Category: Tax
Tags: charitable deductions, charitable gift planning, capital gains, Retirement, inheritance


3 Tax Planning Steps for the New Year

Posted on: November 27th, 2015
2016 tax planningAs the end of the tax year nears, many taxpayers try to maximize deductions in an effort to minimize their tax bills. Some common planning strategies include contributing to retirement accounts, structuring gifts to family, and making charitable donations. Outlined below are a few alternative planning steps to consider in the New Year:

  1. Review new and pending tax laws. The federal tax brackets and adjustments for 2016 were recently released. Our tax attorneys provide an overview of the 2016 tax inflation adjustments here. The standard deduction, annual gift exclusion, and taxable income from estate and trusts are just a few of the many areas affected by the new tax laws. Additionally, before addressing 2015 tax year matters, individuals in North Carolina might need to file amended tax returns for the 2014 tax year. The General Assembly’s decision for income tax rule adjustments took longer than originally anticipated and was not decided until March 31, 2015, which means individuals subject to the new rules who filed state returns prior to this date might owe penalties as a result. Learn more about filing an amended North Carolina tax return.
  2. Double-check records of charitable contributions. Bank records, written receipts, and other evidence of contributions should be carefully organized. Although pending rules might change reporting requirements for charities, donors should still document contributions to have clear proof in the event they are asked to substantiate their charitable deductions.
  3. Capital gain and loss adjustments. If an individual’s taxable investments result in a  loss, a loss amount up to $3,000 can offset ordinary income. Loss in excess of $3,000 can be carried forward to future tax years. Individuals should forecast asset transfers and investment decisions with a tax attorney to determine the best approach to maximize offsetting capital gains. One approach might involve making an unfavorable tax move in one year in order to maximize future tax benefits.

Tax planning should take into account major changes to one’s life and family as well. Marriage, divorce, new children, estates of deceased relatives and inheritances they passed on—each of these might affect one’s taxes. Although some of these situations might be unpredictable, an effective way to alleviate tax debt is to adjust tax strategies to planned life changes. This comprehensive approach can help to maximize marital deductions, structure 529 college savings plan contributions, or prompt an individual to create trusts for inherited asset protection.

By Attorney Samantha Reichle

 
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