Five year-end tips tax payers should consider:
1) Stockpile money in tax-advantaged retirement accounts: You have until April 15 to contribute to an IRA, but you must arrange to deduct extra 401(k) plan contributions from your 2015 paychecks or year-end bonus by year end. Deductible contributions will reduce your taxable income and your adjusted gross income.
2) Gift your assets: In 2015, you can give cash, securities or other property valued at up to $14,000 to as many people as you want without filing a gift-tax return or dipping into the credit that will protect your estate from the federal estate tax.
3) Identify shares of stock and mutual funds that you want to sell: 2015 saw quite a bit of volatility in the stock market. If you want to sell shares that you purchased at different times, select those in which you have a high tax basis in order to reduce taxable gain or increase a tax loss that may be used to offset other taxable income.
4) Use your capital losses: If you had capital gains this year, consider offsetting those gains by selling property in which you have unrealized capital losses.
5) Donate to charity: Charitable contributions are an effective last-minute tax deduction, so consider giving appreciated stocks that you've held long term to public charities or donor advised funds to get the full value of a deduction.
The EY Tax Guide 2016 contains these tips and more that taxpayers should focus on before ringing in the New Year. Visit www.ey.com/EYTaxGuide for more tips, suggestions and email alerts for information on up-to-the-minute tax law changes as they happen.
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This news release has been issued by Ernst & Young LLP, member firm of EY serving clients in the US.
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