Income Tax Saving Tips for 2014 Returns

Tax Season is upon again upon us. It can be a stressful time for anyone as it seems that there are constant updates to the tax codes and laws that make it nearly impossible for the average American to keep up with them. Fears of overpaying taxes or an IRS audit make the process all the more stressing. The following are some tips to consider as you survive the 2015 Tax Season.

With the new healthcare law, you are required to either:

a) Indicate on your tax return that you and your family had health care coverage throughout 2014;
b) Claim an extension from the health care coverage requirement for some or all of 2014 (via Form 8965); or
c) Make a shared responsibility payment (i.e., tax) for any month you, your spouse, or a dependent were not enrolled in minimum health care coverage.

According to the Tax Increase Prevention Act of 2014, several tax savings advantages have been extended into the 2015 tax season. This pertains to the tax deduction of mortgage insurance premiums, the deduction of qualified tuition and related expenses, and the tax credit for differential wage payments to employees who are active duty members of the Uniformed Services.

One of the newest taxes (originated in 2013) is the Net Investment Income Tax on an individual’s passive income. This additional tax imposes 3.8% on your interest, dividends, annuities, royalties, and rents. As with most taxes, there are planning opportunities to minimize this tax but it requires a plan prior. If you find that this tax is imposed on you for 2014 tax year, then make it a priority to implement a plan to minimize it for 2015.

A commonly missed opportunity to minimize overall tax is to take exemptions on the return that has the highest tax liability. For example, if a parent resides with an adult child, it is possible for the adult child to list the parent on the child’s tax return as a dependent. Presumably, the child is in a higher tax bracket and the additional exemption ($3,950.00) would result in overall less tax. Same analysis for adult children that are still in school or living at home.

These are all helpful tips to keep in mind when filing your 2014 income tax return. Remember, don’t pay more in tax than your “fair” share. Feel free to call on us if you have any questions or need assistance with your 2014 tax return.

Bryson Law Firm: Suwanee, Georgia. Attorney Richard Bryson has over 15 years experience with investment entities, elder law, estate planning, probate, wills and trusts, tax planning, tax dispute resolution, asset protection, personal injury, business formation, real estate transactions, and Medicaid and VA planning. Contact our Gwinnett County law firm at 404-909-8842.