Owing to several changes in Tax rules, you must be very careful in planning the tax handling in 2019. For those who feel lost and know nothing about how to plan things for avoiding any trouble regarding federal tax payments, we have come up with some valuable information.
If you are looking for some tax-planning tips for 2019, you are in the right place.
Tax-planning tips for 2019
Consider Bunching Rebates
In effect from the tax year 2018, the Tax cuts and Job Act elevated the standard deduction amount. The individuals who don’t possess sufficient deduction to surpass the threshold choose to take the standard deduction. However, it would be better to use bunching method for exceeding the limit. To do so, you may double your charitable contribution and boost up tax deduction.
Max out the Retirement plan
If you want to decrease your taxable income for lowering tax bill, maxing out the retirement plan can be very helpful.
Involve in Tax Loss Harvesting
The Tax loss harvesting is an effective strategy that you can use for offsetting the gains. It includes selling out of the below average performers. Because of the latest market instability, the tax loss harvesting is a smart strategy to adopt.
Remember the Annual Exclusion Gifts
You might already know that the max tax exemption gift amount increased to $15,000 this year while previously it was about $14,000. The gift tax exemption amount is the money that an individual can give to any family member without any tax. Thus, you should take advantage of this exemption and gift 15000 to your children. Moreover, if you put this amount in 529 plan for college expenses of your children, they can keep all of it.
Making donations can also be helpful. Remember that donation does not necessarily include money. You can give other stuff as charity as well. For instance, you can donate gently used furniture, clothing, electronics and other things to local charities. This can be helpful for the itemized deduction on the taxes.
Get Health Care Insurance
You might have heard that the Tax Cuts and Job Act include the removal of the penalty for not getting health insurance. Remember that this will only be in effect from 2020. Till then, those who don’t have health insurance will face the penalty. Hence, you must get the health insurance timely.
Defer the income if possible
For payments or bonuses at the end of the year, ask clients to hold it till the start of 2019 so that you can save from further taxes in 2018. It can be a beneficial strategy only if the tax bracket remains same of gets lower the next year.
Update the Beneficiary Designations
If you want to help your loved ones with their taxes, reviewing the beneficiaries at the end of the year would be great. Lining up your beneficiary designations can help to lower the taxes that they may have to pay off when you pass some assets to them.
Lastly, you should always be careful while filing taxes. Make sure you file on the official IRS website. Moreover, you should not disclose your sensitive information to others.