Big 2018 Tax Bill? 4 Ways To Owe Less Next Year

Recent tax legislation includes a bevy of tax breaks for individuals. However, as you may discover when you're filing your 2018 return, not everyone comes out ahead. Loss of personal exemptions, cutbacks in deductions and the suspension of others mean you may end up paying a lot more tax than you thought you would.
 
Fortunately, you don't have to use the same tax plan you did in 2018. Instead, consider incorporating these four strategies now to help lower your tax bill next time:
​

• Bunch charitable donations. With the new tax laws, it's more likely that you'll opt for the increased standard deduction instead of itemizing deductions. Therefore, it makes tax sense to bunch large charitable donations in 2019 if you expect to itemize this year.

• Step up retirement contributions. Generally, the contributions you make to qualified retirement plans, such as a 401(k), reduce the amount of your taxable income (up to certain limits). For instance, the maximum 401(k) deferral for 2019 is $19,000 ($25,000 if you're age 50 or over). Similarly, IRA contributions for the 2019 tax year may provide tax benefits.

• Review your portfolio. Could you owe sizable capital gains taxes in 2019? After you analyze your situation, you might sell securities that will produce losses to offset gains or realize long-term capital gains taxed at preferential rates. The most common rate on long-term gains is 15 percent (20 percent for certain high-income investors).

​

• Avoid estimated tax penalties. If you'll still owe tax when you file your 2019 return, don't add to the tax damage by failing to pay enough "estimated tax" during this year. This could result in an underpayment penalty. To avoid problems, adjust your withholding and/or increase quarterly installment payments.

Call to set up a meeting to discuss the best tax strategy for your situation for 2019.
_________________________________________________________________________
"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
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.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.