Last minute tips to lower your 2019 tax bill12/14/2019
There are only a few more days left in this year – and decade! – but there are still some things you can do to lower your 2019 tax bill. Here are just a few to consider…
Tax loss harvesting
If you made more money this year and expect it to push you into a higher tax bracket, or if you expect to pay short-term capital gains on investments you sold in 2019, this can be a good strategy. You can sell losing investments and “harvest” those losses to reduce your taxable income by up to $3000 by offsetting investment gains from the year.
Max out your retirement account contributions
You can contribute up to $6,000 to an IRA or $19,000 to a 401(k) this year, and if you are over 50, you can make additional contributions (to catch-up) of $1,000 to an IRA or $6,000 to a 401(k). This doesn’t apply to those of you with Roth IRAs, but nothing says you can’t take advantage of both options if you want.
Track medical expenses
If you’ve incurred a good deal of unreimbursed medical expenses this year, gather all those receipts. Since the threshold for deducting unreimbursed medical expenses is now 10% of your income (up from 7.5% in 2018), most people won’t be able to take advantage of this, but it is worth checking if you’ve had a tough year health-wise.
Contribute to a 529 plan
Connecticut has one of the more generous tax deduction limits for residents who save for college education via the Connecticut Higher Education Trust (CHET) plan where single taxpayers can deduct up to $5,000, and couples filing jointly can deduct up to $10,000. And if you want to save more than that, you are allowed to carry any excess forward for up to 5 years. Keep in mind, you can set up these plans for yourself, children, grandchildren, nieces, nephews, and even friends too!
Defer income to 2020
If this has been a banner year for you (and congratulations if it has been!), and you expect your income to decrease next year, consider deferring some of your income to 2020. If you own a business, wait to invoice some of your clients until January.
Call us for help!
There are a variety of other things you can do to reduce your taxes, and we can help you identify them. And here’s the bonus…the fees you pay us for these services are deductible too. Talk about a win-win situation!