Start the tax year off right

What you don’t know can hurt you. That’s especially true when it comes to tax planning and reporting. Do yourself a favor and take advantage of a few strategies to help reduce your taxes and potentially build your assets, while learning about the latest changes in tax-year legislation.

Start this year’s process by talking to your tax advisor and TIAA-CREF Financial Consultant/advisor about the following topics:

  1. Contributing to your IRA and retirement plan. If eligible, you may lower your tax bill for the 2012 tax year by contributing — by April 15, 2013 — to a Traditional IRA. For 2012, eligible taxpayers can make a maximum contribution of $5,000 ($6,000 if you’re age 50 or older by the end of 2012). Please note that IRA contribution limits do not apply to rollover contributions. And, if applicable, ask about the benefits of contributing any self-employed income to SEP IRAs, which can be designed to allow for larger contributions than Traditional IRAs.
  2. Maximizing your individual deductions. Taking standard deductions can simplify the reporting process, but you may be able to save more — and increase your potential refund — if you itemize certain expenses related to your home (mortgage interest, real estate taxes), gifts to charity, state income taxes paid, tax preparation fees, childcare, charity and so on.
  3. Reporting a loss. Review IRS Publication 547 for information regarding a variety of material, financial and personal losses, including those caused by car accidents, fires, earthquakes, floods, storms, terrorist attacks and vandalism. Please note: You’ll need to provide proof of the circumstances that led to your loss.
  4. Gifting and College Savings Plans. During 2013, you can make gifts of up to $14,000 per individual.1 These gifts can include contributions to 529 college savings plans, where you can make five years’ worth of gifts in one year.2 529 Savings Plans will allow for tax-deferred growth potential and tax-free withdrawals when used for higher education qualified expenses.
  5. Taking a home office deduction. According to the IRS, “if you use part of your home for business, you may be able to deduct expenses for the business use of your home,” such as utilities, repairs, mortgage interest, office supplies and depreciation.
  6. Family Gifts. Gifts of income-producing property may be a good choice for family members in a lower tax bracket. What’s more, for taxpayers who are in the 10% and 15% regular tax brackets, the long-term capital gain rate is currently 0%. However, you should first consult a tax advisor before you make a gift, because there are specific rules regarding the type and basis of property gifted, estate planning implications (step-up in basis for heirs) and the potential “kiddie tax.”

Bring your questions to our consultants and advisors

While we don’t offer tax advice, we are familiar with the tax situations that face our clients regularly. At no additional cost to you, one of TIAA-CREF’s experienced financial consultants or advisors can discuss your financial situation. Start by calling 800 842-2252 to speak with one of our consultants, or if you already have an assigned Advisory Team, please contact the team directly.