December 11, 2018
There are many ways in which you can try and get yourself organized before the 2019 tax year commences, and here are just a few of them:
Try to contribute more towards your 401(k)
Reducing your tax bill is made easier if you contribute the maximum amount to your 401(k). If you’re younger than 50, you’re permitted to contribute a maximum of $18,000 to the retirement plan, while those who fall into the older categories, can contribute up to $24,500. Next year, in 2019, those individuals younger than 50 will be able to contribute up to $19,000, while those who are aged 50 and above, will be permitted to contribute $25,000.
Experts also tell us that if we don’t contribute enough towards our 401(k) plans, then we’re in effect, turning down free money that a company would otherwise match.
Take a closer look at your investments:
Reviewing your investment portfolio is a smart move, and if you have any recognized gains for the year, then you might want to consider selling securities with losses to offset these gains plus $3,000 of ordinary income. This is a tried and tested strategy commonly known as ‘tax loss harvesting’. If it’s within 30 days of the loss having been generated, then as a taxpayer, you cannot replace securities sold at a loss, you must wait until that period is over, otherwise the loss will be disallowed.
Look over your retirement accounts:
Try to take only the amount that you need from your retirement plans to best minimize the amount that you owe, and therefor keep your tax bracket as low as you can. But be mindful of taking out too little; if you’re 70 and a half or older, then you should review the minimum distribution requirements to help you avoid the 50% tax penalty that you’ll incur should you fail to take out the required amount from any accounts requiring an RMD (required minimum distribution).
Not all retirement accounts require an RMD, and for more detailed information and guidance on making the most of your retirement plan for the new tax year, please make an appointment to speak with a tax professional at the earliest.
Don’t leave your paperwork until the last minute:
While some tax forms may arrive as late as Jan 31st, 2019, such as the 1098-T form from educational institutions if you’ve paid for any college or school expenses this year that may award you some credits (such as the life learning credit, which helps minimize the costs of post-secondary education and the child and dependent care credits), the W-2, 1099 or whichever form you may be waiting for, that doesn’t stop you from getting your records up to date in the meantime. Be prepared so that when the form does arrive, you simply need to fill it out and return it.
For all your last-minute tax queries and doubts, don’t waste any time reaching out to a tax professional to make sure that when 2019 rolls in, you’re not left behind panicking about your return. Always be prepared, and even if you’re using a tax professional to plan and prepare your taxes, the more organised you can be, the better they will be able to work.
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