Beautiful Accounting, it’s what we do

October 29, 2014 · Posted in Uncategorized · Comment 

Well, it is that time of year. The end of 2014 is rapidly approaching and now is the time to take action, manage and potentially mitigate your 2014 tax liability.

We often find that too much of your time and focus is spent on gathering information and having us prepare your return and that inadequate resources are spent on proactive tax planning during the year, which is a primary beenfit of working with Core Performance, as we do an entire tax plan at the beginning of the tax year for all of our tax clients. How much time do you spend discussing with your Accountant and proactively exploring strategies to mitigate your current and future tax liabilities?

Here are 5 simple strategies to explore before year-end.
1) Review your capital gains/loss schedules and explore harvesting capital losses to offset existing realized gains.
2) Review your current year contributions to ensure that you have maximized your allowable tax deductible contributions to qualified retirement accounts such as a 401k, IRA and Defined Benefit Pension Plan.
3) Explore charitable gifting of appreciated assets. Most charitable entities have brokerage accounts which allow for quick and easy deposits of various types of securities.
4) Do not forget to take your Required Minimum Distributions (RMD) from certain types of retirement accounts such as IRAs. The IRS penalty for a missed or late distribution is 50%.
5) Consult with your Accountant or tax professional and have a 2014 tax projection prepared. Incorporate all pertinent gains or losses, dividends and deductions to address how your tax outlook this year differs from future and prior.

In recent years tax rates have changed and new taxes have been created.
Taxes may be your biggest expense. Play it smart. Give us a call, we can prepare your projection in our first meeting. Peter

Does your Accountant focus on your MAGI ( Modified Adjusted Gross Income) ? …. they should

When you meet with Your Accountant, he or she should review with you and Pay close Attention to Your MAGI (Modified Adjusted Gross Income) in order to insure you still Qualify for Tax Breaks. Proper planning with your Accountant now will help avoid getting caught up in an MAGI tax trap.

Take a look at your 2013 tax return after it’s prepared. How close to the edge did you come to losing tax benefits due to tax phase-outs? As you begin your 2014 tax planning, consider the effects of these benefit-limiting provisions, many of which are based on modified adjusted gross income, or MAGI. Knowing how close you are to the “edge” can help you preserve tax breaks for 2014.

A caution: Since the definition of MAGI as applicable to individual phase-outs varies, you might have to choose between conflicting opportunities. For instance, if you have a child in college this semester, the American Opportunity Credit and the Lifetime Learning Credit may be on your mind. Both benefits are education-related, yet the qualifying requirements differ – including the MAGI threshold.
Education benefits. The American Opportunity Credit is a partially refundable, dollar-for-dollar reduction of your tax bill, with a maximum of $2,500 per student. This year the credit starts to shrink when your MAGI reaches $160,000 and you’re married filing jointly ($80,000 when you’re single). It disappears completely when your MAGI is greater than $180,000 for joint returns, and $90,000 when your filing status is single.

For 2014, the Lifetime Learning Credit begins to phase out at $108,000 when you’re married filing a joint return and $54,000 when you’re single. Once your MAGI reaches $128,000 (married) or $64,000 (single), the credit is no longer available.

Other education benefits, such as the above-the-line tuition and fees deduction, also have MAGI limitations. If you qualify, you can claim the maximum annual limit of $4,000 when you’re married filing jointly and your MAGI does not exceed $130,000 ($65,000 if you’re single). The deduction phases out completely when your income reaches $160,000 ($80,000 for singles).

Retirement plans. Phase-outs affect retirement planning too. The deduction for contributions to your traditional IRA is limited when you are eligible to participate in your employer’s plan and your MAGI exceeds $96,000 ($60,000 when you’re single).

And while Roth IRA contributions are not tax-deductible, the amount you can contribute for 2014 begins to phase out when your MAGI reaches $181,000 ($114,000 if you file single).

In addition, the federal “saver’s” credit for making contributions to retirement plans phases out when your 2014 modified adjusted gross income is more than $60,000 and your filing status is married filing jointly ($30,000 for singles).

Other phase-outs. Finally, the exclusion of social security benefits from taxable income also has a phase-out calculated on the amount of your MAGI over the base amount of $32,000 when you’re married and $25,000 when you’re single.

Other phase-outs affecting your 2014 federal tax return reduce personal exemptions, itemized deductions, and the alternative minimum tax exclusion. Contact Peter Cullen at our office for guidance in managing income for maximum tax breaks.

October 2014 Tax Calendar with Due Dates for Small Businesses & Self-Employed

October 8, 2014 · Posted in Uncategorized · Comment 

Attached is our October 2014 Tax Calendar with Due Dates for Small Businesses & Self-Employed. Let us know if you have any questions. Peter

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