Time certainly flies by! The year 2013 has come and gone. Many think that December 31st is the final date for year-end tax planning, but there are some planning actions that you may be able to take in 2014 that are retroactive to 2013.
For example, the final payment of estimated tax is due January 15th, 2014. But if you file your tax return and the full tax is paid by January 31st, there will be no penalty. A word of caution here: the Internal Revenue Service has announced that they will only begin accepting tax returns (paper or electronically) on January 31st. Therefore, the tax return would have to be filed on January 31st for any waiver of underpayment penalties.
Retirement Plans: Contributions to your traditional and Roth IRAs can be made until April 15th for the payment to be attributed to 2013. You even have until April 15th to establish the IRA. Contributions for Keogh, Simple and 401(k) plans can be made up until the due date of the return, including extensions. Thus, you have until October 31st to make a contribution and apply it to the 2013 tax year. However, the Keogh, Simple, or 401(k) plan must be established before the end of 2013 (September 30th for Simple plans), unlike IRAs.
Individual Stock Sales: When you sell stock at a loss and then repurchase the same stock within 30 days, the loss on that sale is disallowed. This is known as a “wash sale”. For a wash sale, the loss is added to the basis (cost) of the repurchased stock. So, if you already sold stock in December 2013 at a loss, consider repurchasing the stock (within the 30-day time frame) in January 2014. When you sell the stock at a later time, your loss could be reduced.
Businesses: If you own a business, NOW is the time to review your 2013 documentation. For example, credit card charges made in 2013 but not paid until 2014 are still deductible in 2013 as long as they meet the requirements as a business expense.
If you use your vehicle for business purposes and you don’t keep a log, write down the odometer reading as soon as possible. Find repair bills from 2013, as well as previous years. Many times the mileage is written on the bill. If you can “reasonably and accurately” determine your business vehicle usage, you might be surprised at how many tax dollars you can save. Not only will this apply for 2013, but it will also develop record keeping habits that can be used in 2014 and beyond.
Sometimes a change in filing status may be advantageous. If your business is organized as a LLC and you are taxed as a Sole-Proprietor, there may be revenue procedures that will permit you to change your filing status retroactively. Please note: this should only be done after considerable study and with the consultation of a professional tax advisor.
The above are some items where post-2013 planning can affect your 2013 tax return. Some of these are steps that you can do yourself, while others involve technical issues in which a tax professional should be consulted.