Year End Reminders….
The end of the year is a great time to review your tax situation for any significant changes to report to your tax preparer, and while your last-minute tax move opportunities may be limited, here are a few ideas worth considering:
- Retirement Contributions
You may wish to make some last-minute contributions to qualified retirement accounts like an IRA. This can be $5,500 for traditional or Roth IRAs plus an additional $1,000 if you are 50 or older. Contributions to traditional IRAs need to happen by April 15, 2019 to be deducted on your 2018 tax return.
- Harvest Gains and Losses
Profits and losses on investments have their own tax rates from 0 percent to as high as 37 percent. Knowing this, make plans to conduct an annual tax review of investment moves you wish to make.
- Charitable Giving
Make donations to your favorite charities to maximize your itemized deductions. Take advantage of the annual $15,000 gift-giving limit.
- Qualified Business Income Deduction
Under the Tax Cuts and Jobs Act non-corporations may be entitled to a deduction of up to 20 percent of their qualified business income (QBI) from a qualified trade or business for tax years 2018 through 2025. To take advantage of the deduction, taxable income must be under $157,500 ($315,000 for joint returns). The QBI is complex, and tax planning strategies can directly affect the amount of deduction, i.e., increase or reduce the dollar amount. As such it is especially important to speak with a tax professional before year’s end to determine the best way to maximize the deduction.
Dee Ann Creach serves as a tax planning and compliance expert for McConnell & Jones where she leads the preparation of hundreds of tax returns. With more than 30 years of experience, clients value the ability to tap into Dee Ann’s extensive experience in public accounting—which, in addition to income tax services, includes strategic family business, gift and charitable planning as well as financial consultative services. As tax manager, Dee Ann also oversees correspondence with the IRS and state governments, helping to save clients hundreds of thousands of dollars in unnecessary remittances. Connect with Deeann on LinkedIn.