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Wolters Kluwer, CCH can assist you with stories, including interviews with subject experts.
Also, the 2014 Whole Ball of Tax is available in print. Please contact:
Eric Scott
(847) 267-2179
Brenda Au
(847) 267-2046

Visit the Whole Ball of Tax site often as new releases and other updates will be posted
throughout the tax season.

Wolters Kluwer, CCH provides special CCH Tax Briefings on key topics at:

2014 CCH Whole Ball of Tax
Release (13) | Back to WBOT

2014 Wolters Kluwer, CCH Whole Ball of Tax

Eric Scott , 847-267-2179,
Brenda Au , 847-267-2046,

Ways for Lowering Taxes, Even If Your Key Deductions Expired: Wolters Kluwer, CCH Examines Steps to Reduce Taxable Income

(RIVERWOODS, ILL., January 2014) – As taxpayers rang in the New Year with celebrations, many weren’t too happy at the thought of entering a new tax season without several deductions they had counted on to minimize tax exposure. In fact, 55 tax breaks were phased out at the end of 2013, coupled with an increased maximum tax rate of 39.6 percent (up from 35 percent) for high-income earners ($400,000 for individual filers and $450,000 for married couples filing jointly). CCH, a part of Wolters Kluwer and a leading global provider of tax, accounting and audit information, software and services ( examines some tax-favorable investment opportunities available all year that can help lower tax payouts.

“Despite all the changes in available tax breaks, there are always specific investments, such as retirement, education and health care accounts, which are more tax-friendly and encourage savings,” said Mildred Carter JD, Wolters Kluwer, CCH Senior Federal Tax Analyst. “If you’re primarily relying on traditional savings or brokerage accounts, it may be worth looking at other options that can also be beneficial for tax planning.”

Checklist of Tax-friendly Investment Options

For taxpayers looking to get the most out of their investments, the following options may lower current taxes owed, allow investments to grow tax-free or a combination of both.

___ Maximize 401(k) matching contributions If your employer offers matching 401(k) contributions, contributing to the maximum matched amount is a great first tax-savings investment step.

“If your employer matches 3 percent of your contribution, that’s free money to you as well as a significant amount of tax-free savings that many people may have a hard time putting aside on their own,” said Carter.

Roth 401(k)s also have increased in popularity. Like traditional 401(k)s, money grows tax-free. However, unlike traditional 401(k)s, individuals pay taxes on the initial contribution rather than on the gains at future distribution. Additionally, while traditional 401(k)s have required minimum distributions (RMDs) starting at age 70 ½, Roth 401(k)s do not have RMDs.

“Even with higher current taxes, contributing to Roth 401(k)s can be a good choice, especially for younger individuals who anticipate the value of their accounts will appreciate considerably over time,” Carter added.

The maximum amount an employee can contribute in 2014 to a 401(k) is $17,500 ($23,000 for those age 50 and over). The same rules apply for 457 and 403(b) retirement plans.

___ Contribute to an IRA – Both traditional IRAs and Roth IRAs allow contributions to grow tax free. The maximum contribution to either in 2013 and 2014 is $5,500 for those under age 50 and $6,500 for those 50 and older. A $1,000 catch-up contribution also is allowed in each year for taxpayers 50 and older.

Contributions to traditional IRAs are tax deductible.

In 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is:

  • More than $96,000 ($95,000 for 2013) but less than $116,000 ($115,000 for 2013) for a married couple filing a joint return or a qualifying widow(er)
  • More than $60,000 ($59,000 for 2013) but less than $70,000 ($69,000 for 2013) for a single individual or head of household

As with Roth 401(k)s, contributions to Roth IRAs are not tax deductible, but there are no taxes on capital gains on distribution and no RMDs. The AGI restriction for Roth IRAs in 2014 for single filers is $114,000 ($112,000 for 2013) phasing out at $129,000 ($127,000 for 2013) and for married, filing jointly, $181,000 ($178,000 for 2013) phasing out at $191,000 ($188,000 for 2013).

Taxpayers have until April 15, 2014, to make an IRA contribution for 2013.

___ Contribute to a 529 education savings plan – Named after Section 529 of the Internal Revenue Code which created these plans in 1996, 529 plans allow you to make after-tax contributions to pay for college costs for your child or other family members. The contributions grow tax-deferred and the funds can be withdrawn tax free if used for qualified college tuition and other expenses.

Nearly every state operates a plan as well as many educational institutions. In most instances, the state plan you select does not limit your choice of schools. For example, a resident in Illinois can invest in a California plan and send the student to a university in New York. The amount put into a 529 plan may be tax deductible under some state income taxes and distributions for qualified tuition and expenses are not taxed.

Additionally, while a beneficiary has to be named in order to open a 529 plan, the beneficiary can be changed to another family member at a later date. For example, if the initially designated beneficiary earns scholarships or chooses not to go to college, a different family member can be named beneficiary.

“Because 529 plans are funded with after-tax dollars, you don’t have immediate tax savings, but avoiding future taxes on capital gains and dividends means you’ll have saved more to cover education costs,” said Carter.

___ Contribute to an HSA High-deductible health plans continue to increase in popularity as people look to lower their monthly health care premiums. Taxpayers with these plans also can open Health Savings Accounts (HSA) and make pre-tax contributions and take tax-free distributions for qualified medical expenses for themselves and their families. These distributions can be made at any time, for example, they could be made to pay for qualified expenses in the near-term or saved to cover health care expenses in retirement.

In order to be a high-deductible health plan under IRS standards, the plan must have a minimum annual deductible for 2013 and 2014 of $1,250 for individual coverage or $2,500 for family coverage.

For 2014, the maximum amount you can contribute to an HSA is $3,300 ($3,250 for 2013) for individuals and $6,550 ($6,450 for 2013) for families. Those who reach age 55 by the end of the tax year are eligible for a catch-up contribution of $1,000. Contributions cannot be made by someone enrolled in Medicare.

As with IRAs, taxpayers also have until April 15, 2014, to make their 2013 HSA contributions.

About CCH, a part of Wolters Kluwer

CCH, a part of Wolters Kluwer ( is a leading global provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading solutions are The ProSystem fx® Suite, CCH Axcess™, CCH® IntelliConnect®, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill. Follow us on Twitter @CCHMediaHelp. Wolters Kluwer ( is a market-leading global information services company. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.





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