5 Tax Savings Tips Before the End of 2018
As the Holidays approaching rapidly, so is the end of 2018 tax year. Due to major tax reform enacted in 2018 there are a lot of unknown facts and circumstances that will be facing taxpayers this upcoming tax filing season. So what can you do in the next couple of weeks to minimize your tax liability?
Here are 5 tax savings tools that will give you the best bang for your buck:
- Check your last paystub to make sure you are maxing out your 401K deferral – qualified retirement accounts savings is still one of the most tax advantageous tools for earned income taxpayers:
- The limit for 2018 is $18,500 if you are 49 years old or younger and $24,500 if you are 50 years old or older;
- If you are working for a company you can elect for a one-time larger 401K deduction up to the amount of your net paycheck
- If you are self employed consider paying yourself a bonus that will allow you to contribute maximum amount to your 401K plan.
- Taxpayers with joint income of $77,200 or less will pay zero capital gains tax;
- Taxpayers with joint income between $77,200 and $479,000 will pay 15% capital gains tax.
- If you have capital losses from prior years and considering selling some of your holdings, complete the transaction before the year is over to utilize those losses and pay no tax on the gains;
- Donate appreciated stock – not only you won’t pay capital gains tax but also receive deduction for a full fair market value of the stock;
- If you are over the age of 70 and a half and are required to take minimum distributions (“RMD”s) from your IRA but don’t need the money you can do a direct charitable contribution from your IRA. By doing that you will satisfy RMD requirement and get a deduction at the same time.
- Taxpayers that are in a low tax bracket will pay minimal taxes on the conversion and the money in your Roth IRA will be tax free when you take it out at the age of 59 and a half.
Even with only two weeks left until the end of the year don’t shy away from contacting your tax advisor who can provide you with a valuable tax savings advise based on your individual situation.
For more information on how we can get your taxes in good shape for filing, give us a call: 407-650-9088.