Money & Career
Year-End Review: Tax Strategies
11/30/2018 11:57:44 AM
Tax Strategies


This time of year can be pretty hectic for most people, and chances are, the last thing you want to think about right now is your taxes. Even so, it’s a good idea to take a little time to consider what you might be able to do as the year winds down to save on taxes. 

This is also a great time to re-evaluate your current tax strategy and think about making changes for 2019.

"One of the biggest mistakes I see people making is failure to plan for the upcoming tax year,” says Kelly Love, CPA, manager at accounting firm J. Walker & Co.

Don’t make that mistake. Get started with your tax plan by reading on for a few year-end tax tips.

Maximize your retirement savings. 
If you’re not already doing this, you should seriously consider it for 2019. Tax-deferred retirement accounts are a great deal for you because they reduce your taxable income and grow tax-free until you retire. If your employer offers a 401(k), contribute as much as you’re able, up to the maximum allowed. Many employers even match employee contributions up to a point.

You should also consider contributing to an individual retirement account, or IRA. The two main types — traditional and Roth IRAs — both grow without you paying income taxes as long as you don’t withdraw the money. With a traditional IRA, you get a tax deduction for whatever you’ve contributed that year. With a Roth IRA, though, any contribution is still included in your taxable income for the year, but you won’t be taxed when you withdraw the money later (assuming you meet the correct conditions, like being at least a certain age).

Contribute to a health savings account (HSA). 
If your employer offers an HSA and you qualify but you’re not participating, consider enrolling for 2019. An HSA is money specifically set aside for qualified medical expenses, and the tax benefits of contributing are trifold: You receive a tax deduction up front, the money grows tax-free, and you’re not taxed on withdrawals as long as you’re using the funds for qualified medical expenses.

Maximize the tax benefits of charitable giving. 
Many people donate money this time of year, but not everyone knows how to be tax-smart when doing so. Love says one strategy is to "bunch” your charitable contributions.

"If you can concentrate itemized deductions, say, every other year, then you can take advantage of itemizing in one year and then take the standard deduction the next,” he says. For example, if you typically donate $1,000 to charity every year, instead give $2,000 this year and nothing next year.

Defer your income. 
This one doesn’t apply to everyone, but if you are self-employed or do freelance or consulting work, it probably applies to you. Basically, if you can delay receipt of payment from your clients until 2019 — perhaps wait until the end of the month to bill them — then you won’t be taxed on that money until next year. 

"In general you prefer to postpone it to next year, the theory being that it’s always better to pay a dollar in taxes next year than it is this year,” Love says.

If you’d like to learn more about tax strategies, consult your tax preparer or check out the IRS website, which has a wealth of information available. That said, Love recommends Googling the topic you’re interested in and then entering the IRS website from the results page rather than trying to navigate the huge IRS site directly.

"There is a lot of questionable information on the internet, but as long as it comes from the state of Louisiana or the IRS, then you should be dealing with good information,” Love says.

For more information, contact J. Walker & Co. at www.jwalkerco.com.
Posted by: Andrea Mongler | Submit comment | Tell a friend

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