Are you ready for next April?
Tax Tip of the Week
December 15, 2014
Are you ready for next April?
Are you prepared for 2015? Here are two things you can do now to get ready for next year — specifically for April 15, when your 2014 federal income tax return is due.
- Add up your income and tax payments for 2014. Year-end is close enough now for you to have a good idea of your total annual income and federal tax withholding. What you're looking for: Check for potential underpayments of tax. For example, make sure you're covered for the 0.9% additional Medicare tax. Your employer is only required to withhold this surtax when your salary exceeds $200,000 — without regard for other income. If you have a second job, or neither you nor your spouse has wages individually in excess of the withholding threshold, you may be underpaid. What to do: Increase your federal income tax withholding for December by updating your Form W-4. Alternatively, make an estimated tax payment.
- Add up your retirement plan contributions for 2014. Contributions to 401(k) plans reduce your taxable income. What you're looking for: Is there an opportunity to make additional contributions? Compare your year-to-date contributions to the 2014 maximum contribution of $17,500 (plus another $5,500 if you're over age 50). Will your current payroll deduction leave you under the allowable limit at year-end? What to do. Ask your employer to increase your contribution from your remaining 2014 paychecks. Another option: Find out whether you can make a lump-sum contribution from a year-end bonus.
Need more tax-saving suggestions to implement before December 31? Give us a call.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
© MC 2014
December 15, 2014
Are you ready for next April?
Are you prepared for 2015? Here are two things you can do now to get ready for next year — specifically for April 15, when your 2014 federal income tax return is due.
- Add up your income and tax payments for 2014. Year-end is close enough now for you to have a good idea of your total annual income and federal tax withholding. What you're looking for: Check for potential underpayments of tax. For example, make sure you're covered for the 0.9% additional Medicare tax. Your employer is only required to withhold this surtax when your salary exceeds $200,000 — without regard for other income. If you have a second job, or neither you nor your spouse has wages individually in excess of the withholding threshold, you may be underpaid. What to do: Increase your federal income tax withholding for December by updating your Form W-4. Alternatively, make an estimated tax payment.
- Add up your retirement plan contributions for 2014. Contributions to 401(k) plans reduce your taxable income. What you're looking for: Is there an opportunity to make additional contributions? Compare your year-to-date contributions to the 2014 maximum contribution of $17,500 (plus another $5,500 if you're over age 50). Will your current payroll deduction leave you under the allowable limit at year-end? What to do. Ask your employer to increase your contribution from your remaining 2014 paychecks. Another option: Find out whether you can make a lump-sum contribution from a year-end bonus.
Need more tax-saving suggestions to implement before December 31? Give us a call.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
© MC 2014
