Chamber Post: Business Tip Monday: (BASKING RIDGE, NJ) The Bernards Township Regional Chamber of Commerce provides the following information for consideration. Its always best to consult with a licensed financial adviser or your accountant. Your Investment Portfolio: As the stock market fluctuates, here are some tax items for you to consider this year: Realize losses on stock while substantially preserving your investment position. There are several ways this can be achieved. For example, you can sell the original holdings, and then buy back the same securities after 30 days have passed (to avoid being subject to the wash sale rule). If you have appreciated stock that you are thinking of selling, consider transferring the asset to your children who are not currently your dependents. To the extent their taxable income would be taxed at a regular tax rate of less than 25% (for 2014, taxable income of no more than $36,900 for single returns) they can take advantage of the 0% rate for net capital gains. Consider adjusting your portfolio to buy stocks that pay qualified dividends. These dividends are taxed at the maximum capital gain rate of 15% (20% for taxpayers in the top ordinary income tax bracket). Upper-income taxpayers should analyze whether they should increase their allocation of tax-free municipal bonds and bond funds. Charitable donations: Consider donating property to a charity with the following in mind: If you are planning to make a substantial contribution to a charity, college, etc. consider donating appreciated stock from your investment portfolio instead of cash. The donation of property to charity is equal to the fair market value (FMV) of the donated property. If your donated property has appreciated, you can avoid paying any tax on this unrealized gain. This rule allows for the doubling up so to speak, of tax benefits: a charitable deduction, plus avoiding tax on the appreciation in value of the donated property. No appraisal is required as stocks, bonds and mutual funds have readily ascertainable published values. It is a great time to donate unwanted property such as clothing and household goods to a non-profit organization (must be in good condition). You help the charity and get a tax deduction at the lower of your cost or the current fair market value (FMV). Make sure you obtain a receipt and have documentation to support the FMV since the burden of proof is on you. For any donation over $5,000 you must obtain a formal appraisal. If you do volunteer work for a charity, deductions are permitted for out-of-pocket costs you incur while performing these services. These include: Away-from-home travel expenses while performing services for a charity. Cost of entertaining others on behalf of the charity, such as wining and dining a potential large contributor (but the cost of your meal is not deductible). If you use your car while performing services for the charity, you may deduct a flat 14 cents per mile plus tolls and parking. Invest in Retirement Funds: It is important to save for your future by making contributions to your retirement account(s). You should take advantage of any 401(k) or 403(b) plans offered by your employer. If you have your own business, we will be glad to review your self-employed retirement options. If you are thinking about contributing to an IRA, we can help you decide whether a Traditional or Roth IRA would be best for your financial needs. Your Bernards Township Regional Chamber of Commerce Works for You!
Posted on: Mon, 21 Jul 2014 11:41:14 +0000
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