Year End Tax Planning Strategies 2014

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Webinar
Year-End Tax Planning Strategies
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This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.

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Year-End Tax
Planning Strategies
Barbara O’Neill, Ph.D., CFP®, AFC, CHC
Rutgers Cooperative Extension
oneill@aesop.rutgers.edu

Webinar Objectives
• Increase participants’ knowledge about income tax
filing process
• Increase participants’ knowledge of tax planning
strategies
• Provide update of 2014 and 2015 tax law changes
• Provide information about income tax resources
• Help participants save money on income taxes

Webinar Topics
• Federal income tax rates
• Tax deductions and credits
• Tax filing process
• Tax avoidance vs. tax evasion
• Tax record-keeping
• Common tax errors
• 10 year-end tax planning strategies
• Tax planning resources

Question #1
What questions do people have
about income taxes at the end of
a calendar year?

2014 Income Tax “Issues”
• Impact of incorrect ACA law credits on tax refunds
• Tax identity theft (expanded IRS efforts; 1.6 million affected in early 2013)
– http://www.irs.gov/uac/Newsroom/IRS-Combats-Identity-Theft-and-Refund-Fraud-on-– http://www.bostonglobe.com/news/nation/2014/02/16/identity-theft-taxpayer-information-• Higher tax bills for wealthy taxpayers due to
“backdoor” taxes (e.g., reduced exemptions and itemized deductions)
• Net investment-income tax of 3.8% (higher incomes)
• $500 unused FSA carry-over to 3/15 of next year

Background:
Major Taxes Paid in the U.S.
 Taxes on Purchases
– Sales tax and excise tax (e.g., gas, cigarettes)
 Taxes on Property
– Real estate property tax
– Personal property tax
 Taxes on Wealth
– Federal estate tax
– State inheritance tax
 Taxes on Earnings
– Income tax and Social Security tax 3-11

Background: The Progressive
Nature of Federal Income Tax
• Progressive tax – Takes a larger
percentage of income from high-income
taxpayers than low-income taxpayers.
– Federal income tax
• Regressive tax – Takes a decreasing
percentage of income as income increases.
– State sales tax

Background: Marginal Tax Rate Is
Applied to the Last Dollar Earned
• Marginal Tax Bracket (MTB) – One of the six
income-range segments that are taxed at
increasing rates as income goes up
• Marginal Tax Rate – The tax rate applied to your
last dollar of earnings
– Effective Marginal Tax Rate – describes a person’s true
marginal tax rate on income after including federal, state,
and local income taxes as well as FICA tax (Social
Security and Medicare)

Background: Federal Tax Rates
Tax Rates Are:
• Established by Congress and change periodically
• Based on many things including:
• Amount and type of income
• Filing status - e.g. married, joint, single
Marginal rates: 10%, 15%, 25%, 28%, 33%, 35%, and
39.6%
• Tax rate on last dollar of income earned
• Beginning in tax year 2013, the tax rate of 39.6% was added for
individuals whose income exceeds $400,000 ($450,000 for married
taxpayers filing a joint return)
• Rutgers fact sheet: http://njaes.rutgers.edu/money/taxinfo/
14

2014 Tax Rate Schedules
Figure 1. 2014 Tax Rate Schedules
Single-Schedule X
Taxable Income Over But Not Over Marginal Tax Rate
$0 $9,075 10%
9,075 36,900 15%
36,900 89,350 25%
89,350 186,350 28%
186,350 405,100 33%
405,100 406,750 35%
406,750 --- 39.6%Head of household-Schedule Z
$0 $12,950 10%
12,950 49,400 15%
49,400 127,550 25%
127,550 206,600 28%
206,600 405,100 33%
405,100 432,200 35%
432,200 --- 39.6%Married filing jointly or Qualifying widow(er) -
Schedule Y-1
$0 $18,150 10%
18,150 73,800 15%
73,800 148,850 25%
148,850 226,850 28%
226,850 405,100 33%
405,100 457,600 35%
457,600 --- 39.6%Married filing separately - Schedule Y-2
$0 $9,075 10%
9,075 36,900 15%
36,900 74,425 25%
74,425 113,425 28%
113,425 202,550 33%
202,550 228,800 35%
228,800 --- 39.6%
2014 Tax Rate Schedules
Single-Schedule X
Head of Household-Schedule Z
Married Filing Jointly or Qualifying
Widow(er) - Schedule Y-1
Married Filing Separately - Schedule Y-2

Background:
Average Tax Rate
Average tax rate = total tax due divided by
taxable income
Average tax rate < marginal tax rate
Example:
–Taxable income = $40,000
–Total tax bill = $6,344
–Average tax rate = 15.9%
» ($6,344 / $40,000) 3-16

Background: Tax Credit Versus
Tax Deduction
$100 Tax Credit
Reduces Your Taxes by $100
$100 Tax Deduction
Amount Your Taxes are Reduced
is Based on Your Tax Bracket
3-17 Example: $5,000 x .25 mtb = $1,250 of tax savings; $3,750 net cost

Background:
Types of Deductions
Deduction = An amount subtracted from gross income to
reduce the amount of income subject to tax.
•Standard Deduction- Amount established each year by tax
code; no need to itemize deductions; amount is based on a
taxpayer's filing status, age, etc; no receipts needed
•Itemized Deduction- Specific amounts spent on certain goods
and services throughout the year; allowed deductions are
outlined by the IRS and include such expenditures as mortgage
interest, state and local taxes, charitable donations
www.investopedia.com/terms/i/itemizeddeduction.asp#ixzz1zxopAxpP
www.money-zine.com/Calculators/Mortgage-Calculators/Mortgage-Tax-
Deduction-Calculator/ (Mortgage tax deduction calculator)
18

Background: Itemizing Required
for Charitable Gift Benefits
• You can give thousands of dollars, but if you claim
the standard deduction on your tax return, charitable
gifts will do you no tax good.
• You must itemize expenses on Schedule A to
deduct charitable donations.
• Donors' deductions are limited to 50% of adjusted
gross income; rollover of excess for up to 5 years
http://www.bankrate.com/finance/taxes/get-a-tax-deduction-
for-charitable-giving-1.aspx

Who Itemizes Deductions?
• The percentage of tax filers who itemize increases as we
move up the income scale
• The value of deductions depend on a taxpayer’s tax bracket.
Example: a $1,000 deduction is worth $150 in the 15%
bracket, and $396 for someone in the top 39.6% bracket.
Overall, only
about a third of
taxpayers itemize
deductions
http://www.irs.com
/articles/it-worth-it-itemize-
your-taxes

Background: Refundable and
Non-Refundable Tax Credits
• Refundable: When tax credits are greater than the
amount of tax you owe, the IRS sends you a tax
refund for the difference
– Example: Earned Income Tax Credit (EITC)
• Non-Refundable: Credit can’t be used to increase
your tax refund or to create a tax refund when you
wouldn’t have already had one. In other words, your
savings cannot exceed the amount of tax you owe.
– Example: Child and Dependent Care Expenses Credit

Background: Earned
Income Tax Credit
• A special subsidy credit paid to low-income workers
with qualifying child(ren), or in some cases, workers
with no children
• Maximum EITC credit is
– $490 for a family with no children
– $3,305 for a family with one qualifying child
– $5,460 for a family with two qualifying children
– $6,143 with 3+ qualifying children

EITC Income Limits (2014)
Adjusted gross income (AGI) must each be less than:
•$46,997 ($52,427 married filing jointly) with three or more
qualifying children
•$43,756 ($49,186 married filing jointly) with two qualifying
children
•$38,511 ($43,941 married filing jointly) with one qualifying child
•$14,590 ($20,020 married filing jointly) with no qualifying
children

Child Tax Credit
• A $1,000 credit is available for each qualifying child
under the age of 17 (at the end of 2014) claimed as
a dependent
• The Child Tax Credit is non-refundable
http://www.irs.gov/uac/Newsroom/The-Child-Tax-
Credit-May-Cut-Your-Tax

Child and Dependent
Care Credit
• Available for workers who pay employment-related
expenses for the care of their child(ren) while they
are working, seeking work, or in school full time
• The total expenses that may be used to calculate the
credit are capped at $3,000 (for one qualifying
individual) or at $6,000 (for 2+ qualifying individuals)

Retirement Savings Contribution
Credit (Saver’s Tax Credit)
• Singles with adjusted gross incomes of $30,000 or
less and joint filers earning $60,000 or less can claim
this credit (in 2014)
• Credit is 10%, 20%, or 50% of every dollar
contributed to an IRA or employer-sponsored
retirement savings plan, up to $2,000, depending on
income range
http://www.irs.gov/Retirement-Plans/Plan-Participant,-
Employee/Retirement-Topics-Retirement-Savings-
Contributions-Credit-(Saver%E2%80%99s-Credit)

Recommended Resource
“The Bible”:
Annual Limits Relating to Financial Planning
(College for Financial Planning):
http://www.cffpinfo.com/annual-limits/

Background:
Determining
Your Tax
Liability
Source: Kapoor, Dlabay, & Hughes
(2013). Focus on Personal Finance

Key 2014 Tax Numbers
• Personal exemption: $3,950
• Standard deduction: $6,200- single;
$12,400- mfj
• Exemption and itemized deduction AGI
phase-out ranges: $254,200-$376,700-
single; $305,050-$427,550- mfj
• SS earnings limit below FRA: $15,480

Background: Completing the
Federal Income Tax Return
 Filing status and exemptions
 Income
 Adjustments to income
 Tax computation
 Tax credits
 Other taxes (such as from self-employment)
 Payments (total withholding and other payments)
 Refund or amount you owe
• Refunds can be directly deposited to a bank account
• Payments may be directly debited from a bank account
 Signature (most common filing error) 3-30

Background: Tax-Rate
Schedules and Tax Tables
• Tax-Rate Schedules – Used by persons with
a taxable income of $100,000 or more;
requires a mathematical computation to
determine tax liability
• Tax Tables – Used to look up one’s tax liability
according to tax filing status and income range

Federal
Income
Tax Table
Filing Status
Taxable Income Tax Liability
32

Background:
Alternative Minimum Tax (AMT)
– Paid by taxpayers with high amounts of certain
deductions and various types of income
– Designed to ensure that those who receive tax
breaks also pay their fair share of taxes
– Has increasingly been affecting less affluent
taxpayers, especially in high-tax states (e.g., NJ)
– A high proportion of long-term capital gains to
ordinary income can trigger the AMT
3-33

Background: Tax Avoidance
and Tax Evasion
Tax Avoidance (Minimization)
– Legitimate methods to reduce your tax obligation to
your fair share but no more
(e.g., deductions, credits, tax-deferred/tax-free investing)
– Decisions related to purchasing, investing, and
retirement planning are heavily affected by tax laws
(e.g., home, IRAs)
– Keep good tax records (W-2s, 1099s, receipts, copies)
Tax Evasion
– Illegally not paying taxes you owe, such as not
reporting all income or overstating deductions
3-34

Question #2
Who are some high profile tax
evaders in U.S. history?

Background: Form W-4
Determines Taxes Withheld
• Typically completed on first day of job
• Employer uses information on W-4 to determine how much
tax to withhold
• Recommended practice: review number of withholding
allowances each year
• Can add “extra” tax withholding amounts through employer to
cover “marriage tax penalty” and/or investment,
unemployment, or consulting income

38
Background: Impact of W4
Form on Net Pay
0 allowances = max taxes deducted* =
Smaller take home pay =
Larger tax refund
+ allowances = less taxes deducted =
Larger take home pay =
Smaller tax refund
NOTE: Taxpayers can add extra withholding beyond “0” allowances; e.g., +$50 more)

Background:
Tax Refunds
Is it a good idea to get a big tax refund
($500 +) at the end of the year?
Cons:
 Taxpayer is not earning interest on the money
 Government has had an interest-free loan
Pros:
Some people see it as discipline to save a large lump sum
BIGGEST ISSUE: Tax refund identity theft:
https://www.youtube.com/watch?v=Ensq6NRtzpk
39

Question #3
What is your opinion about tax
over-withholding?

Background: IRS Limitations
on Tax-Related Actions
According to IRS, IF YOU Limitation
Owe additional tax 3 years
Do not report income that you should and it is
more
than 25% of the gross income shown on your
6 years
return
File a fraudulent return No limit
Do not file a return No limit
File a claim for credit or refund after you filed
your return
The later of 3
years or 2 years
after tax was
paid.
File a claim for a loss from worthless securities
7 years
41

Background: Record Retention
• How Long to Keep Financial Records
(Bankrate)
– http://www.bankrate.com/finance/personal-finance/
how-long-to-keep-financial-records.aspx
• Keep investment records to document capital
gains and the tax basis of the investments
(length of investment ownership + at least 6 years)
42

Strategy: Keep Tax
Records a Long Time
• Never discard records relating to
– Home purchases
– Contributions to retirement accounts
– Retirement account rollovers and conversions
• When in doubt about keeping a tax record, do
NOT throw it out!

Background: Taxable vs. Tax-
Deferred Investing
27,600
31,300
48,300
58,600
75,800
98,800
112,200
157,900
160,300
244,700
$250,000
$200,000
$150,000
$100,000
$50,000
$0
10yrs 15yrs 20yrs 25yrs 30yrs
Taxable Returns (at 28%)
Tax-Deferred Returns
Garman/Forgue, PERSONAL FINANCE, Fifth Edition, Tax-
Sheltered Returns are Greater than Taxable Returns (Illustration:
8% Annual Return and $2,000 Annual Contribution)
Calculator: http://www.calcxml.com/do/inv07

Background:
Common Tax Errors
• Claiming wrong number of dependents
• Failing to itemize deductions
• Forgetting charitable gifts made via payroll deduction
and texting
• Overlooking medical expenses
• “Double-dipping’ on education benefits
• Reporting an erroneous investment cost basis
• Not including previous year’s state tax refund
• Not signing the tax return (if paper filed)

Question #4
What other income tax errors
have you or your clients made?

Background:
Tax Deduction Timing
• Donations and payments for deductible expenses
must be made by the end of the tax year for
which you want to claim a deduction
• If you put a check dated Dec. 31 in the mail by
that day, you are OK
• Donations and payments charged by year's end
to a credit card are also OK, even if you don't pay
the card's bill until the next year
http://www.bankrate.com/finance/taxes/get-a-tax-deduction-for-charitable-giving-
1.aspx

Year-End Tax Planning
“Year-end tax planning is essentially a matter
of projecting your GROSS income for the
year and looking for ways to minimize your
TAXABLE income.”
Source: 2014 Year-End Tax Planning Guide
(Newkirk Publications):
http://www.newkirk.com/pdf_forms/low_review.pdf

Taxpayers Still Have Time!
• BAD News: People SHOULD have started
2014 tax planning on 1/1/14
• GOOD News: It is NOT too late to take some
effective tax savings measures for 2014
– Some actions need to be taken by 12/31 (e.g.,
charitable gifts)
– Some actions need to be taken by 4/15/15 (e.g.,
IRA contribution for 2014)

General Tax Planning
Strategies to Minimize Taxes
If you expect Then you should Because
The same or a
lower tax rate next
year
Accelerate
deductions into this
year
Greater benefit to
higher rate
The same tax rate
next year
Delay income into
next year
Delay paying taxes
A higher tax rate
next year
Delay deductions Greater benefit
Accelerate income Taxed at lower rate
3-50

10 Year-End Tax
Planning
Strategies

1. Estimate 2014 Annual Income
• Wages, salary, tips, bonuses, retroactive pay
• Interest, dividends, capital gains
• Business income
• Unemployment benefits
• Alimony
• Taxable Social Security benefits
• Taxable RMD withdrawals from IRAs, annuities, TSP,
401(k)s, etc.
• Taxable refunds of state and local income taxes
• Other income (e.g., gambling, prizes, etc.)

Why Bother to Do This? To See
If You Are On the Cusp of…
• Falling into a higher tax bracket
• Having to pay alternative minimum tax (AMT)
• Losing a tax benefit (e.g., EITC)
• Being able to itemize deductions
• Having inadequate tax withholding
• Other?

2. Review Lifestyle Changes
That Affect Income Taxes
• Marriage/remarriage
• Divorce
• Widowhood
• Getting or losing a job or freelance work
• Birth, adoption, or emancipation of a child
• Retirement and receipt of Social Security
• Getting or paying off a home mortgage
• Other?

3. Review Tax Withholding So Far
• You can pay taxes through payroll withholding or by
making estimated tax payments
• If you did not pay enough tax throughout the year,
either through withholding or estimated tax payments,
you may have to pay a underpayment penalty
• Most taxpayers can avoid this penalty if they owe less
than $1,000 in tax (after subtracting withholdings and
credits) or if they paid at least 90% of the tax for the
current year, or 100% of the tax shown on the return
for the prior year, whichever is smaller
http://www.irs.gov/taxtopics/tc306.html

IRS Tax Withholding
Calculator
http://apps.irs.gov/app/withholdingcalculator/
Asks questions about filing status, number of jobs,
tax credit eligibility, age (if someone is over 65),
income (wage and non-wage), tax withholding to
date and in one paycheck, anticipated deductions

Based on the information you previously entered, your anticipated income tax for 2014 is $27,434. If you do
not change your current withholding arrangement, you will have $30,400 withheld for 2014 resulting in an
overpayment of $2,966 when you file your return. If you want your withholding to more closely match your
anticipated tax, adjust your withholding on a new Form W-4 as follows:
•For the only job you entered (which has a projected salary of $140,000): 18 allowances.
•Check the “Single” box on your Form W-4
Assuming this recommendation is in effect for the rest of 2014 your withholding will approximately equal your
anticipated tax, and any refund or balance due should be less than $25.
Tip Be sure to review your withholding at the beginning of 2015 (or any time there is a change in your tax
situation). If you follow the above recommendation and do not check your withholding at the beginning of next
year, your withholding for 2015 might be incorrect.
Filing Status: single Someone else can claim you as a
dependent: no
Number of jobs: 1 Number of dependents: 2
Will you be 65 or older 1/1/2015: no Are you blind: no
Child & dependent care credit
qualifying persons: 0
Child & dependent care credit
expenses: $0
Eligible children for child tax credit: 0 Other credits: $0
Total salary: $140,000 Total plans and cafeteria: $0
Total tax withheld to date: $25,000 Total tax withheld from last check: $900
Total earned income other than salary:
$10,000 Nonwage income: $0
Adjustments to income: $800 Total itemized deductions: $15,000
Projected additional withholding if you
do nothing: $5,400
NOTE: This
calculation
was done
on 10/3/14

4. Review and Revise W-4 Form
With Employer for 2015 Taxes
• Downloadable form:
http://www.irs.gov/pub/irs-pdf/fw4.pdf
• Consider changes in income, deductions,
filing status, lifestyle, etc.

5. Review and Revise Form
With Employer for 2015
Retirement Plan Savings
• Authorize a certain percentage of your pay to be
saved up to maximum IRS or employer maximum limit
(whichever is smaller)
• Save at least the amount required for a maximum
employer match (if available)
• Caution: It is possible for high net worth people to
over-save in tax-deferred plans; RMD concerns

Employer Tax-Deferred
Retirement Savings Plans
• 457 deferred compensation plans
• 403(b) plans
• 401(k) plans
• Thrift Savings Plan (TSP)
– $17,500 maximum contribution (in 2014)
– $5,500 extra catch-up contribution ($23,000 max)
for workers age 50+ by year-end

Benefits of Tax-Deferred
Employer Retirement Plans
• Earnings on investment grow tax-deferred until
withdrawal
• Savings deducted directly from paycheck
• Wide investment selection (generally)
• Contribution made with before-tax dollars
– Example: $50,000 salary, $5,000 TSP or 403(b) plan
contribution, $45,000 taxable income (federal income tax)
• Employer matching for many 401(k) plans and some
403(b) plans (e.g., private colleges)

Tips For Funding a Tax-Deferred
Employer Retirement Plan
• Invest as much as you possibly can
• “Kick it [contribution] up a notch” when pay
increases or household expenses (e.g., child care,
car loan) end or decrease
• Diversify across asset classes
• Avoid market timing
• Choose low-expense investments with good
historical performance

6. “Bunch” Itemized Deductions
• When people find they don’t have enough deductions
to exceed the standard deduction, but they are close
• Shift payment dates of some deductible items from
one year to another to increase itemized deductions
– Items that can be “bunched” include
• Medical expenses
• Real estate taxes
• State and local income taxes
• Personal property taxes
• Home mortgage interest
• Charitable contributions (cash and property donations)
• Employee business expenses exceeding 2% of AGI

Employee Business Expenses
• Can only deduct unreimbursed costs
• Must be able to itemize deductions
• Subject to 2% of AGI “floor”
• Need to file IRS Form 2106
• Must be able to prove expenses
– Mileage log/calendar/expense forms
– Receipts

Business Tax Deductions:
Local Travel
• Standard mileage rate: 56 cents per mile (minus
employer reimbursement)
• Alternative: deduct actual car expenses
– gas, insurance, oil, license, registration, parking,
garage rent, tolls, repairs, tires, lease payments,
depreciation, etc.
• Travel between 2 workplaces: deductible
• From home to (any) job: never deductible

Business Tax Deductions:
Distant Travel
• Can deduct job travel away from home
• Must be away from tax home for > ordinary work day
and need sleep/rest
• Only 50% of unreimbursed meal costs are
deductible
• Can deduct laundry/cleaning bills and baggage tips

Business Tax Deductions
On Schedule A, you can deduct:
– Union dues
– Professional association dues
– Fees for professional licenses (e.g., AFC)
– Research expenses (as part of job duties)
– Job search expenses in present occupation
– Subscriptions to professional journals and trade
magazines

Alternative to
Non-Deductible
Business Expenses
Consider self-employment/consulting/freelance work
options to fully write off business expenses
otherwise subject to the 2% of AGI limit
– Same field as “day job” specialty area

Schedule C:
Used for
Self-
Employment
Income and
Expenses
69

7. Check Your Investments
• Do you have capital gains for this tax year?
• Do you have any unrealized losses in other assets to
sell before year-end to offset gains?
• If not, do you need to send estimated taxes for the
gain (if extra withholding is not done through a job)?
– Fourth quarter estimated taxes are due by 1/15/15
• Declaring capital losses, while emotionally difficult,
can help offset capital gains and reduce tax liability

8. Make Flexible Spending
Account Decisions
• FSA: allows workers to put away tax-free money for
qualified medical expenses
• Plan to spend down account by 12/31
• Can carry over up to $500 to next year (IRS rule) or
employer may allow rollover of all unused funds (but
is not required to do so)
• Consider 2015 changes in FSA contribution
• Resource: http://www.irs.gov/pub/irs-pdf/p969.pdf

9. Consider Charitable Donations
• Donations can be as late as a check mailed or a credit card
charged on 12/31/14
• Gift must be to a qualified 501(c)(3) organization
• Donation of stock or non-cash property at fair market value
• If gift of $250+, must get letter from the qualified organization
noting the amount of cash or a description of property
contributed, and whether the organization provided any goods
or services in exchange for the gift
• No income tax deduction for gifts to relatives but you can gift
up to $14,000 without gift tax

10. Maximize “Above the Line”
Deductions to Reduce AGI
• Traditional IRA contributions (if qualified by income)
– Have until tax filing date next year to contribute
• Health savings account contributions
• Moving expenses
• Alimony payments
• Retirement plan savings for self-employed persons
• Health insurance for self-employed persons
• Health insurance
• Interest on student loans

Other Tax Tips
• Check AMT status BEFORE you take a capital gain
or other large income source
– AMT Assistant: http://www.irs.gov/Businesses/Small-Businesses-&-
Self-Employed/Alternative-Minimum-Tax-(AMT)-Assistant-for-Individuals
• Accelerate or defer AMT vulnerable items
– State income taxes and local property taxes
– In high tax states, losing these deductions hurts!!
• Comply with required minimum distribution rules for
qualified retirement plans (if age 70 ½ +)

Question #5
Any other year-end income
tax tips?

2015 Personal Finance
Announced Changes
• 1.7% COLA for Social Security recipients in 2015
• 2015 maximum taxable earnings: $118,500 ($117,000 in 2014)
• 2015 earnings limit under FRA: $15,720 ($15,480 in 2014)
• Increase in elective deferral limit for employer retirement
savings plans to $18,000 ($17,500 in 2014)
• Increase in catch-up contribution limit for workers age 50+ to
$6,000 or $24,000 total ($5,500 and $23,000 in 2014)

Military-Specific Tax
Information
• Free tax preparation software from Military OneSource
• Free tax centers at military installations in the U.S. and
abroad (have quality review process; layers of support)
– Fewer limitations on services provided than VITA tax sites
– Includes legal assistance and amended tax return assistance
• Continued use of TSP; increase pay % contribution in 2015?
• Liberal home sale rules: can suspend the “2 out of 5 year”
test period for up to 10 years: http://www.figuide.com/military-tax-benefit-
sale-of-primary-residence.html
• Reduced taxable income if deployed to a combat zone

Recommended Resources
IRS Publication 17 (Your Federal Income Tax):
http://www.irs.gov/pub/irs-pdf/p17.pdf
2014 Year-End Tax Planning Guide (Newkirk):
http://www.newkirk.com/pdf_forms/low_review.pdf
AAII Personal Tax Planning Guide (published
annually): http://www.aaii.com/journal/article/the-individual-investors-
guide-to-personal-tax-planning-2013

Minimize Income Taxes
Through Proper Planning
Famous Quote by Judge Learned Hand (United
States judge and judicial philosopher, 1872-1961):
"Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's taxes.
Over and over again the Courts have said that there is nothing
sinister in so arranging affairs as to keep taxes as low as possible.
Everyone does it, rich and poor alike and all do right, for nobody
owes any public duty to pay more than the law demands."

Key Take-Aways
• ACA law health insurance tax subsidies will
complicate 2014 income taxes
• Tax refund identity theft is increasing significantly
• Tax credits are refundable or non-refundable
• The Savers Credit helps low/moderate income
families save for retirement
• Tax-deferred investments postpone income taxes
• Tax planning can legally lower income taxes

Key Take-Away Applications
• Refer people to local Navigators and VITA sites for assistance
with ACA-related tax questions
• Encourage people to file taxes early and avoid a large tax
refund that can be held up by thieves
• Encourage people to take advantage of tax credits that they
qualify for
• Teach the benefits of the Retirement Savers Credit and how to
“find” money to save
• Teach the benefits of tax-deferred plans; fund them personally
• Teach and follow the 10 tax planning strategies

Questions? Comments?
Experiences?

Evaluation Survey and CEU link
• Go to: https://vte.co1.qualtrics.com/SE/?
SID=SV_aYkhaXgtYAAwszr
• Complete the webinar evaluation.
• If you would like to receive CEUs, click on the link
shown at the end of the evaluation.
• Enter the 2 passwords and your email address.
• The CEU survey closes December 12, 2014 at 6 p.m. ET.
• You will receive a Certificate of Completion from
fsawebinars@gmail.com on Friday, December 19, 2014.
• Use this Certificate to get your CEUs from AFCPE.

Next Personal Finance Webinar
Developing a Personal Asset
Allocation Strategy
Tuesday, January 13, 11 a.m. ET
• https://learn.extension.org/events/1715
• Speaker: Dr. Michael Gutter
• 1.5 CEUs for AFC-credentialed participants

Military Families Learning
Network
Find all upcoming and recorded webinars covering:
Family Development
Military Caregiving
Personal Finance
Network Literacy
http://www.extension.org/62581

Year End Tax Planning Strategies 2014

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Year End Tax Planning Strategies 2014

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