Year-End Tax Tips

POST DATE: 11.18.19
Ccha  Tax Law

Previously, we’ve discussed how much you can give away tax-free, but what can be done now to increase your tax refund? Believe it or not, quite a bit!

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  1. Defer bonuses: you’ve worked hard and are looking forward to that year-end bonus, but we advise deferring into the new year. That extra money could bump you into a new tax bracket, thus increasing your amount of taxes due. If your boss is able to deliver in the new year, you’ll still receive it close to year-end, but you won’t be paying taxes on it in 2019.
  2. Accelerate deductions & defer income: there are a few tax deductions recognized during the year in which you pay them. If you own a home, get a mortgage interest deduction, and you make an extra mortgage payment on December 31, claiming the additional interest paid as a tax deduction in the tax year may be an option. This results in taking the tax deduction immediately, rather than waiting another year, when taxes are due again. An important thing to remember, though: if your new home was purchased after Dec. 15, 2017, you’re able to deduct the mortgage interest paid based on a home loan up to $750,000, versus $1,000,000 for owners who purchased before that date.
  3. Donate to charity: It’s giving season, and it could be of benefit to others and you. You can reap the reward of any tax deductions for non-cash and monetary donations made to a qualified charitable organization, if you can itemize your tax deductions. You can also deduct your mileage driven for charitable work, if you volunteer at a qualified charitable organization. Make donations count by donating by December 31st. Even if donated by credit card, you do not have to pay it off in 2019 to receive this tax deduction.
  4. Get to class: Taking a course to widen your skillset or advance your career is never a bad idea, least of all around the end of the year. Paying for next quarter’s tuition by December 31, 2019 may give you a valuable tax credit up to $2,000 with the Lifetime Learning Credit.
  5. Making a contribution to your retirement savings account is one way to reduce your taxable income while building a nest egg. Whether contributing to a 401(k) or Traditional IRA, you can simultaneously reduce taxable income while saving for your future. Note: If self-employed and contribute to a SEP IRA, you can contribute up to 25% of your net self-employment income (up to $56,000) in 2019.
  6. Spend (your FSA): If there is still money in your Flexible Spending Account (FSA), schedule a doctor’s appointment! You may only be able to carry $500 worth of unused money left in your 2019 FSA account at the end of the year. Your plan may also have other limitations.
  7. Look at your portfolio, buy low and sell low: you can recognize losses and use them to offset investment winners. To do so, simply sell the losing investments and offset your losses against your recognized gains. If losses exceed gains, you can apply $3,000 of that against your regular income. Any extra will pass to the next tax year.
  8. If 2019 gave you with a new baby, a pay increase or a new job, now is a good time to adjust the amount of taxes withheld, by adjusting your withholding on your W-4 and then refiling the form with your employer.
  9. ODC: Other Dependent Credit is another consideration you should make if you support parents or even grandparents. If someone you caretake qualifies as a non-child dependent, make sure to take advantage of the “Other Dependent Credit” worth up to $500. This can reduce taxes you owe dollar-for-dollar by as much as $500.
  10. Gather Receipts for Home Property Taxes or Large Purchases: If you pay home property taxes, state taxes or made a large purchase and paid a lot of sales tax, you can still deduct that amount of state and local property, income or sales tax, up to $10,000 -- these taxes have generally been fully tax-deductible.

Have questions? Get in touch and we’ll help you navigate your year-end tax issues and challenges. CCHA has extensive experience in federal, state and local taxation. Our multidisciplinary tax team provides tax planning services to a wide variety of clients including those facing tax-related issues, closely-held corporations, S corporations, limited liability companies, farmers, trusts, estates, partnerships, joint ventures and tax-exempt organizations.