It’s getting late, but there is still a little time left for some year-end tax planning.belt tightening on dollar bill

Here are 10 last-minute tax tips to consider:

1. Sink more into a retirement account.

You can shelter more of your income from taxes by contributing to a workplace plan, such as a 401(k) or 403(b) or through a traditional Individual Retirement Account.

If you are self-employed, you can pitch in up to 25% of your self-employment income for a maximum of $56,000 for 2019. Another option for the self-employed is a solo 401(k).

You can open a solo 401(k) or SEP-IRA by Dec. 31 but you have until April 2020 to contribute to it and take a tax deduction for 2019.

2. Consider deferring workplace bonuses until 2020.

If you are self-employed, consider postponing sending out invoices until 2020 for work done late in 2019.

3. Harvest investment losses.

If you sell an investment for a profit, an excellent way to avoid paying tax is to offset it by selling a losing investment and capturing the loss. With that loss you can offset gains from a winning investment that you sold.

There are two kinds of gains – short-term (held for a year or less) or long-term (held for more than a year). Short-term gains are taxed as ordinary income, but long-term gains are taxed at rates than range from 0% to 23.85%.

If your losses exceed your capital gains, you can apply $3,000 of the amount against your regular income. If you have more left over, you can use it in future tax years until the losses run out.

5. Review whether you will be itemizing your taxes or just taking the standard deduction.

This can direct your end-of-year tax strategies.

6. If you own a house, make your January payment in December.

By doing this, you will have paid extra interest on your loan which you may be able to take advantage of as a tax deduction.

7. Donate to charity.

If you itemize your tax return, you can reduce your taxes through monetary contributions to your favorite charities and through non-cash donations. If you volunteer for a qualified charity, you can deduct 14 cents of every mile you have driven for it.

8. Explore qualifying for an itemized deduction for medical expenses.

If you had an unusually high number of medical expenses, they could represent a deduction. Unreimbursed medical expenses must exceed 10% of your adjusted gross income to claim a deduction. If you are near the limit, you might want to schedule doctor visits or labs before year’s end. Also, dental and vision care counts as medical expenses.

9. Contribute to a 529 college savings account.

Contributions to a 529 plan won’t lower your federal taxes, but it could reduce your state taxes. More than 30 states allow people to contribute at least a portion of 529 contributions from state income taxes.

10. Consider converting traditional IRA money to a Roth IRA in a low-income year.

Whether you are in-between jobs or have already retired, partial Roth IRA conversions deserve a look as a tax strategy.


Please reach out to our advisory team with any questions!

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