Here are some tried and true - and some new - tax planning strategies.
Medical expenses: Defer payment of medical expenses if you will turn age 65 in 2015, as the AGI threshold will decrease to 7.5% from the new 10%. In the case of married individuals, the 7.5% floor applies if either spouse is age 65, regardless of the age of the other spouse, for tax years 2013 through 2016.
Gifting: Maximize figting styrategies. When gifting, remember:
Cash gifts may be better if the recipient is in a high tax bracket;
Give appreciated assets to individuals who are in lower tax brackets;
Do not gift assets that have a FMV lower than the donor's basis;
Consider medical or education expenses gifts to avoid gift tax. Payments directly to the medical provider or to the university or other qualified educational organization are not counted toward the annual gift tax exclusion or the lifetime credit;
Make noncash charitable contributions buy December 31;
Insure that the January mortgage payment is received by the lender by December 31, if you are considering increasing rthe current year home mortgage interest deduction; and
Contribute to a 529 plan, which allows a taxpayer to donate up to five time the $14,000 annual gift tax exclusion in 2014.
Kiddie Tax: The Kiddie Tax deters shifiting income to children in the hopes of paying tax at the child's lower tax rate. Remember, the chil's income is included in the parent's computation of the 3.8% HI tax. However, a child pays tax on his or her investment income up to $2,000. So, smaller gifts to the children can potentially reduce the overall tax.
Bunching: Time-tested bunching strategies still work. accelerate or defer deductions so that you alternate years of itemizing with years of taking the standard deduction. for married couples filing a joint return, it is expecailly critical to keep an eye on changing tax law:
Accelerating or deferring charitable contributions;
Accelerating or deferring property tax payments; and
Accelerating or deferring state estimated tax payments.
In bunching, it's important to consider AMT, particularly with regard to taxes paid. If you are paying AMT, push property tax payments and state estimated tax payments into the following year.
Charitable contributions: Consider contributing appreciated assets such as stock, rather than cash, to a charitable organization. You as the taxpayer will generally receive a deduction of the full FMV and be relieved of tax on the capital gain.