Looking to reduce your tax liability for 2019? Here are six tax-saving ideas that you can still execute before we turn the page to 2020.
The Tax Cuts and Jobs Act doubled the standard deduction, so many taxpayers aren’t itemizing as they have before. But if you bundle two years worth of charitable gifts into one, you maximize the chances of receiving a tax benefit. The same goes for other itemized deductions that have not been phased out, such as medical expenses.
The annual gift exclusion allows you to provide annual cash gifts tax free of up to $15,000 to each person. Choose the split gift election and you and your spouse can give away as much as $30,000 annually to each person.
If you are 70 ½ or older and you have an IRA, you can avoid paying taxes on your required distribution by donating all or part of it to a charity. Another strategy is to avoid paying capital gains taxes by donating appreciated stock you’ve owned more than a year. Finally, in Pennsylvania, you may be able to convert taxes into Educational Improvement Tax Credit and Opportunity Scholarship Tax Credit programs.
Fully fund your tax-deferred retirement accounts. The 2019 contribution limits are $19,000 for workplace plans and $6,000 for traditional IRAs. If you’re 50 or older, don’t forget that you can make catch-up contributions to save extra for retirement.
Business owners can reduce their 2019 income by sending invoices at the beginning of January, thus delaying receipt of income into 2020.
If you own a business, prepay for business expenses such as office supplies. Other expenses such as business insurance may be deductible using the 12-month rule. Check with your accountant for details.
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