Tax Tips

Top 10 Year-End 2019 Tax Tips to Do BEFORE It’s Too Late

Happy Holidays! Yes, time has flown by once again, and while many are thinking of the holiday season, we are approaching the END OF THE YEAR, which means it is also your last chance to discuss taxes. But IF you do these things, it’s like giving yourself a 2019 BIG Christmas gift!  

Learn these top 10 year-end tax tips to Maximize your tax refund or Minimize the taxes you owe.

Read on.

December 31, 2019, is the last day to take action that will impact your 2019 tax return.  

We have broken down the top 10 things to know to do before shouting, “Happy New Year!”

So let’s get started!

 

  1. CHARITABLE CONTRIBUTIONS: Did you know that if you itemize your deduction, those philanthropic contributions are deductible in the year made? So, for example, if you charge your credit card and make a donation before the end of 2019, it’ll count for the 2019 tax year, even if the bill isn’t paid till 2020.
  2. RETIREMENT PLANS: Are you over the age of 70 ½ years old and required to take distributions from your individual retirement account? There is a “special rule,” which allows you to wait until April 1, 2020, to receive them!  
  3. REFUNDS: As an average, the IRS issues refunds in 21 days or less. It may take longer, and the vast majority of taxpayers are getting their return faster by filing electronically and using direct deposit.
  4. PREPAY TUITION: Those with children starting college or graduate school, or even taking 1 class, can prepay their tuition before January 1, 2020, and use the credits to reduce their 2019 taxes. For example, if the child is in college, you may be eligible for the American Opportunity Tax Credit, which offers a maximum annual credit of $2,500 per qualified student. Note: a tax credit can be more valuable than a deduction since it lowers your taxable income dollar for dollar.
  5. SPECIAL NEEDS: Do you know someone who has a child with special needs? More than 9 million children are estimated to have special needs – that is comparable to 20% of households with children under 18. If so, open an ABLE account. Families with special needs can contribute up to $15,000 a year to an ABLE account. Many states allow you to deduct your contributions to such savings programs.
  6. MAKE 401(K) AND HSA (HEALTH SAVINGS ACCOUNT) CONTRIBUTIONS: People can make tax-deductible contributions to traditional IRAs up to April 15 of next year. However, the door closes on December 31, 2019, for 401(k) and Health Savings Account contributions. MAX OUT ON RETIREMENT Increasing 401(k) contributions to the $19,000 maximum allowed by year’s end can help reduce taxable income. Also, remember to contribute the $6,000 maximum (for those under age 50) to individual retirement accounts—and ensure that nonworking spouses do the same.
  7. HOLD OFF ON MUTUAL FUND PURCHASES: Talk to your CPA and your broker before purchasing investments at this late date. If held in a taxable account, you may want to hold up on buying mutual funds. You could get hit with a tax bill of year-end dividends even if you just purchased shares. (consult with your broker)
  8. HARVEST YOUR CAPITAL LOSSES: If your stocks have lost money, you can sell them and deduct up to $3,000 on your federal taxes. Take note of the “wash-sale” rule.  – talk to your CPA this week.
  9. INVEST IN QUALIFIED OPPORTUNITY FUNDS: The Tax Cuts and Jobs Act of 2017 created these funds to spur economic development and job creation in distressed communities. Holding your money in a Qualified Opportunity Fund for seven years can expect to eliminate 15% of the capital gains tax and then the real benefit is the end of the fund. Talk to your CPA before investing, but if you have a gain on other investments you need to talk to your CPA this week.
  10. USE YOUR FLEXIBLE SPENDING ACCOUNT BALANCE: Workers who have flexible spending accounts need to use their balances soon. The FSA accounts have “use it or lose it” provisions. The money will revert to your employer if not spent.  

AND A FEW CHRISTMAS TIDBITS!

 

  1. Update your Address: If you moved during 2019, you should tell the US Postal Service, employers, and the IRS. Mail IRS form 8822, change of address. 
  2. For name changes due to marriage or divorce, notify the social security administration so the new names will match IRS and SSA records.
  3. ITIN expiring? Renew your ITIN to avoid refund delays! Find out if your ITIN is expiring: go to irs.gov/ITIN.  Your Trust always has to have your accurate marital status, so make sure it is correct if you got married or divorced this year.
  4. IRS Has its APP! Download their free mobile app and check your refund status, pay taxes, and more! (IRS2Go)

DO YOU OWN A BUSINESS?

If you do, consider the following:

  1. Accelerate expenses:  May want to consider a.) repair work, b.) Purchase of supplies and equipment in the current 2019 year to lower your tax bill.
  2. Reduce Possible Penalties:  Increase your employer’s withholding of state and federal taxes.
  3. Pay Last Quarter taxes:   Don’t wait till Jan 15th, 2020.  Pay your last-quarter taxes before December 31, 2019.

Getting excited about the new year? The IRS has a unique page for steps to take now for the 2020 tax filing season! 

Here at Hess-Verdon & Associates PLC, we wish you Merry Christmas and Happy Holidays. Contact us about how we can help you with your estate planning, and please like and share this critical tax savings topic with your loved ones. They’ll be glad you did! Feel free to contact us 949-706-7300 or email us at contact@hessverdon.com

2019 Tax Tips Top 10 Year-End Tax Tips to Do BEFORE It’s Too Late

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DISCLAIMER: Hess-Verdon & Associates and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.