Year end tax strategies for 2018. Fine tune your payroll tax withholding. The Tax Cuts and Jobs Act changed individual income tax rates and the income tax brackets. The IRS recommends that you verify your payroll withholding amount to avoid any surprises. Review itemized deductions. Many taxpayers find that they will no longer need to itemize. Review the items still available and determine if it would make sense to prepay state estimated taxes, take care of some medical or dental issues before year end or bump up your charitable donations.
Plan for pass through items. If you are a business owner taxed as a sole proprietorship, partnership or S Corporation, review your eligibility for the new Section 199A 20% deduction. Review whether your business qualifies, whether changes need to be made to the compensation structure or if you need to review your deferred compensation strategies to lower taxable income. Year end tax strategies for 2018 can pay dividends.
Fund your retirement account: add as much as you can to your retirement accounts by years end. While you may have until April 15th to make IRS contributions, the sooner the money is deposited into your account, the sooner it has the potential to start to grow to earn tax deferred. Harvest your investment losses: for a while it seemed that stocks could only go up, but when we entered into October and saw the year to date gains pretty much wiped out. The prevailing theory is to dump the bad stocks before year’s end to write off agasint any gains realized on other stock transactions.
Collect any cryptocurrency documents: prepare a paper trail if you buy, sell or mine cryptocurrency for an accurate record of your transactions and possible tax consequences. Move income into the following year: if you are near the top of a tax bracket and due to receive a year end bonus talk to the company about delaying the bonus until the following year. Or if you are self employed, delay sending out invoices so payment is not received until after December 31st.