Did you know that taxes were collected in ancient Mesopotamia even before the invention of money 2,500 years ago? Taxes have caused people questions long before the present day.
The year will come to a close before you know it. Now is the perfect time to plan ahead to maximize your returns. Discover our best tax tips for 2019 taxes now.
1. Decide if Itemizing is the Best For You
Before you begin to get ready for your end of year taxes make sure that you review your tax payment plan. Once you’ve reviewed your tax plan, start deciding if itemizing is right for you this year.
In 2019 the standard deduction for single filers is $12,000 and $24,000 for married couples. Itemized deductions have a $10,000 cap on property, state, and local income tax deductions. With the new laws, selecting the standard deduction over itemizing may be a better use of your time, money, and resources than itemizing.
2. Give Tax-Free Gifts
Did you know that you can give up to $15,000, $30,000 from a married couple, to friends and family without reporting it to the IRS? If you’d like to give tax-free gifts consider this during your end of the year tax planning.
This used to be capped t $14,000 but the new law allows an extra $1,000. Consider setting this money away for a child’s college fund.
3. Max Out Your Retirement Contributions
If you’re able to financially, consider maxing out the contributions you put towards your retirement plan. This can decrease your taxable income as well as boost your retirement funds. Both will benefit you in the long run.
401(k) contribution limits are $19,000 under age 50 and $25,000 over age 50. Always try to contribute at least the amount your employer is willing to contribute to your 401(k). Retirement plan savings are always a good focal point for the end of year tax tips.
4. Contribute to a 529 Education Savings Plan
Do you have children in need of a college fund? Consider contributing to a 529 education savings plan to help them pay for college. A 529 is a tax-sheltered fund to be used for education expenses.
When your children go to school they will be able to take out this money tax-free. You’ll get the most of your money by putting it into a 529. You’ll keep every cent to go towards education.
5. Donate to Your Favorite Charity
Lastly, do you have additional funds set aside that you’d like to give to your favorite charity? Add this spending into your end of the year tax plan. If you decide to itemize your taxes you are still eligible to receive tax breaks on donations.
If you’re going to itemize this year you can now deduct cash charitable contributions of as much as 60% of your adjusted gross income. This is up from 50% last year. Even if you take the standard deduction, it is still a nice idea to donate to charity when you’re financially able.
Ready to Use These Tax Tips?
As the year comes to a close, are you ready to use these tax tips to prepare for your future? These tips will help you get your finances in order before the close of the tax year.
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