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Business

Your Finance: Using fall to prepare for spring tax time

When everyone else is loading backpacks and shopping

When everyone else is loading backpacks and shopping the school sales, I know it is time for me to dive back into TurboTax. Credit: iStock

When everyone else is loading backpacks and shopping the school sales, I know it is time for me to dive back into TurboTax.

That's because fall is the perfect time to plan my approach to the tax forms I won't file until next April. By using the next few months strategically, I may be able to reduce the amount I have to pay then.

This is a particularly easy year to do tax planning, because the rules haven't changed much from 2013. If you use a tax professional, it's a good time to ask for a fall review and some advice.

Here are some of the actions to take now and through the end of the year to minimize your 2014 taxes.

Feed the tax-advantaged plans. Start by making sure you're putting the maximum amount possible into your own health savings account, if you have one associated with a high-deductible health plan. That conveys maximum tax advantage for the long term. Also boost the amount you are contributing to your 401(k) plan and your own individual retirement account if you're not already contributing the maximum.

Plan your year-end charitable giving. You probably have decent gains in some stocks or mutual funds. If you give your favorite charity shares of an investment, you can save taxes and help the charity. Instead of selling the shares, paying capital gains taxes on your profits and giving the remainder to your charity, you can transfer the shares, get a charitable deduction for their full value and let the charity -- which is not required to pay income taxes -- sell the shares. Start early in the year to identify the right shares and the right charity.

Take losses, and some gains. If you have any investment losses, you can sell the shares now and lock in the losses. They can help you offset any taxable gains as well as some ordinary income. You can re-buy the same security after 31 days, or buy something different immediately. In some cases you may want to lock in gains, too. You might sell winners now if you want to make changes to your holdings and have the losses to offset them.

Look at the list of deductible items and plan your approach. Many items, such as union dues, work uniforms, and investment management fees are deductible once they surpass 2 percent of your adjusted gross. Advisers often suggest taxpayers "bunch" those deductions into every other year to capture more of them. Check out the Internal Revenue Service's Publication 529 at irs.gov to view the list, and try to determine if you want to amass your deductions this year or next. Then shop accordingly.

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