At Accountfully, we want to ensure you make the most of your 2019 tax season. We know how quickly that April tax time will arrive after the hustle and bustle of holidays are over. Don't get too flustered yet - with a little bit of insider knowledge (you're welcome, by the way) you can be set up for tax success. Here are some items you can still take advantage of now to reduce your liability on April 15th.
□ Increase Your 401k Contribution
Grow your retirement and get a tax break. For 2019, the maximum employee contribution increased from $18,500 to $19,000.
□ Increase Your IRA Contribution
The $500 increase also applies to Individual Retirement Accounts. These contributions limits increased from $5,500 to $6,000 in 2019.
□ Set Up A Health Savings Account
Make a tax deductible contribution to a Health Savings Account. The funds can be withdrawn at any time for qualified medical expenses; a smart move to plan for increasing health costs and a great tax break. The maximum contribution for 2019 is $3,500 for those filing as single, and $7,000 for a family.
□ Contribute To A 529 Plan
Plan ahead for education expenses by making a tax deductible contribution to a 529 plan. The distributions may be used for college or private school tuition. In addition to the deduction you get for the contribution, the earnings are also non-taxable.
□ Opportunity Zones
An investor who has realized a capital gain by selling an asset like stocks or real estate can receive special tax benefits if they reinvest that gain into an Opportunity Zone within 180 days. Doing this lets you defer capital gains until Dec. 31, 2026 and you pay zero tax on gains earned from the Opportunity Zone.
□ Charitable Contributions
For those who are itemizing deductions, charitable contributions are a great way to reduce your tax bill. Donating highly appreciated stock is a great way to save money on taxes.
□ Estimated Tax Payments
Hint: this is a big one to consider in your end of the year planning
There is one more estimated tax payment due for 2019 on January 17th, 2020. Planning ahead to cover these is key to minimizing payment surprises. Plan now by doing end of year net income projections.
□ Sell Investments That Are at a Loss
Consider selling these investments. It will allow you to realize a capital loss, which is deductible against capital gains and ordinary income.
□ Open a Donor-Advised Fund
Putting your money or other assets, such as stocks or personal property, in a donor-advised fund lets you deduct the entire contribution in the year you make it, and decide later how you want to make charitable contributions.
□ New Alimony Rules
This may not apply to the general crowd, but it could have a significant impact nonetheless. For divorce decrees issued after December 31st, 2018, the payer no longer gets a tax break for alimony payments. For planning purposes, ensure you have adjusted your tax withholding or estimated payments accordingly.
Need more insight? Think some of these items still apply to you for 2019? We are happy to help you make the most of your taxes while there is still time to plan ahead. Contact us with any questions you may have regarding end of year tax planning.
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