Wrapping Up 2018 While Increasing Your Tax Refund
December 19, 2018 in Tax Planning
It’s difficult to believe that the last month of 2018 is here. You still have time to take a few strategic, but simple, steps to lower your taxes for this year. Increasing your refund should be your goal for the next few weeks! Here are some helpful ideas you can take advantage of:
The First Step – Get Organized
Gather your receipts for all your sources of income and any tax-deductible expenses. By getting organized now, you’ll ensure you won’t forget anything important. You’ll also get a better understanding of your finances far in advance of filling out tax forms.
Donate to Charity
This is the ideal time to give to those in need, especially if you itemize your deductions. Clean out your closet and get a tax deduction for clothing and household items. Monetary donations are tax deductible as well and if you use a credit card, you get the full deduction even if you pay it off in 2019. For qualified nonprofit organizations, you can even deduct your mileage when you volunteer. Just be sure to donate by December 31st.
Sign Up for a Class
You can increase your tax refund by taking a course to build your business or advance your career. With the Lifetime Learning Credit, if you pay for next year’s tuition prior to December 31st, you can get a tax credit up to $2,000.
Low Value Investments
You may have stocks or other investments that have lost value. Fortunately, you can use those losses to offset your gains. First, you must sell the losing investments. If your gains are less than your losses, you can apply up to $3,000 against your income as a tax-deduction. Any additional losses can be used for the upcoming tax year.
Many people are hoping for a year-end bonus; however, this extra money may push you into a higher tax bracket, increasing the amount of taxes you’ll pay. It may be better to see if your bonus can be paid after the first of the year. Then you won’t have to pay taxes on it when filing for 2018. Who knows what 2019 will bring financially?
How’s Your FSA?
If your FSA (Flexible Spending Account) still has money in it, get to the doctor fast. If you have money left on December 31st, you may be limited to the amount of time to use the funds or only be able to carry over $500 to next year.
Contribute to your retirement savings account and reduce your taxable income. You can save for the future while taking a dollar for dollar income reduction, whether you add to your 401(k) or an IRA. If you are self-employed, you can deduct up to 25% of your salary (or $55,000) by contributing to SEP IRAs.
Don’t worry about needing to know all the new tax laws. In order to get the highest return possible, it’s best to contact a professional. Call Tax Defense Partners today to help you know what to do.