Tax Planning Tips for 2019

Preparing your tax return can be complicated, but it’s critically important to submit an accurate return.

The 2018 tax year is even more complicated, because of the changes in the rules. Tax changes seem to happen every year, but there are some things you can do to minimize your tax bill.

For the 2018 tax year, the standard deduction amount was increased to $12,000 for individuals, $18,000 for heads of households, and $24,000 for married couples who file jointly. The standard deduction applies to people who do not have enough itemized deductions to exceed the threshold.

Bunching Deductions

Do some planning and consider when a particular income or expense will impact your tax return.

Expenses that are due in the first few days of the next year can be paid before the end the current year. This allows you to recognize more expenses and reduce your current year tax liability.

Speak with an accounting expert regarding income and gains that you may incur shortly before the end of the current tax year. In some cases, the income or gains can be pushed into the next year, which reduces your current year’s tax liability.

This all gets very complex, and you should seek the help of someone such as Brunoro Law to make sure it is done in the right way and complies with current tax laws.

Max It Out

In 2018, the maximum amount you can pay into your retirement plan is $18,500, unless you are over 50, and then it is $24,500. This reduces your taxable income and helps to secure your financial future. If you cannot afford to contribute the full amount, pay as much as you can and at least try to match any employer contributions.

Your invested dollars are tax-deferred and grow tax-free.

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Give It Away

Donating to charity to help with your accounting and tax liability does not have to be in the form of cash. You can donate items that are still of good quality and write off the market value as an itemized deduction on your taxes.

The IRS says that charity donations to private organizations are limited to 30% of your adjusted gross income and for public charities, the limit is 50%.

To get the tax deduction in the 2018 tax year, you must have made the donation by the close of the tax year and must have a receipt to prove it.

Charity donations are part of the standard deduction thresholds, so it’s important to time the donation correctly to benefit the most from the tax deduction.

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Other Strategies

There are other ways to reduce your tax bill, including:

• Tax-loss harvesting to reduce the tax due on investment gains;
• Taking the required minimum retirement plan distributions, if you are older than 70 and a half years;
• Using the annual exclusions gifts

If you are confused and want to be certain to keep your tax bill as low as possible, seek out professional tax advice.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

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