset your gains. Or if you have net losses, consider selling some appreciated investments, because the losses can absorb the gain. If net losses exceed net gains, you can deduct only $3,000 ($1,500 for married filing separately) of the net losses against ordinary income, though you can carry forward excess losses indefinitely.

If you bought the same investment at different times and prices and want to sell high-tax-basis shares to reduce gain or increase a loss to offset other gains, be sure to specifically identify which block of shares is being sold.

For more ideas on how to reduce taxes on your investments, contact us. We can provide strategies that are right for your situation. But don’t wait — most strategies must be implemented by Dec. 31 to reduce your 2014 tax liability.

If you’re looking to reduce your 2014 tax bill, you may want to consider purchasing a business vehicle before year end. Business-related purchases of new or used vehicles may be eligible for Section 179 expensing, which allows you to expense, rather than depreciate over a period of years, some or all of the vehicle’s cost.

The normal Sec. 179 expensing limit generally applies to vehicles weighing more than 14,000 pounds. The limit for 2014 is $25,000, and the break begins to phase out dollar-for-dollar when total asset acquisitions for the tax year exceed $200,000. These amounts have dropped significantly from their 2013 levels. But Congress may still revive higher Sec. 179 amounts for 2014.

Even when the normal Sec. 179 expensing limit is higher, a $25,000 limit applies to SUVs weighing more than 6,000 pounds but no more than 14,000 pounds. Vehicles weighing 6,000 pounds or less are subject to the passenger automobile limits. For 2014, the depreciation limit is $3,160.

Many additional rules and limits apply to these breaks. So if you’re considering a business vehicle purchase, contact us to learn what tax benefits you might enjoy if you make the purchase by Dec. 31.

Smart timing of deductible expenses can reduce your tax liability, and poor timing can unnecessarily increase it. When you don’t expect to be subject to the alternative minimum tax (AMT) in the current year, accelerating deductible expenses into the current year typically is a good idea. Why? Because it will defer tax, which usually is beneficial.

One deductible expense you may be able to control is your property tax payment. You can prepay (by Dec. 31) property taxes that relate to this year but that are due next year, and deduct the payment on your return for this year. But you generally can’t prepay property taxes that relate to next year and deduct the payment on this year’s return.

Don’t forget that the income-based itemized deduction reduction returned last year. Its impact should be taken into account when considering timing strategies.

Not sure whether you should prepay your property tax bill or what other deductions you might be able to accelerate into 2014? Contact us. We can help you determine what steps to take before year end to reduce your 2014 tax bill.

With the midterm elections now behind us and control of the U.S. Senate set to shift parties in January, it’s time to revisit the valuable tax breaks that expired at the end of 2013. Will the lame-duck 113th Congress revive any of them for 2014? Or will nothing happen until the 114th Congress goes into session after the new year begins?

Here are some of the breaks in question:

• The deduction for state and local sales taxes in lieu of state and localincome taxes,
• Tax-free IRA distributions to charities,
• 100% bonus depreciation,
• Enhanced Section 179 expensing,
• Accelerated depreciation for qualified leasehold improvement, restaurant and retail improvement property,
• The research tax credit,
• The Work Opportunity tax credit, and
• Various energy-related tax incentives.

For you to benefit on your 2014 tax return from any breaks that are revived, you might need to take additional action by Dec. 31. So it’s a good idea to consider what you’d need to do so you can act quickly if applicable breaks are indeed revived. If you have questions about what you can do to prepare, please contact us.

The long-term capital gains rate is 0% for gain that would be taxed at 10% or 15% based on the taxpayer’s ordinary-income rate. If you have loved ones in the 0% bracket, you may be able to take advantage of it by transferring appreciated assets to them. The recipients can then sell the assets at no federal tax cost.

Before acting, make sure the recipients you’re considering won’t be subject to the “kiddie tax.” This tax applies to children under age 19 as well as to full-time students under age 24 (unless the students provide more than half of their own support from earned income).

For children subject to the kiddie tax, any unearned income beyond $2,000 (for 2014) is taxed at their parents’ marginal rate rather than their own, likely lower, rate. So transferring appreciated assets to them will provide only minimal tax benefits.

It’s also important to consider any gift and generation-skipping transfer (GST) tax consequences. For more information on transfer taxes, the kiddie tax or capital gains planning, please contact us. We can help you find the strategies that will best achieve your goals.

Typically, it’s better to defer tax. Here are two timing strategies that can help businesses do this:

1. Defer income to next year. If your business uses the cash method of accounting, you can defer billing for your products or services. Or, if you use the accrual method, you can delay shipping products or delivering services.
2. Accelerate deductible expenses into the current year. If you’re a cash-basis taxpayer, you may make a state estimated tax payment before Dec. 31, so you can deduct it this year rather than next. Both cash- and accrual-basis taxpayers can charge expenses on a credit card and deduct them in the year charged, regardless of when the credit card bill is paid.

But if you think you’ll be in a higher tax bracket next year, consider taking the opposite approach — accelerating income and deferring deductible expenses. This will increase your tax bill this year but can save you tax over the two-year period.

These are only some of the nuances to consider. Please contact us to discuss what timing strategies will work to your tax advantage, based on your specific situation.