While it may seem like it is too early to start thinking about your 2019 taxes, it is never too early. The holidays and end of the year are rapidly approaching. Once the new year hits, it is time to start gathering those documents and preparing to file your taxes. Doing a few things before the year ends can help you maximize your deductions and even save for retirement.
Whether you use tax preparation services in Vienna, VA or plan to file them yourself, you can save money on your investments by selling off anything not performing well in your investment portfolio. The current market volatility may help you offset those capital gains by writing off up to $3,000 in losses. In addition, you can also carry another $3,000 forward to another tax year for additional tax savings.
If you are 70 or older, you are required to take required minimum distributions on your retirement accounts. IRAs and 401(k)s are both included. If you haven’t taken your distributions yet, you need to if you want to avoid up to a 50% tax penalty on that minimum distribution requirement.
Both individuals and families benefit from changes to the 2018 Tax Cuts and Jobs Act that increased the standard deductions. Married couples who file jointly can benefit from a $24,000 deduction up from $13,000. Heads of households can take $18,000 while individuals can take $12,000. This means that if you don’t spend over this, you can at least have the increased standard deduction. You can also bunch deductions to take more one year than take the standard deduction the following year to maximize savings.
Giving back not only makes people feel good, but it can also save you money on your taxes. You can donate gently used items to a local charity or give cash to a worthy cause. You can take up to 50% of your adjusted gross income for public charity gifts and up to 30% for private organizations.
For those still saving for retirement, now is a great time to max out those retirement plan contributions. For those at least 50 years old, you can contribute $24,500 while the rest of us can make a $18,500 contribution. Not sure you can max out the contribution? No worries add whatever you can for those tax savings. At minimum, match whatever your employer is willing to contribute.