While it’s not too early to find a great holiday sale, it’s equally as true that it’s not too late to do some year-end tax planning to help you achieve some tax savings for 2019.
Withholding
Make sure to check your withholding will be sufficient to cover your projected 2019 liability. Adjustments may be made by updating your W-4 form with your employer or making an estimated tax payment.
Itemized or Standard Deduction
Compare your current itemized deductions to the available standard deduction ($12,200 for single filers and $24,400 for married filing jointly in 2019). If your current itemized deductions are close to the standard deduction, you may want to consider making some additional charitable contributions or check to see if your unreimbursed qualified medical expenses exceed 10% of your adjusted gross income to receive the benefit of the higher itemized deduction.
Capital Losses
Consider selling assets in taxable accounts that have losses at the end of the year to offset capital gains. You can deduct up to $3,000 ($1,500 if married filing separately) in capital losses against ordinary income.
Retirement Planning
Look to max out your retirement plan. Depending on several factors, you may qualify for a deduction for contributions to an IRA. With the current lower tax brackets in place, consider converting a traditional IRA into a Roth IRA.
Gifting
You may transfer up to $15,000 per person per year without having to pay gift tax or utilizing your lifetime exemption. The lifetime exemption amount for 2019 is $11.4 million.
Education Savings
Note the benefits of funding a 529 plan. Amounts in the plan grow tax-free and distributions are not treated as income to the extent they are used to pay for qualified higher-education expenses. Tax-free distributions from 529 plans can also be used to pay up to $10,000 of expenses per student per year with respect to elementary and secondary schools.
Reach out to a Withum tax advisor to discuss these options and determine what planning opportunities are most beneficial to you.
