Sunday, 29 November 2015 00:53

Year-End Tax Planning

Written by  Peter K. Hoover, CFP®

Ideas for 2015

Peter K. Hoover, CFPAs you look forward to the holidays, it’s essential to set some time to ensure you’re ready for your 2015 tax filing so you won’t miss opportunities to reduce your tax payments.

To help, here are a dozen ideas to consider for your year-end tax planning. Of course, please consult your tax professional or financial advisor about tax-saving strategies.

1. Consider deferring income into 2016 if you’re in a higher tax bracket in 2015.  Income is taxed in the year received.

2. Review the amount of capital gains realized in 2015 and determine if any capital losses are available to offset the gains. If your capital losses exceed gains in 2015, you can deduct up to $3,000 of the losses from taxable income. Talk with your financial advisor about tax-loss harvesting to help minimize taxes.

3. Consider donating appreciated securities to a qualified charity.  This provides a valuable income tax deduction, and you don’t pay any capital gains tax in 2015.

4. For taxpayers over age 70½, make sure required minimum distributions have been withdrawn from all retirement accounts. Withhold monies for paying federal and state taxes to avoid a tax penalty for missing required quarterly tax payments.

5. For working taxpayers, make sure you’ve maximized before-tax contributions to retirement plans.  In 2015, you can contribute $18,000 to retirement plans and $6,000 in additional catch-up contributions if you’re over 50. Check your Flexible Spending Account balance and use it by the end of the year. If you don’t think you’ll use it all, check with your employer to see if your plan allows a roll-over (up to $500) into 2016.

6. If you’re eligible to contribute to a Traditional or Roth IRA, you have until April 18, 2016—the deadline for 2015 tax returns—to do so. 

7. If you have children or grandchildren who have earnings in 2015 and you want to help them start on the road to a secure retirement, consider setting up a Roth IRA for them. Contributions are limited to the lesser of their earnings or $5,500.

8. Consider making some last-minute tax deductions if you’re planning to itemize and you’re in a high tax bracket.  For example, prepay your mortgage payment, make a bigger charitable donation or pay a medical or tax bill early to help increase your deductions in 2015.

9. If your children are over 24 and in the lowest two tax brackets, consider a gift of appreciated securities. You can give up to $14,000 per person annually without filing a gift tax return. If the child sells the securities while in the lowest two tax brackets, there’s no capital gains tax on the sale.

10. If you’re going to invest in a mutual fund in December, inquire about projected timing and size of capital gains distributions from the fund. If you invest right before a capital gains distribution, you’ll be liable for the distribution taxes.

11. If you contribute to a college savings 529 Plan for a relative, you can deduct contributions up to $14,000 per person (you and your spouse) and per beneficiary to reduce Pennsylvania taxes. Income generated in the 529 Plan can be withdrawn tax-free, if the money is used for qualified education expenses.

12. Make sure you pay the correct amount of taxes. If 2015 taxes are more than $1,000, you’ll be subject to a penalty unless 2015 payroll withholdings and estimated tax payments equal the lesser of 1) 90% of your 2015 tax liability, or 2) 100% of your 2014 tax liability (110% if 2014 adjusted gross income exceeds $150,000 for married taxpayers).


Peter K. Hoover, CFP, has more than 30 years of experience as an independent financial advisor. He founded Hoover Financial Advisors, PC, in 2005 and the company has quadrupled since then. HFA was selected by Chester County Chamber of Business & Industry as the 2012 Small Business of the Year. Contact him at 610-651-2777;