Have You Reviewed You Tax Plan Lately?

Here are what you may find to be some very helpful tax tips you should consider now that it’s time to review your year-end tax plan.

* Have you paid enough for 2014? The deadline for the third quarterly payment of 2014 estimated taxes is September 15. Whether you pay in quarterly installments, through withholding, or both, this is a good date to do a quick review of the taxes you've paid so far for 2014. If necessary, you can beef up your quarterly payment or adjust your income tax withholding for the remainder of the year. Be aware that withheld taxes are considered paid in equal amounts during the year, regardless of when the tax is withheld.

* Switching funds can bring a tax surprise. There are some mutual fund companies that allow you to switch funds without a penalty or commission, as long as you stay within their family of funds. However, there's a catch. Unless the funds are in a tax-deferred retirement account, you could owe income tax each time you make a switch. When you move money between funds, the IRS considers it a sale. You've sold shares in the first fund, then reinvested the proceeds in the second. As a result, you'll owe income tax on any gain. You should consider switching funds when it makes economic sense to do so. Just remember you may owe taxes.

* Use summer earnings for an IRA. If your children have earnings from summer or after-school jobs, encourage them to open IRA accounts. The additional years of tax-free compounding can produce huge additional savings by the time your children reach retirement age.

* Parents need to do estate planning. For a parent, estate planning is especially important. The first priority is to make sure your children are protected in the event that something happens to you. Your estate plan should appoint guardians for your minor children, as well as provide for their financial well-being.

* Driving for charity. If you drive your car on behalf of a charitable organization and there is no element of personal pleasure, recreation, or vacation involved, you may take a tax deduction for either your actual vehicle expenses or the standard mileage rate of 14 cents a mile, plus parking fees and tolls.

*IRS issues yet another warning. Another strong warning from the IRS is alerting taxpayers to phone scams that have already resulted in 90,000 complaints and the theft of millions of dollars. Here's how the typical scam works: The caller claims to be from the IRS and, using hostile and abusive language, demands immediate payment of taxes by a prepaid debit card or wire transfer. The IRS reminds taxpayers it will never contact you by phone about owed taxes; the first contact will be by mail. It will never ask for credit, debit, or prepaid card information in a phone call, and it will never request immediate payment over the phone.

For more tax tips or help with your tax plan review, contact our office at (260) 497-9761 to schedule an appointment with our Tax Advisors.