As 2019 draws to a close, there are a lot of things you can do to help lower the taxes you might owe when you file your 2019 tax return in April. Whether it’s contributing to your retirement or to a charity or deferring income, there a several tips you can use to help lower your taxable income. Here are just a few moves you can make to help save you money on your taxes!
Contribute to Your Retirement
Contributing to your retirement not only helps you bring down your tax bill, but it also helps you save money for later on in your life. Try to increase your 401(k) contribution so that you are putting in the maximum amount of money allowed ($19,000 for 2019, $25,000 if you are age 50 or over). You should especially use this option if your company has a contribution matching program. If you have an IRA, you have until April 15th, 2020 to make any IRA contributions. You can contribute up to $6,000 to an IRA in 2019.
If you are self-employed or are a contractor, you could delay billing your clients until late December, to ensure that you won’t receive payment until 2019. Of course, it only makes sense to defer income if you think you will be in the same or a lower tax bracket next year. You don’t want to be hit with a bigger tax bill next year if additional income could push you into a higher tax bracket. If that’s likely, you may want to accelerate income into 2019 so you can pay tax on it in a lower bracket sooner, rather than in a higher bracket later. If you are a W-2 employee, you could look at asking your boss to postpone your year-end bonus until the beginning of the next year.
Giving back can have more than one benefit as the IRS allows you to write off charitable contributions. The Charitable Contribution Deduction allows taxpayers to deduct contributions to qualifying charitable organizations. In order for your donation to be deductible, it must go to a nonprofit group that is approved by the IRS. The simple rule is that your contributions cannot exceed 50% of your Adjusted Gross Income (AGI). If the restrictions cause you to not be able to write off the total amount, the excess deduction can carry over to the next year.
If you need help preparing for the 2020 tax filing season or need someone to prepare your 2019 tax return, Polston Tax can help. Our team of tax attorneys and tax preparers can help you make the most of the tax deductions and credits. Give us a call at 844-841-9857 or click below to schedule a free consultation!