Beat the tax man with 6 ‘astute’ year-end tax-saving strategies

As 2015 comes to a close, now is the time to make smart year-end tax strategy decisions. Savvy investors and their financial advisors or tax professionals should look to these tips — one for each letter in "astute" — to keep more of what you earn.

"A" — Accelerate deductions and defer income: It generally makes sense to accelerate deductible expenditures into 2015 to reduce taxable income. For example, you might consider prepaying state and local income taxes that are due in January 2016. Another example is to pay your January mortgage in December.

The advantage is that these are both tax-deductible. (But think strategically, because if you are subject to the Alternative Minimum Tax in 2015, state and local taxes are not deductible.)

Taxes 1040 form
Zachary Scott | Getty Images

Conversely, you should try to postpone the receipt of taxable income into 2016, to the extent you have control over the timing.

"S" Set up a qualified retirement plan: For business owners and other self-employed professionals, the deadline to establish a qualified retirement plan for 2015 is Dec. 31. The 2015 contribution, however, does not need to be made until the business's tax-filing deadline, including extensions. Businesses with full-time employees may add a New Comparability profit-sharing or even a Cash Balance plan to an existing 401(k), which might permit substantially larger allocations to the principals.

"T" Transfer assets to charity: If philanthropy is a goal, Dec. 31 is the deadline to make a charitable donation and qualify for a 2015 deduction. Generally, appreciated assets — such as shares of stock — rather than cash should be transferred to the charitable organization. While your tax deduction is the same, neither the charity nor the donor will pay a capital gain when that security is eventually sold.

If you are interested in a current-year tax deduction but do not have a specific cause or charity in mind, you can transfer assets to a Donor Advised Fund. This type of investment vehicle allows you to take a tax deduction this year, but recommend the DAF make the contribution to a charity of your choosing in the future.

"U" Use your $14,000 annual gift-tax exclusion: You may gift up to $14,000 per year (couples may gift up to $28,000) to as many individuals as you wish without federal gift-tax implications. Consider a gift into a 529 college savings plan if you have young children or grandchildren.

You can even front-load five years' worth of contributions to the same children for a total of $70,000 (or $140,000 for couples). Investment earnings in these accounts accumulate tax-deferred, and qualifying expenses — including tuition, room and board — are tax-free when distributions occur.

"By working with a tax and investment professional ... you can smartly — and legally — keep more of your dollars working toward your financial objectives."

"T" Take your required minimum distribution: If you will turn 70½ years of age in 2015, the deadline for satisfying a required minimum distribution from retirement accounts is Dec. 31. There's a hefty penalty for failing to take the required minimum distribution — up to 50 percent of the shortfall.

If you own multiple individual retirement accounts, each is subject to a minimum distribution, but you might choose to satisfy the aggregate amount from one or several accounts. If you are over age 70½ and still working, you must still take a minimum distribution from your IRA, although your employer's retirement plan may allow you to delay distributions until you retire (as long as you are not more than a 5 percent owner).

"E" Exit losing stock and mutual fund positions: Any capital losses realized in 2015 can be used to offset realized capital gains. If losses exceed gains, you may offset up to $3,000 of ordinary income. Any additional losses that cannot be used in the current year are carried over into future years.

But don't take a bath on the so-called "wash sale" rule. In order to claim a capital loss, you must not purchase a substantially similar security 30 days before or 30 days after the trade date; otherwise, the transaction
 will be considered a wash sale and the capital loss will not be allowed.

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By working with a tax and investment professional who understands the benefits and caveats of the current tax code, you can smartly — and legally — keep more of your dollars working toward your financial objectives.

— By Matt Sommer, certified financial planner and vice president and director of Retirement Strategy at Janus Capital