- Maximize your retirement contribution. If you have a 401K through your employer, contribute the most you can. At a minimum make your IRA contribution of $5,500 and unlike the 401K contribution, you have until April 15th to make this deposit. In most cases, these contributions reduce your taxable income and helps you prepare for retirement.
- Go to IRS.gov, to use their free “Withholding Calculator” to check that you had enough taxes withheld from your paycheck or that you have made enough estimated tax payments. This may save you money in underpayment penalties and interest.
- Defer income into 2019, postpone anything that can be received in 2019 instead of 2018. This income will be subject to tax in the following year.
- For those who are self-employed, consider pre-paying your expenses a couple of days in advance. For example, if your rent is due on the first, pay it on the 31st. This may allow you to take a deduction in 2018 instead of having to wait an entire year to deduct it as a 2019 expense.
- For those who itemize deductions, the new tax laws have drastically changed the calculations, you will now need more than $12,000 single, $24,000 married to make your deductions worthwhile, the employee expense deduction is gone, and the most you can deduct in property taxes is $10,000. If you are close to reaching the threshold, consider making a charitable deduction and alternating deductions to every other year, the sales tax on large purchases is also deductible and you may want to lump the large purchase in the same year you make a large charitable contribution.
- Consider realizing capital gain losses to offset capital gains. You may realize a loss when you sell a stock or a mutual fund for less than what you paid for. Just be careful to not buy the same stock or fund within 30 days of the sale. You can deduct all the losses against the gains plus $3,000. Any amount over $3,000 carries over to the following year.
- Everyone should keep track of their work miles. If you are self-employed, you need a log in order to take the deduction and if you are an employee you can use the data to negotiate reimbursement from your employer.
- Self-employed individuals considering buying equipment should make the purchase in 2018, this year you can deduct up to $250,000 to offset income and without having to slowly depreciate the asset.
- Organize your tax records. Designate an area, folder or box to start putting all the tax forms as they arrive in the mail. Start looking for and adding to the area, any receipts, documents or tax-related documents. It is really easy to miss out on a deduction because a receipt got lost or forgotten. It could also cause delays and result in a missed deadline.
- If you have an accountant, give them a call, the new tax laws could present planning opportunities that will require your attention before the end of the year. If you do not have a CPA consider meeting with one, even if you decide to prepare your taxes on your own.
The following two tabs change content below.
Petry Law Firm, PLLC
Lucy Petry started Petry Law Firm, PLLC, not for profit or notoriety, but because she has a real desire to help individuals and businesses with their legal needs. Lucy personally supervised and prepared over 15,000 tax returns, which makes her well-equipped to handle your business and IRS issues. In addition to her professional accomplishments, Lucy is also fluent in Spanish and Portuguese. She enjoys seeing and learning about the world, having traveled to more than 50 countries, lived abroad and is an advanced diver and a pilot. She currently lives in Houston with her two rescue dogs, Elsa and Keyer.
Latest posts by Petry Law Firm, PLLC (see all)
- Navigating an IRS Audit as an Attorney: Your Essential Roadmap - January 25, 2024
