Before you put your 2014 federal income tax return in the virtual or physical file drawer, check for items that can affect your 2015 planning. Here are three.
- Capital loss carryovers. If your capital losses exceeded your capital gains in 2014, you may be able to carry any unused loss to future years. For planning purposes, remember you can apply the loss against 2015 capital gains as well as up to $3,000 of other income — a benefit to remember when you’re rebalancing your portfolio this year.
Tip: Keep track of your capital loss carryforward for alternative minimum tax planning and projections. In some cases, this amount can be different from the carryforward calculated for your regular income tax.
- Charitable contribution carryovers. Was your charitable donation deduction limited for 2014 or prior years? You may have a carryover that you can use if you’re going to itemize on your 2015 tax return.
Tip: Take this carryover into consideration when planning your 2015 donations so you don’t lose the benefit of older unused amounts. Charitable contribution carryforwards have a five-year life.
- Net operating loss carryover. If your business had a loss in 2014, you had to make an election if you wanted to carry the entire loss forward to 2015. Otherwise, the general rule of carrying the net operating loss back two years applies, with the remainder carried forward 20 years.
Tip: If you did not make the carryforward election with your 2014 return, you may be able to file an amended return to do so. Generally you have six months from the due date of your return to make the election.
Give us a call to schedule a tax planning appointment. We’re ready to help you get the most benefit from these and other carryovers, such as investment interest, tax credits, and passive activity losses.