It’s time to make last-minute moves to save on your 2019 taxes.
Retirement Account Contributions
Do you have a Roth or Traditional IRA to save for your retirement? United States taxpayers can put up to $6,000 a year into one of these vehicles and deduct the amount from their taxable income. Even better, you have till April 15, 2020, to open and fund one. Self-employed people can also open a SEP-IRA, which has contribution limits up to $56,000 and a contribution deadline of October 15, 2020. Solo 401(k) plans are also an option for self-employed folks, but they must be established by December 31, 2019.
To Itemize or Not to Itemize, That is the Deduction Question
Due to changes in the latest tax code, more people now use the standard deduction instead of going the itemized route. For 2019, the base standard deduction is $12,200 for single filers and $24,400 for married couples filing jointly.
Sure, using the standard deduction is the easiest way to go; you don’t have to worry about receipts and building a justification portfolio in the event of an audit. But are you cheating yourself out of money? Why not sit down with a tax professional who can assess your situation and determine if you’re best positioned to pay the least amount of taxes, compliantly?
The Tax Cuts and Jobs Act changed the way donation tax deductions work. Under the new rules, it makes sense for many people to bundle charitable giving gifts into a single year. For example: Instead of giving $1,000 to your favorite philanthropic organization annually, donate $5,000 in one year, and then take four years off.
Under the TCJA, establishing donor-advised funds is an efficient strategy. It allows you to recognize the contribution now and distribute it later, allowing the money to grow tax-free.
Small businesses and self-employed people who make more than $160,725 (single) or $321,400 (married filing jointly) may be eligible for the Qualified Business Interest (QBI) deduction. In short, qualifying parties can lob 20% off their net income.
Connect with a Tax Wizard
Year-end tax planning can make a huge difference in your finances. Our team of tax attorneys and accountants will get you on the right track. We’ll make sure you’re leveraging every credit, deduction, and opportunity possible. Give us a call and find out why our clients rate us 10 out of 10 (hint: we save them gobs of money).