Year-End Tax Savings Strategies

Year-End Tax Saving Strategies, light bulbYear-End Tax Savings Strategies

Though our firm specializes in helping people resolve their IRS or state back tax problems, we also love saving you money. After all, one of the best ways to avoid getting into tax trouble is to minimize your liabilities.

The end of the year is the perfect time to review your finances and the perfect time to make some smart tax-saving moves. Making the right moves at the end of the year can possibly reduce your tax liability and allow you to keep more of what you earn.

From accelerating expenses to boosting the amount you put away for retirement, there are things you can do to lower your tax burden. You may not be able to control the tax fight in Washington, but you can limit the amount you pay by assessing your own tax situation and making some prudent changes.

Accelerate Your Expenses

Individual taxpayers are on the cash basis for income tax purposes. This means your income is taxable when you receive it and expenses count when you pay them. Depending on your situation, shifting deductions between years can make a big difference on your tax bill. With this knowledge, making additional deductible payments prior to the end of the year may be a good idea. Examples include property tax payments, mortgage interest payments, and charitable donations.

Boost Your 401(k) Contributions 

Year-End Tax Saving Strategies, girl, writing, white board

As the year ticks down to its close, it pays to look at your most recent pay stub and see how much you have already contributed to your 401(k) plan. Contributing to a 401(k) plan is an excellent way to save on taxes since every dollar you put in is deducted from your taxable income.

For 2018, you can contribute up to $18,500 to your 401(k) plan, plus an extra 6,000  if you are 50 or older. Also, if you have not yet maxed out your 401(k), now is the perfect time to boost your contributions and make up for lost time.  Keep in mind that many companies allow you to change your contribution percentage any time you wish. Boosting the amount you put in between now and the end of the year can make a huge difference. You can adjust your contribution downward in the new year if you wish, but at least consider leaving it at its new elevated level.

Gather Your Donations

Donating to charity makes you feel good, but it can also be good for your wallet. If you itemize your deductions, you may be able to take a deduction for not only cash contributions but gifts of household goods and clothing as well.

Take a few minutes this weekend to go through your closets and storage areas. First, look for usable items you no longer need. Box them up and take them down to your local thrift store or other charity. Be sure to get a receipt that shows what you donated, along with the approximate value.

Contact Your Enrolled Agent

This is a short list of some of the ideas you can use to lower your tax obligation in 2018. If you need an expert tax resolution professional, reach out to us and we’ll schedule a no-obligation confidential consultation. Jeffrey Schneider, EA, CTRS will explain your options and help permanently resolve your tax problem.

Jeffrey Schneider, EA, CTRS, NTPI Fellow has the knowledge and expertise to help you reach a favorable outcome with the IRS. He is the head honcho at SFS Tax Problem Solutions as well as an Enrolled Agent and a Certified Tax Resolution Specialist.
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