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December 22, 2018: YEAR END TAX STRATEGIES
It’s nearly the end of the year and finally, the holidays are here. But tax time is approaching and there are some things you need to do before you ring in the New Year.
Individuals:
- Do you think you will be itemizing? The standard deduction is pretty high, singles are at $12,000 and marrieds at $24,000. But if you are close, consider making end of year charitable contributions, property tax payments, and medical bill payments. Here is some brief info on each:
- Donations can now equal up to 60% of your total income. Be sure to get receipts for anything donated that is non-cash.
- Property taxes are included in the SALT limit (SALT = Sales And Local Taxes). There is a new total deduction limit of $10,000
- Medical expenses have a lowered threshold of 7.5% of income for 2018, going up to 10% in 2019, so if you have some big bills you need to pay, do so before January 1st (if you charge them on your credit card they still count!)
- Do you normally make quarterly estimated tax payments? Don’t forget, you will have one due on January 15th, 2019.
- Is your dependent child attending college in the spring? Consider paying that tuition before January 1st to take advantage of available tax credits in 2018.
Businesses (including self-employed, LLC’s and Sub S):
- Do you claim a mileage deduction? If not, you should be! Check the odometer on your car on or about December 31st, write it down, and place with your tax records.
- Are you claiming a home office? (self employed or LLC only, not Sub S) If not, you really should be as it establishes your “Tax Home” with the IRS and legitimizes any mileage for business. Consider paying utilities and property taxes before January 1st to add to that deduction.
- Are you planning to purchase any business furniture or equipment? Make sure it is “placed in service” (i.e. delivered and in use) before January 1st to take advantage of the new bonus depreciation limits of 100%.
- Are you planning to purchase a new business vehicle? New car limits are in place but be warned, there are a lot of rules that accompany these great deductions! Call me.
- Are your books up to date? Do you need help? You should get this caught up and to me as early in 2019 as possible. Tax planning is critical when you are self-employed but remember, the later your return is prepared, the less maneuverable you are with tax strategies!
Contact me with any questions or concerns you may have!
940-393-3590 or Barbara@BarbarasTaxService.com