As we head towards the end of the year, we’re fast approaching the deadline to implement your family’s tax strategies for 2019. The Tax Cut and Jobs Act (TCJA) completely overhauled the tax code, and if you’ve yet to take full advantage of the benefits offered by the new tax law now is the time to do so.
To qualify for some TCJA tax benefits, you’ll need to act by December 31, so don’t wait to get started. The following 4 tips could save your family big money on your 2019 tax bill. That said, there may be other strategic opportunities for savings, so contact your Personal Family Lawyer® to be certain you haven’t missed any.
Under the new tax law, itemizing your deductions might no longer make sense. That’s because the TCJA increased the standard deduction up to $12,200 for individuals and $24,400 for married couples filing jointly. So, if you're filing a joint return, you need more than $24,400 in itemized deductions to make itemization worth it.
By maximizing your contributions to tax-deferred retirement accounts like IRAs and 401(ks), you can not only save for retirement, but also reduce your taxable income for 2019.
In 2019, you can contribute up to $6,000 to an IRA and up to $19,000 to a 401(k) if you're under 50, and up to $7,000 to an IRA and $25,000 to a 401(k) for those 50 and older. If you can’t afford the maximum amount, try to contribute at least the amount matched by your employer, since that’s basically free money
You have until December 31, 2019 to contribute to a 401(k) plan and until April 15, 2020, to contribute to an IRA for the 2019 tax year.
If you’re expecting to make significantly more income this year than in 2020, try to defer as much income into next year as possible. However, this strategy only makes sense if you’ll be in the same or a lower tax bracket next year.
This might mean asking your boss to delay paying a year-end bonus until after Jan. 1, 2020, or if you’re self-employed, waiting to invoice some clients until the new year. And whether you’re an employee or self-employed, you can also defer income by taking capital gains in 2020 instead of in 2019.
Implementing these—and other—year-end tax-saving strategies could save your family thousands of dollars on your 2019 tax bill. But if you don’t act soon, these opportunities may vanish for good, so meet with us as your Personal Family Lawyer® today to lock in your savings.
This article is a service of Beverly R. Davidek. I don’t just draft documents; I ensure that families and business owners make informed and empowered decisions about life and death, for themselves and the people they love.