12/29/2017
5 Personal Year End Tax Tips That Will Save You Money
December 2017
Dear Client:
The year is coming to an end. However, you still have enough time to save money on your personal taxes by following these 5 tax tips from Hollis CPA Firm. Keep in mind that all of the tax brackets are being lowered in 2018, so you generally can save tax dollars by pre-paying (either online or by mail) deductible expenses by 12/31/2017 instead of paying them next year.
In addition, the Standard Deduction will be increasing to $12K for individuals and $24K for married couples in 2018, so if you typically itemize (on Schedule A) and your itemized deductions will be below these amounts, you'll want to capture all of the expenses you can that are listed below in 2017:
1. Prepay Next Year's Deductible Home Expenses
If you think you need more tax deductions, consider prepaying future tax-related home expenses in 2017. Also, be sure to pay your property tax bill in December (and not in 2018). These home expenses include property taxes and home mortgage payments. This is a great way to get ahead going into the current year.
2. Donate to Your Favorite Charity
If you itemize, you can donate to your church or favorite charitable organization in the form of cash, goods (food, clothing and household items), or stocks and deduct them on your tax return. Regarding stocks, consider giving the investment directly to a charity rather than selling the stocks, because you can deduct the current market value of the stocks and avoid capital gains taxes.
3. Contribute the Maximum to a Retirement Plan
Contributions to 401(k) or IRA plans can help reduce your current year taxable income. If your maxed out on your 401(k), consider contributing to an IRA. You have until April 15th, 2018 to contribute to an IRA for the 2017 tax year.
4. Harvest Investment Losses
Consider selling investments at a loss before year end. If capital losses exceed capital gains, you can use up to $3,000 of the losses to offset your salary or any other ordinary income.
5. Consider Prepaying Unreimbursed Job & Misc. Expenses
Itemized deductions that are subject to a 2% floor of AGI are going to be eliminated in 2018, so consider prepaying any of these types of items such as investment fees, unreimbursed job expenses, tax preparation fees, investment fees and safe deposit box fees. Prepayment of these expenses in 2017, allows you to deduct them on your 2017 taxes since they are no longer able to be deducted under the new tax law in effect in 2018.
Act now, because you need to complete these by December 31st in order to take advantage of personal tax strategies that will save you money by year end.
Please contact me by email at [email protected] if you have questions about your specific tax situation or have questions related to any of the strategies outlined above.
Sincerely,
Cameron Hollis, CPA
