Wright, Lori

English

UNH Scholars' Repository

University of New HampshireUniversity of New Hampshire Scholars' RepositoryMedia Relations Administrative Offices12-12-2005Before You Ring In 2006, Remember These TaxTipsLori WrightFollow this and additional works at: https://scholars.unh.edu/newsThis News Article is brought to you for free and open access by the Administrative Offices at University of New Hampshire Scholars' Repository. It hasbeen accepted for inclusion in Media Relations by an authorized administrator of University of New Hampshire Scholars' Repository. For moreinformation, please contact nicole.hentz@unh.edu.Recommended CitationWright, Lori, "Before You Ring In 2006, Remember These Tax Tips" (2005). UNH Today. 1535.https://scholars.unh.edu/news/153510/2/17, 11(14 AMBefore You Ring In 2006, Remember These Tax TipsPage 1 of 2http://www.unh.edu/delete/news/news_releases/2005/december/lw_051212taxtips.htmlRelated LinksWhittemore School ofBusiness andEconomicsBefore You Ring In 2006, Remember These Tax TipsContact: Lori Wright603-862-0574UNH Media RelationsDec. 12, 2005DURHAM, N.H. – As the new year approaches, taxpayers may want to consider severalstrategies to help ease their tax burden and make April 15 less of a day of doom and gloom. John Colliander, adjunct professor in accounting and an expert on taxation at UNH’s WhittemoreSchool of Business and Economics, suggests taxpayers consider several strategies.Capital Gains and LossesPerhaps the most relevant year-end tax strategy relates to capital gains and losses. Net capitallosses are only deductible up to $3,000, but taking capital losses on underperforminginvestments can be used in full to offset capital gains the taxpayer may have realized during theyear. Conversely, if the taxpayer has realized capital losses in excess of $3,000, he or she mightconsider cashing in on some capital gains, which can be absorbed against these excess capitallosses.Coverdell Education Savings AccountsYear-end is a good time to review Coverdell Education Savings Accounts (formerly educationIRAs). “Annual nondeductible contributions are limited ($2,000 for 2005) so if you miss a year,it is gone,” Colliander says.IRA ContributionsThe contribution limits for 2005 is $4,000 for both a Roth and traditional IRA, with an additional$500 catch up contribution for taxpayers at least 50 years old. However, these contributions arenot year-end sensitive in that contributions for 2005 may be made as late as April 15, 2006.Certain income phase out limits apply which may limit or eliminate an individual's ability tocontribute to these plans.Deferring Income or Accelerating ExpensesDeferring income or accelerating expenses (e.g. charitable contributions, prepayment of statetaxes, etc.) is always a strategy, but it is important to compare 2005 marginal tax brackets withanticipated 2006 marginal tax brackets. “For example, an individual who expects to retire in2006 may want to double up his/her contributions in 2005 when he is in a higher bracket. Theconverse is also true: low income earners (e.g. students who expect big jobs in 2006) who do notitemize may want to defer contributions and other deductible expenses until 2006 if they expectto earn more and can possibly itemize their deductions. You get no benefit from otherwiseitemized deductions if you take the standard deduction,” Colliander says.10/2/17, 11(14 AMBefore You Ring In 2006, Remember These Tax TipsPage 2 of 2http://www.unh.edu/delete/news/news_releases/2005/december/lw_051212taxtips.htmlThe Katrina Emergency Tax Relief Act of 2005The Katrina Emergency Tax Relief Act of 2005 removes the 50 percent of Adjusted GrossIncome (AGI) limit on charitable contributions to Katrina victims, and raises that limit to 100percent of Adjusted Gross Income.Editors: John Colliander can be reached at colliander@cfbpa.com or 603-433-9997.

Before You Ring In 2006, Remember These Tax Tips

https://scholars.unh.edu/cgi/viewcontent.cgi?article=2538&amp;context=news

Before You Ring In 2006, Remember These Tax Tips

Abstract

Similar works

Full text

Available Versions

UNH Scholars' Repository