GREENSBORO, NC -- In honor of the ACC Tournament, 2WTK is all about brackets this week. It's not all about sports. This time it is about tax brackets. If you get a new job this year, maybe you get a raise, maybe you have a relationship change that affects your taxes and the change puts you in the next tax bracket.
Even a small bump in salary can put you in the next tax bracket. What you can do to take a bite out of the tax bill.
There are a few ways to reduce your tax bite. These recommendations are from tax accountant Kevin Robinson:
Adjust your federal and state withholding so more tax is withheld per paycheck.
Increase the amount you give to you 401K. This is pre-tax withholding. You can give up to $17,500 in 2014 which is a big change from years past. Workers over the age of 50 can give an extra $5,500.
What else can be done? Certified Financial Planner Matt Logan has a few more ideas for you.
Review the taxable investments you have. If you own investments outside of a retirement account, you may want to be sure that these investments are being managed with your tax situation in mind. This is a lot more difficult than choosing a mutual fund for your employer's plan. Things like harvesting losses and minimizing short term capital gains can make a big difference in your tax bill. I asked Matt about what "harvesting losses" means in the web video.
Increase your donations.If you have been meaning to make a contribution to your church or favorite charity and never done so, begin planning your 2014 giving now. Speak to your CPA shortly after tax season and work with them to find the best way to give to your cause. This is not only personally fulfilling, it can have a big impact on your 2014 tax bill.
Matt Logan is a Representative with Matt Logan Inc and Summit Brokerage and may be reached at www.mattloganinc.com, 336-808-0126 or firstname.lastname@example.org.