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Even though 2014 is now in the rear view mirror, there are still some actions that can be taken now to potentially reduce your 2014 taxes. Other ideas presented here, if done prior to December 21, 2015, can potentially reduce your 2015 taxes. Let’s remember that patriotism does not require any of us to pay more taxes than we are legally required to pay!

Contributions to IRAs can be made until April 15, 2015 and deducted on your 2014 income tax return. Contributions to a SEP-IRA or other self-employed retirement plan can be made until October 15, 2015 (if you file for an extension) and still be 
deducted on your 2014 taxes. However, related tax rules may limit or eliminate these deductions.

Other actions to reduce your 2015 taxes should be considered now. Don’t wait till the last minute! With the recent volatility in the stock market and the plummeting price of oil, some investments have declined in value. If these investments are held in taxable accounts, it may be a good idea to consider using a strategy known as loss harvesting. By selling positions that are at a loss, it’s possible to reduce your earned income by as much as $3,000 per year. Moreover, additional losses can be used to offset gains resulting from the sale of assets in 2015 and later years. These losses carry over from year to year. However, be cognizant of the wash sales rule, which disallows losses if an investment is repurchased within thirty days of sale. 

On the other hand, you might also consider harvesting gains. If you are in a 15% or lower income tax bracket, the tax rate on long term capital gains is 0%! By intentionally harvesting gains at a 0% rate, the taxed appreciation will forever escape 
income taxation. Plus the wash sales rule does not apply to gains so the investment that was sold can be immediately repurchased! 

If you are drawing social security, consider taking steps to reduce the amount of your social security benefit that is subject to income taxes. Tax advantaged investments and proper gain and loss harvesting, as well as proper planning with respect to distributions from IRAs and qualified plans can potentially reduce the income tax bite on social security benefits. 

323232Christopher J. Maurer, J.D., CFP® is a CERTIFIED FINANCIAL PLANNERTM in Bellaire, with over 20 years of experience. He can be reached at 713-667-4884 or This email address is being protected from spambots. You need JavaScript enabled to view it.. This material is intended for educational purposes only. Please consult your investment professional or tax advisor for specific information pertaining to your situation. Securities and advisory services offered through SagePoint Financial, Inc., member FINRA/SIPC. Insurance services offered through Park Place Financial, which is not affiliated with SagePoint Financial or registered as a broker-dealer or investment advisor. SagePoint Financial, Inc. does not offer tax or legal advice. Legal advice provided by Christopher J. Maurer. 6750 West Loop S, Suite 920, Bellaire, Texas 77401 (713) 667-4884.