2013 Tax Planning Opportunities for Individuals Still Available
While December 31, 2013 is generally the last day that individuals have to implement tax strategies that would reduce their 2013 tax liabilities, there are still a few actions that can be taken in 2014 that would accomplish that objective.
Traditional and Roth IRAs can be established and contributions made up until the April 15th filing deadline and still be considered made in 2013.
Contributions to Keogh, SIMPLE and 401(k) plans can be made up until the due date of the return including extensions. However, unlike IRAs, these plans must have been established before the end of 2013 (Sept. 30 for SIMPLE plans).
SEP plans can be opened any time in 2014 until the tax return due date, including extensions, and payment delayed until then for the 2013 deduction to be allowed.
Wash sales occur when stock sold at a loss is reacquired within 30 days before or after the stock’s sale. For sales made at a loss in December 2013 a repurchase of the stock on or before January 30, 2014 (within the 30-day prohibited period) will cause the 2013 loss to be disallowed and added to the basis of the January 2014 purchased shares. While this wouldn’t reduce 2013 taxes, it could reduce 2014 or later year taxes depending on when the stock is old.
The final estimated tax installment for 2013 is due on January 15, 2014. However, if that installment isn’t paid but the return is filed and the full tax paid by January 31, 2014, there will be no penalty for underpaying that installment. Due to delays in filing 2013 returns that are very likely to occur, there may be little likelihood of benefitting from this opportunity.