Use these tips to Save!!
We commonly hear things like “2018 is over now. There’s nothing more I can do.” NOT TRUE! Even though the year has ended, there are still things that you can do to either save on taxes or ensure that you are getting every deduction possible. Sometimes referred to as “Post-Mortem Tax Planning”, here are some tips to help you save.
1. Consider Making Your 2018 IRA Contributions
Yes, 2018 is over, but you can still make your 2018 IRA contributions. Obviously, with anything tax-related, there are some stipulations. Depending on your income level and whether your employer has a plan or not, you may or may not be able to make this contribution tax-deductible, but it’s worth checking. It’s also worth looking into making these contributions as Roth contributions if your income is in the right range.
2. Don’t Forget About Your Credits!
Credits are incredibly valuable because they directly offset your tax burden. Some credits will give you a refund even if you owe no tax for the year. Deductions, discussed later, are also valuable, but to a lesser degree. Here is list of some of the common potential credits to look for (see the IRS Website for a more exhaustive list).
- Family and Dependent Credits - These credits benefit families with children and other dependents, including older dependents. They have income limits and phase-outs, but your tax software will take care of that. Just know enough about the rules to know what you need to input.
- Child Tax Credit
- Child and Dependent Care Credit
- Adoption Credit
- Earned Income Credit
- Education Credits - You will want to take advantage of these to help offset the cost of higher education. Any help is this area is appreciated by all of us.
- American Opportunity Credit
- Lifetime Learning Credits
- Other Credits
- The Saver's Credit
- Energy-Efficient Property Credit
- Low-Income Housing Credit
- Healthcare Credits
3. Don't Forget About Your Deductions!
Deductions are a way to reduce your level of taxable income. Although they do not reduce your tax bill at a dollar-for-dollar rate like credits do, they are still beneficial and should be used as much as possible. The standard deduction for 2018 has roughly doubled when compared to 2017, which will make it harder for most families to itemize their deductions. This makes it even more important to remember to include all of your them in your calculation. Here are some of the most common ones…
- Mortgage Interest
- State and Local Taxes (maximum deduction of $10,000 for 2018)
- Charitable Contributions
- Medical Expenses
- Miscellaneous Deductions (These are now gone for 2018, so don’t bother keeping track of these this year)
Hopefully these tax-saving tips help you out. We may be slightly biased, but the old adage of “Don’t spend it all in one place,” should apply to any refunds you may or may not be getting. Consider investing some of it for your future. Happy Tax Season!
If you have any questions, feel free to contact us.