Tax season doesn’t start until January, but taking steps now to plan for your taxes next year can save you time and money.


  1. If possible, defer your income. This is difficult if you are an employee, but if you are set to receive any large year-end bonuses, ask your boss if they can be paid out after the first of the year. Self-employed individuals can delay billings until late December, ensuring you will not receive payment until January. No matter your employment circumstance, you can also defer your income by taking capital gains next year, instead of this year.

    It is important to remember that deferring income only makes sense if you are going to be in the same or a lower tax bracket next year as the additional income could push your income into another tax bracket, otherwise.

  2. Look for last-minute tax deductions. With the new tax laws that took effect for 2018 taxes, this may not be as beneficial to individual taxpayers, as most itemized deductions were absorbed by the standard deduction ($12,200 per individual, $24,400 per married couple). Those that are still available:
    1. Mortgage Interest – homeowners are allowed to deduct the interest they pay on as much as $750,000 of qualified personal residence debt on a first and/or second home.
    2. Charitable Contributions – Donations to qualified charitable organizations are deductible for up to 60% of your Adjusted Gross Income. Please note that, with the 2018 tax changes, donations to a collage for the ability to buy athletic tickets is no longer considered a charitable donation for tax purposes. You will need to keep all your donation receipts to back up your deduction claim.
    3. Medical expenses – all taxpayers may deduct only the amount of the total unreimbursed allowable medical care expenses for the year that exceeds 10% of their adjusted gross income.
    4. Property Taxes – Taxes paid on any personal property are deductible. These include any real estate or vehicles, but is limited to $10,000 per year.

You may also be able to accelerate expenses by paying some deductible expenses, such as an expected hospital bill or a property tax bill that is due early next year. The caveat to paying these early is if you are already subject to the Alternative Minimum Tax (AMT) or inadvertently trigger it, this could cost you more money. The AMT is figured separately from your regular tax bills and with different rules and, when used, you have to pay whichever tax bill is higher. Property taxes are not deductible under the AMT, so, in this case, it would not be wise to prepay an impending property tax bill early.


  1. Contribute the maximum to retirement accounts. If your employer offers a company-sponsored 401(k), this may be the best to contribute to as contributions are often matched by your employer. Try to increase your 401(k) contributionso that you are putting in the maximum amount of money allowed ($18,500 for 2018, $24,500 if you are age 50 or over). If you can’t afford that much, try to contribute at least the amount that will be matched by employer contributions.


You may also consider contributing to an IRA. You have until April 15, 2020 to contribute, but the sooner you get your money into the account, the sooner it can start to grow tax-deferred. In addition, any deductible contributions increase your taxable income.


  1. Check IRA Distributions. April 1 of the following year after you reach the age of 70 ½, you are required to take regular distributions from your traditional IRA accounts. Failing to do so leads to one of the worst IRS penalties: A 50% excise tax on the amount you should have withdrawn based on your age, your life expectancy, and the amount in the account at the beginning of the year and, after that, annual withdrawals must be made by December 31 to avoid the penalty.

    Ask your IRA custodian about withholding taxes from your withdrawals to avoid paying quarterly taxes.

    One note: If you have a Roth IRA, as the original owner, you are never required to withdraw money from your accounts.

  2. Watch your Flexible Spending Accounts. If your company offers a Flexible Spending Account (FSA) or Flex Account, you are able to divert money from your pay to an account that avoids both federal income tax and Social Security tax in order to pay medical or child care bills. While this plan has a lot of benefits, the unfortunate caveat is that you have to use it, or you lose it, so any funds you do not use are forfeited to your employer. Check to see if your employer has a grace plan, which may give you until March 15, 2020 to spend your funds. If not, this is a good time to plan a last-minute trip to the drug store, the dentist, or the optician.


In addition to the above, this is also a great time of year to work on organizing your paperwork for business, rentals or medical expenses. Our website has templates all of these expenses available in our Customer Help Center that you can download and use to categorize and add up your expenses. What this means for you is that we will spend less time entering your information for your tax return and could mean a savings on your tax preparation cost.


Some important things to keep in mind when preparing your tax paperwork to bring in to us are:

  1. Use the organizer we send to you – By filling out, at minimum, the questions in the front of your Organizer, it allows us to see what, if any, changes to look out in preparing your taxes. Also, if you have your expenses totaled for business, rentals and medical, you do not need to include much of the back-up paperwork (such as medical receipts). Make sure you return the organizer to us with your tax paperwork.
  2. Include the Green sheet in your tax paperwork you send in – This allows us to see your preferences as to how you want your returns delivered to you and can save you additional cost.
  3. The IRS has a scheduled day when we can begin to eFile tax returns – While you may get your tax forms in the middle of January, we may not be able to do any work on them until the end of January.
  4. Keep tax forms complete and remove them from all the envelopes – While it may seem easier to separate the IRS copies from the other copies of your W-2s and 1099s and only include those, it makes it more difficult for us to scan in. We will return all your original forms with your tax return, except the IRS copies, which get attached to your eFile form.
  5. Open and remove all forms from their envelopes – When we get in tax paperwork in all envelopes, we spend a good amount of time removing them and discarding the envelopes. This can result in additional cost to you in preparation time.
  6. If you have questions as to which forms we need, look in your organizer – Typically, your organizer has form numbers listed for each different type (1099-R, W-2, etc.)


While not all of these work for everyone’s tax situation, they are a great start in your end-of-year tax planning. Of course, if you have any questions, or wonder how specific situations will affect you, this is the best time of year to call our office and schedule an appointment.


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