Tax Planning for Individuals 2014 - Part 2
December 1, 2014
This is the second installment of considerations for 2014 year-end tax planning for individuals. Below are additional issues taxpayers may wish to address in the days between now and December 31.
Aggregate medical expenses, if possible, into tax years when the total will exceed 10% of your Adjusted Gross Income (7.5% if 65 years of age or older).
College Education Planning
Plan for including certain college related expenses on your tax return, if applicable. The American Opportunity Credit has been extended through 2017. This credit is available for the first four years of post-secondary education at an eligible institution and provides a $2,500 credit per student per year for qualifying expenses. The credit is subject to certain Adjusted Gross Income limits. Married taxpayers must file jointly to obtain the credit.
Consider shifting college saving funds held in a taxable account to a Section 529 plan in order to reduce taxable income. Section 529 plans such as the Virginia College Savings Plans can be used to save for college expenses with appreciation in these accounts being tax-free.
Deduct any contributions made to fund Virginia College Savings Plans and receive a Virginia deduction from income of up to $4,000 per contract or per account for the tax year. Any unused amount may be carried over to future years until the purchase price has been fully deducted. Taxpayers over age 70 may deduct the entire amount paid to the Virginia College Saving Plan during the taxable year.
Although more limited than in previous years, certain energy incentives continue to be available under the Residential Energy Efficient Property Credit until 2016. These incentives provide for the installation of certain energy efficient systems such as solar water heating, solar electric, geothermal heat pump, and small wind energy. The credit amount is generally 30% of the cost and is restricted to equipment for the taxpayer’s personal residence.
Please contact us at 804.270.6980 if you have any questions or would like to discuss tax planning opportunities.