Tips on How to Cut Your Tax Bill by Dec. 31
December 13, 2018 Justina Coronel
47 ABC – It may seem too early to start thinking about your tax return but holding off could actually cost you hundreds of dollars.
The quicker you get to work on your taxes, the better you’ll be for 2019.
There are simple steps that you can do to save some big bucks, as long as you do it by December 31st.
One way to cash in, move money into a 401K. CPA Thomas Hudson says, “Any contributions that you make to your 401K aren’t taxed until you retire so a lot of people start make more contributions, if they haven’t contributed up to the maximum this year. So what you’re doing by making contributions this year is lowering the amount of wages that are taxed to you in 2018.”
Another bang for you buck, bunch charitable donations. “Instead of maybe if you like donating $10,000 a year, donate $20,000 every other year and part of that could be a deduction on your tax return because the levels have increased on how much is deductible,” Hudson tells 47 ABC.
Keep in mind the new federal tax law, the Tax Cuts and Jobs Act, will affect charitable non-profits for your 2018 tax returns. It raised the standard deduction, which in some cases, minimizes the tax impact of a charitable contribution for an individual. For a non-profit that means that donors may not receive that same tax benefit and may not be as inclined to give back because of that change. Since the standard deduction may decrease tax benefits for some donors, they could maximize that impact by giving gifts of appreciated assets, such as stocks or direct distributions from their IRA. But the Community Foundation says they still encourage you to donate, despite the tax change, since it makes a difference in our community.
If you made money on investments, you could gain funds by selling the losses. Selling a lot of the stocks or equities that you purchase have underperformed and generated a loss, you can benefit on those tax returns up to $3,000 a year.
But the biggest tip would be to meet your tax preparer, as soon as possible.