Mid- Year Tax Planning Ideas

Jun 18, 2015

The earlier in the year you have an opportunity to talk to your accountant about 2015 tax planning opportunities, the more likely you will be able to take advantage of them before the filing season begins. More often than not, accountants only talk to clients at year-end and there have been changes in your life that can affect tax planning. Some of the areas to consider are education planning, retirement, marriage or even divorce.

Education planning is important to parents and their college-bound children. The cost of college is increasing at an alarming rate. The tax-favored 529 plan is an option for both parents and grandparents in planning for tuition. The 529 plan contributions accumulate untaxed and if spent on qualified education expenses are never subject to income tax.

Retirement planning can be beneficial to help you achieve your long-term goals. The maximum 401k contribution for 2015 is $18,000, an increase of $500. The catch-up contribution for those over 50 years old has increased to $6,000. If you are thinking of retiring before being eligible for Medicare, the cost of health care coverage needs to be considered.

Family16When clients are about to get married, financial issues need to be discussed. Review all financial accounts and decide whether they should be jointly registered. The future spouse will need to know where investment accounts are and how to access. Clients should update wills and beneficiaries or even speak with an attorney about a prenuptial agreement. Health insurance and life insurance coverage should be updated. There is also the Medicare surtax on higher income earners. The threshold for being subject to the 3.8 percent surtax on net investment income is $250,000 for married filing jointly. Also, making any needed adjustments to tax withholding to help ensure there is not a huge bill on April 15 or a large overpayment.

Then there is the unfortunate reality of clients getting divorced. The same items discussed when getting married will apply. Financial accounts separated, wills changed and tax planning for a single income. The client may have to restrain spending in the short-term future until matters are settled.

Some clients might come out of a mid-year tax review session without needing to change anything. Even so, it is a reminder that your accountant is another valuable resource in planning for your future.

By: Diane Cook, Accountant

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