Do you have a well thought out tax strategy? Are you planning in advance for the best possible returns for not only this year but next year as well?
Doug Mueller, President of Mueller Prost PC, a St. Louis accounting firm, appeared on TNtv to discuss how to save money on future tax returns.
In the part two of a three-part TNtv segment, Mueller discussed the importance of developing a strategic plan to take advantage of optimized tax rates whether you anticipate a good year or down one.
Mueller said those enjoying a good revenue year in 2014 may wish to defer some of their revenue for 2015, if at all possible.
Should the following year not look as promising, a lower average tax rate can be used for the return.
He also emphasized that those facing a down year should not waste their itemized deductions unless they generate enough income to cover them. An annuity payout or IRA distribution can be utilized to optimize the tax rates to your advantage.
Similarly, business owners enjoying a highly profitable year may wish to purchase a large amount of equipment to offset their gains. However he said it may more efficient to spread those purchases out over two years to lessen the average tax rate.
Mueller emphasized the importance of understanding all “carry forward” tax items. These are normally deductions and credits you already paid for but have not benefited from.
These can be obtained from your latest return. Your adviser or software person can download this document for you.
For example, one item which can be carried forward is a capital gains loss. If there is enough of a decline someone can benefit from items such as a current short term stock profit without paying taxes.
Other carry forward items can include investment interest expenses, passive losses, alternative minimum tax credits, a low income housing credit, a loss from real estate, and certain charitable contributions.
Mueller said individuals should analyze any possible carry forward items with their investment adviser to fully understand how they can impact current and future returns.
The key is to think strategically and plan for both now and in the future.
For additional information contact Mueller Prost , CPAs and Business Advisors, at 314-862-2070.
Watch the full episode below. Miss Part 1? Read our recap on the ThrottleNet blog now.