Today TaxMama®wants to give you some steps to take before the end of 2018.
This year, it’s especially difficult to figure out how to reduce your taxes. The average couple is not likely to be itemizing any more. Folks with high employee business expenses won’t be able to use them. Individuals with mortgages might still have expenses above the standard deduction. Or folks, who, heaven forbid,have been seriously ill with minimal insurance coverage. So what’s a taxpayer to do? Here are some ideas.
- Do a withholding check-up – you’re apt to come up short this year –
IRS payroll check-up tool – https://www.irs.gov/newsroom/time-for-a-paycheck-checkup
- Seniors age 70 1/2 -remember to withdraw your Required Minimum Distribution from your retirement accounts – https://www.irs.gov/newsroom/irs-reminder-deadline-dec-31-for-most-retirees-who-must-make-required-retirement-plan-distributions -50% penalty if you don’t – but you may have the draw sent directly to your favorite charity to avoid taxation
- Make charitable contributions – now deductible up to 60% of income, instead of 50% – and start getting copies of receipts right now – https://www.irs.gov/taxtopics/tc506 -Also a great time for the annual “clear out the clutter” effort to donate clothing, toys and other household effects in good condition to charities
- Review your investment portfolio – If you have capital gains this year, sell some losers to offset the gains. If you’re in the two lowest tax brackets (10% – 12%), your capital gains rate is -0-!
- Maximize your Retirement contributions – one of the best ways to reduce your taxes and build up savings – up to $18,500 for 401ks – https://www.401khelpcenter.com/2019_401k_plan_limits.html
- Make your January mortgage payment in the last week of December to get the maximum interest deduction early
- Generate enough medical expenses by 12/31 to get reimbursed for your Flexible Savings account funds withheld from your paycheck – https://www.irs.gov/publications/p969#en_US_2017_publink1000204176
- Roth Conversion, anyone? If you’re in a low enough tax bracket, it may be worthwhile moving money from a regular IRA to a Roth IRA
- ITINs – since the PATH Act of 2015, Congress set up a system where ITINs expire in a 3-year cycle.This year is the last year of that cycle. So if you haven’t renewed your ITIN in the last three years, or haven’t filed a US tax return in the last 3 years,you’re about to lose that ITIN – yourself and your family. Start working on updated it RIGHT NOW! https://www.irs.gov/individuals/individual-taxpayer-identification-number
- And employees with high business expenses – you really should re-negotiate your situation with your employer. Sign up for TaxMama’s® Special Trump Update on-demand webinar to get the tools and template to make this negotiation work. (Note: the on-demand video version of this will be ready next week – but anyone who signs up now will get the template, the book and all handouts and the written lecture, right away.) https://iTaxMama.com/TrumpTax_Planning
Incidentally, I don’t know if you know – TaxMama.com® is a free resource for people to get answers to tax questions BEFORE they make major, costly moves.
And remember, you can find answers to all kinds of questions about taxes and business issues, free. Where? Where else? At www.TaxMama.com.
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