Whether you are a business owner or simply want to save money on taxes, here are some ways you can reduce your tax liability this year:
- Reduce your taxable income by making contributions to a 401(k) plan. If you participate in a 401(k) plan, you can contribute up to $17,500 in 2014 if you are under age 50. For those 50 and over, you can contribute an additional $5,500 for a total of $23,000. Don’t have a 401(k) yet? If you are a small business owner, we can help you set up a plan – even if you are the only employee! Visit our Synergy401k.com site for details.
- Contribute to a traditional IRA. In 2014, you can contribute up to $5,500 if you are under age 50. If you are 50 or older, you can add an additional $1,000 for a total of $6,500. Note: Check with your financial advisor or accountant to determine how contributing to more than one retirement plan affects your tax liability.
- Utilize your employer’s flexible savings plan. By contributing to a medical reimbursement account, you can set aside pre-tax money to cover medical bills throughout the year up to a maximum of $2,500. There are financial consequences if you don’t use all of the money in the account, so budget conservatively.
- Track job-hunting and moving costs associated with a new job. Some restrictions apply, but you can deduct job-hunting expenses including travel if you are looking for a new job in the same line of work, provided the costs exceed 2% of your adjusted gross income (AGI).
- Energy tax credits. Homeowners who install qualifying alternative energy equipment – solar energy systems, geothermal heat pumps and small, residential wind turbines – qualify for tax credits through 2016. See EnergyStar.gov for details.
- Deduct charitable giving. Keep track of expenses related to your charitable work as well as mileage (at a rate of $0.14/mile) to deduct on your itemized tax return.
For additional strategies to reduce your tax liability, send us an email or give us a call at 206-386-5455. We can help you evaluate your options and make recommendations to reduce your 2014 tax liability and plan for the new year ahead.
To your wealth,
Joseph M. Maas, CFA, CVA, ABAR, CM&AA, CFP®, ChFC, CLU®, MSFS, CCIM
President of Synergetic Finance
Author of Exit Insight: Getting to “Sold!”