24 Dec Tax Ideas for the Last Minute of 2018
Tax ideas are coming your way in spite of the fact is almost too late. The Count Down is on for the last moments of 2018. However, we can show you some strategies to beat the clock. Let’s look at some tax ideas to save some money here in the final days. Think of them as our holiday gifts to you.
Before We Tell You That Last Minute Tax Ideas Story: A Holiday Message from the Tax Squad
We know this time of year can be commercial. We know it is full of marketing and financial stress. But we still love it.
We love the innocence and charm, the charity and joy represented by all the winter holidays.
So, we would be remiss if we did not wish our clients, friends and blog readers, sincere Greetings of the Season and “Happy Holidays.”
The accountants and staff of Gavrilov & Co genuinely feel there is no greater place than home for the holidays…
…and no greater holiday gift than looking into the eyes of our loved ones and saying, “I love you.”
And Now: About Those Last Minute Tax Ideas
We know that you might be feeling a little end-of-2018 tax planning pressure. Now, of course, we all know we should do our tax planning all year long. That being said, we will show you, there are still some little strategies for the last minute. We one of them will help you to lower your tax bill for 2018.
Five Tax Savings Ideas to Save You Money
Matthew Frankel, CFP, alias the Math Guy suggests that some
of these tax ideas could “slash your 2018 tax bill and put hundreds or thousands of extra dollars in your pocket when you file your return.” The timer starts now. There are only eight days left!
Tax Idea 1. So, Sell that Sinking Ship!
We know it’s hard to admit that 2018 might have hurt your stock portfolio, but we promise to keep that confidential. If that fourth-quarter whipped your investment confidence, we suggest that you sooth your wounds. Just sell off a few sinking stocks before the year ends.
“The IRS allows you to use capital losses to offset capital gains. Even if you didn’t sell any investments for a profit in 2018, you can still use as much as $3,000 in losses to offset your other taxable income.”
Remember in this, the first of our tax money saving ideas, the IRS taxes the profits you earn when you sell a stock or other investment. However, we want you to know different rates apply. It all depends on how long you’ve owned that sinking ship or losing investment.
Reasons to Sell a Stock Must Be Valid
You can’t just rationalize if you are selling a stock only because its price sank. Here are valid tax reasons:
- Your original reasons for buying the loser stocks no longer applies.
- You discover and believe you could put that capital to better use elsewhere. To be sure, the tax benefits of selling just make a hard decision a little easier.
Tax Idea Number 2: Slam that Student Loan with an Extra Payment
Did you know the above-the-line tax deduction on your student loan interest still exists?
Americans can still deduct up to $2,500 in qualifying student loan interest each year.
The Strategy: If you are on an income-based repayment plan, you must realize that the deduction applies to all student loan interest that you pay. It is not just the amounts you are required to pay.
- Thus, if your required monthly payment doesn’t cover all of your student loan interest each month, you likely have built-up some interest.
- Stay within the $2,500 cap. But send in an extra student-loan interest payment. That interest payment could help maximize this deduction.
Tax Idea Number 3. Delay and Defer Some Income
This is a very logical idea if you are self-employed. Reduce your income by reducing some of the “amount of income you receive in a given year.”
Quick Example: A free-lance commercial artist, for example, could delay billing clients until the last days of the year. Modern life being what it is, this ensures he or she won’t get paid until 2019.
As an employee, you might even use this tax idea to get your boss to give you your bonus on Jan. 1. Now, keep in mind that because of this, tax idea number 3, your income will be higher next year, and thus, your taxes. That is the catch 22 of deferring income.
Of course, you could repeat this procedure “ad infinitum.” To be clear, deferring income this year will result in higher income next year. So, be sure to take that into consideration (unless you intend to repeat the process in 2019).
Tax Idea Number 4: Mortgage Payment Mash-up
If you are itemizing, then max out that mortgage deduction. By the way, be aware this tip only applies if you’re planning on itemizing deductions. Here’s how to work it:
- If you have a mortgage payment due in January,
- Just go ahead and make that payment before the end of the year.
- This can potentially give you 13 mortgage payments (plus, an additional month of mortgage interest) in 2018. Boom! Max out that Mortgage Exemption.
Tax Idea Number 5: Rack Up Some Retirement Dollars!
This tax idea does not refer to your employer-sponsored retirement plan like a 401(k.) It’s just too late in the year for that.
Experts state that if you qualify for the traditional IRA tax deduction, you have until April 15, 2019, to make your 2018 contributions.
- The Gavrilov Tax Squad notes that the limit is $5,500.
- Likewise, you can deduct an additional $1,000 catch-up contribution if you’re 50 or older.
Alternatively, provided you are self-employed, you could hustle quickly to open and fund a Simple IRA, SEP-IRA or solo, or solo 401(k).
“Likewise if you contribute to a health savings account (HSA), it could be an excellent way to save for healthcare expenses in retirement.”
In summary, Director of Tax Services Craig Richards of Fiduciary Trust, reminds us, “While tax reform lowered tax rates and nearly doubled the standard deduction, not all taxpayers will see their tax bill reduced. Many expenses that could be claimed as itemized deductions in the past have been eliminated or severely restricted.”
And we close by saying that your fiscal fitness and tax situation is individual only to you. Thus we are sure if you work with professional accounting experts like Gavrilov & Co, you might find some unique deductions you would never have discovered on your own.