2018 was the first year people filed taxes under the Trump tax plan. While many of the tax strategies are the same, there are several 2019 updates and new strategies for working families.
- Retirement – Contribute to your retirement before the deadline. Contributions before April 15, 2020 are accepted in many cases. For workers in certain income brackets, contributions are tax deductible which boosts your refund.
- College Savings – Contribute to your child’s 529 College Savings Plan. Be sure to contribute to a plan that is most acceptable by your state revenue department. Some 529 savings plans actually help you get a bigger state tax refund.
- Standard Deduction – For the 2019 tax year, the base standard deduction is $12,200 for single files. The standard deduction doubles to $24,400 for married couples filing jointly.
- Schedule your Retirement effectively – If you have eligibility for RMDs and Social Security coming up, be sure to talk to a tax professional about coordinating: distributions, Social Security and Medicare/healthcare.
- Small-Business Deductions – You may be eligible for the Qualified Business Interest (QBI) deduction. This is also called the 199A pass-through business deduction. This is Trump's new 20% deduction for the net income of many businesses that operate as pass-through entities to help working families.
- Use Flexible Spending Money – In some cases, if you don’t use it you lose it. Also, money that funds these accounts avoids both income and Social Security taxes
- Charity Donations – If you itemize on your taxes because your deductions exceed the 2019 standard deduction of $12,200 for singles and $24,400 for married couples, then you can deduct the value of your charitable donations.
- Create a Self-Employed Retirement Plan by Dec 31 – Self-employed workers without employees can adopt a personal 401(k) retirement plan. This plan may allow you to deduct up to $19,000 as a 401(k) contribution and allows you to deduct an additional amount of possibly up to 20% of self-employed income.
- Tax Credits phasing out after 2019 – If you are interested, investigate the: lifetime learning credit which is worth up to $2,000 per return, the $7,500 electric car credit, and the 30% federal solar tax credit.
- Contribute to Your HSA – HSA Health Savings Accounts have various tax benefits where: contributions are made pretax or are tax-deductible, and you can take withdrawals free of tax to cover qualified medical expenses. HSA contributions are tax-deductible, or if made through a payroll deduction, they are pretax.
- Honorable Mention: Gifting – Consider gifting appreciated stock to children or grandchildren. Generally speaking, if a person without income sells stock, their tax can be much less than what you as a working professional would pay as long as no kiddie tax applies.
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award-winning author and advisory board member to several companies around the world in education, charities, and crypto currency.
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