Before 2019 comes to a close, take some time to review these essential items to ensure you are not missing something that could cause tax trouble when you file your tax return:
1. Take required minimum distributions (RMDs). If you are age 70½ or older, you need to take RMDs from certain retirement accounts before Dec. 31 to avoid a 50 percent penalty! This includes most IRAs (except Roth IRAs) and 401(k)s. Your annual RMD is calculated by dividing the prior Dec. 31 balance by the life expectancy factor provided by IRS tables.
2. Watch for your IRS PIN. If you are a victim of IRS identity theft, you will be mailed a one-time use personal identification number (PIN) as added security. You can expect to receive it in the mail sometime in December. Save the PIN as it is required to file your tax return.
3. Contribute to retirement accounts. Making contributions to tax-advantaged retirement accounts like a traditional IRA or 401(k) is a great way to lower your tax liability even if you don't plan to itemize your deductions
4. Harvest gains & losses. If you expect to have capital gains from your investments, selling stocks in a loss position to offset the gains will lower your tax liability. In fact, you can claim excess losses of up to $3,000 to decrease your ordinary income! Timing matters with investment sales and income taxes, so having a year-end strategy can help lower your tax bill.
5. Make last-minute tax moves. Here are a few ideas worth considering:
Understanding your current situation and having a plan will help maximize your tax savings.
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The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
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To better serve our clients and friends, to keep you up-to-date and informed, our blog is a resource for tax tips and overall accounting related articles. We hope you find this useful!