December 11, 2018
The end of the year is the ideal time to assess your current financial situation and plan for the future. In our effort to help you keep more of your hard earned money come tax time, consider these tips:
- Max out retirement contributions. Make sure you are contributing as much as possible to a qualified retirement account such as a 401(k) or an individual retirement account (IRA) to shelter as much income as possible from taxes.
- Check your withholding and/or estimated tax payments. Checking how much tax you are paying through withholding from your employer or estimated payments (if you are self-employed) will allow you to make sure you are not paying more tax than you need to.
- Consider selling your non-retirement investments that have decreased in value. Capital losses can offset capital gains realized during the year (including from your mutual funds) and used to offset up to $3,000 of income or wages.
- Send in your January 2019 mortgage payment prior to 12/31/18. By sending in your payment a few weeks early, you can deduct the interest portion of that payment a full year earlier.
- Clean out your closets and donate clothing and household items to a charitable organization. Since “non-cash” contributions are deductible if you itemize, be sure to put together a list of the donated items and get a receipt.
- For gifts of money, make your donation by credit card before December 31st. This allows you to deduct the donation on this year’s return, even if you don’t pay your credit card bill until 2019.
- Consider the simplified method home office deduction if you are self-employed. Claiming the simplified home office method as a tax deduction can lower your self-employment net income by as much as $1,500.
- Revisit your business structure. If you own a business, you may want to consider another entity type if it offers tax advantages.
We invite you to read our Year End Newsletter for helpful information on the 2018 rules for itemizing deductions, buying or selling mutual funds at year-end, 2019 retirement plan limits, social security increases, and more.
Get the full newsletter here! 2018 Year End Newsletter
If you need help reviewing your tax situation or discussing how we can help you end the year in good financial shape and start 2019 off right, contact our team today. We are here to help!