Depending on when you read this, there may be just 45 days of 2014 left to enjoy (or endure, depending on your perspective). As if you already don’t have enough to do over the next few weeks, there a few time-sensitive money (and other) moves you might want to consider making before the year is up.
1. Boost retirement plan contributions
The best way workers can save on taxes due next April 15th is to increase their contributions to their 401ks and 403bs. For 2014 the limits are $17,500, plus an additional $5,500 for those over 50.
Each dollar you save into one of these plans will cut from 10 to 40 cents off of your 2014 income tax bill. ## 2. Buy some savings bonds You can purchase up to $10,000 face value of Series I savings bonds per person per calendar year, so if you haven’t bought your limit already, go to www.treasurydirect.gov to establish an account and make the purchase (set aside some time for the initial process). The rate paid on the bonds is tied to the Consumer Price Index, and can be adjusted every May and November. Currently the interest rate is 1.48%, and that amount is exempt from state income taxes.
3. Sell your “down” investments
If you own any stocks, bonds, or mutual funds outside of that have declined in value and aren’t in retirement accounts or annuities, you should consider selling some or all of those positions before the end of the year. Any losses realized will first be used to offset taxable capital gains this year, and then up to $3,000 of the loss can be used to offset taxable income for 2014. “Unused” losses this year can be carried forward into future years until the losses are exhausted.
4. Save for college
If you have a child, grandchild, or other kid who is dear to you, you should consider depositing money in to a 529 college savings plan. You can use just about any state’s plan, but if you make qualifying contributions to Wisconsin’s EdVest plan, you can reduce your 2014 Wisconsin state income tax bill. Go to savingforcollege.com to research all of the 529 plans, or head directly to the EdVest plan at edvest.com for more information.
5. Convert your IRA to a Roth IRA
If you’re in low tax bracket this year (and think your tax bracket might be higher in the future) you should consider converting some or all of your IRAs to Roth IRAs, especially if you can do so while remaining in the 15% federal income tax bracket. You can check to see where 2014 taxable income might end up by going to H R Block’s Tax Estimator (tinyurl.com/estimatetax). And if you convert and decide it wasn’t a good idea next year, you can “undo” the conversion before you file your taxes.
6. Give a little
No matter where you’re at in life, there’s a good chance that you have it better than some (or most). So if you can find something to spare, ‘tis the season to do so. Contact a favorite charity or institution and ask what they need. If you’re interested in giving money, consider donating appreciated assets (such as stock or mutual fund shares). You will get a deduction, and the charity can sell the asset without paying capital gains taxes. Best of all, neither you nor the charity needs to find and figure out the cost basis of the asset. But you don’t have to restrict your giving to bigger bucks towards traditional organizations. Call a local church or school and see if they are aware of any families who could use a little cash right now. Finally, ask your older friend or neighbor if they need you to run some errands, an extra hand around the house, or maybe even just a few hours of visiting during the holidays. The time you spend won’t be tax-deductible, but the satisfaction you’ll get will be worth more than anything Uncle Sam can provide.