Looking to lower your tax bill? Here are some ideas to consider as the end of the year approaches.
- Check your withholding. Be sure to check your withholding YTD and your estimated taxes paid. If you or your spouse have additional self employment income you won't own penalties if you increase paycheck withholding late in the year.
- Assess itemized deductions. Less clients itemize given the 2017 overhaul to the standard deduction, but if you have sizable state and local taxes, charitable donations, and mortgage interest you should compare the two options. If you are close to making the itemized decision, you still have to add additional items.
- Check deadlines for retirement-savings contributions. Roth and traditional IRAs can be opened and funded by April 15, 2020. SEP IRAs, 401ks, and other qualified plans have other deadlines that must be met to contribute for 2019.
- Make 529 college-savings contributions. Some states, including Georgia allow a deduction on state returns for a certain amount contributed to 529 plans, which in most cases must be made by December 31st.
- Evaluate capital gains and losses. Check up on your positions in taxable accounts. Investors can use realized capital losses to offset realized capital gains plus $3,000 of ordinary income such as wages, every year. Unused losses can carry foward for future use.
Moves you make between now and the end of the year can have a significant effect on how much tax you have to pay next April. This is particularly true if you're saving for retirement, college, itemize deductions, or hold investments in taxable accounts.