Using the fall to start preparation for tax season

Chicago residents may be interested in some tips for starting on tax preparation in the fall. These tips can help to maximize a person's tax deductions for the year.

While autumn is not usually the time that people think of tax filings, it may be a great time to start doing so. There are steps that can be taken during the end of the year that can help to minimize a person's tax burden for the coming April. First, taking a look at the person's potential deductible purchases can be helpful. Because expenses like union dues and fees for investment management are only deductible when they go above two percent of a person's adjusted gross income, it may help to bundle multiple years' expenses together. Next, stock investments should be examined for any gains and losses. Shares that took a loss could be sold during the taxable year; these losses may then be deducted in April and the shares can be repurchased after 31 days.

Contributions to health savings accounts and IRAs should be maximized for the year in order to take full advantage of the tax savings that they can bring. Charitable contributions should also be addressed before the end of the year. One expert recommends giving the charities investment shares rather than cash, as this can avoid the payment of any capital gains taxes that would accrue after selling the shares and giving a cash donation to the charity.

Understanding the tax law implications of these activities can be difficult without the help of a professional. A tax law attorney may be able to assist in many tax-related issues including IRS dispute and preparing the appropriate tax filings for a business.

Source: FOX Business, "Fall Means it's Time to Hit the (Tax) Books", Linda Stern, September 12, 2014

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