Year-end Tax Planning Tips for 2015
As the 2016 tax season quickly approaches, businesses and individuals should consider tax compliance strategies for 2015 and the upcoming filing period. December is a good time for taxpayers to contemplate planning moves that will lower their tax bills. Newer tax provisions, such as those from the Patient Protection and Affordable Care Act (PPACA), will be implemented for the first time in 2016. Last-minute planning opportunities have come into play now that lawmakers have passed several popular tax provisions that expired in 2014, and strategies and procedures can be put in place to reap current-year tax savings and to ensure compliance.
PPACA’s impact on businesses this filing season
The first mandatory PPACA filing begins on 2015 forms, due to employees by February 1, 2016. Forms 1094-B, 1094-C, 1095-B and 1095-C are required by employers with 50 or more full-time employees to report the health care costs paid for employees for their individual tax filings and to determine if the employer owes a payment under the shared responsibility provisions of the PPACA.
Business and individual planning opportunities
The following tax extenders have been passed by Congress:
- Businesses can utilize the $500,000 Section 179 expense and 50 percent bonus first-year equipment and furniture tax write-offs
- Older taxpayers can hold off on making required minimum distributions from individual retirement accounts and give it directly to their favorite charity.
Taxpayers should also consider the traditional tax deductions that are currently in place:
- Make your charitable contributions before the year-end and obtain the proper receipts
- Bunch your “miscellaneous” and/or medical expenses for phase-out items to exceed the adjusted gross income floors
- Consider recurring items for businesses and make sure they are being treated consistently with the prior year to maximize any deductions
- Pay state tax before year-end if you’re not subject to Alternative Minimum Tax
- Consider giving long-term appreciated securities to charity instead of cash
For businesses, if you are a cash method taxpayer, consider accelerating deductions and deferring income based on your net income needs, as you have more control over cash items versus accrual method taxpayers. Consider delaying year-end billing so payments aren’t received until 2016.
Final year-end tax tips
If you have some capital loss carried forward, go ahead and sell some winner investments you were going to sell anyway. If you have some gains from early in the year, think about rebalancing your portfolio and selling some losers ‒ but of course be mindful of the 30-day wash sale rules that will disallow the loss recognition if you buy the same security within 30 days before or after you sell it.
If you have questions regarding your year-end tax planning, please contact Darla Hemmann (firstname.lastname@example.org), Anne Ritter (email@example.com) or your Brown Smith Wallace tax advisor.