Did you pay more taxes than expected this year? Check out the short list below of what you can do now to reduce your 2019 taxes.
Increase Retirement Contributions
Contributions to tax-deferred accounts (403(b), 401(k), traditional IRA) may directly reduce your taxable income and therefore your tax bill.* Click to view the increased 2019 contribution limits. Note that Roth contributions do not reduce your taxable income as they are funded with post-tax dollars.
Required Minimum Distributions (RMD)
If you are 70 ½, be sure to take your RMD within the required time period or face a tax penalty of 50% of the RMD. In addition, if you do not need your RMD for normal living expenses, you can choose to make a qualified charitable distribution (QCD) to reduce your adjusted gross income. Read more here.
Bunching Charitable Giving
The new standard deduction of $24,000 (for married couples) was intended to simplify tax preparation. Unfortunately, that tax code change made it more difficult to reap tax benefits from charitable giving. If you generate enough deductions to overcome that $24,000 hurdle, you will be able to take advantage of the increased charitable tax deduction that allows you to deduct up to 60% of your adjusted gross income (AGI). You may need to consider a giving strategy called “bunching” to access that increased deduction. Simply put, you can “bunch” your giving by frontloading multiple years of giving into one tax year. In that year of larger-than-normal giving, you boost your itemized deductions higher than the $24,000 standard deduction so you can access the 60% charitable tax deduction. Using both cash and non-cash assets, a Donor Advised Fund is a simple tool to help you “bunch” your charitable giving. Once inside the Donor Advised Fund, you can advise the distributions of those funds to be donated where and when you choose. Click the read the full article on maximizing your deductions.
If you have questions or would like more information regarding the tips in the article, email or call 877.616.5202.
*Subject to eligibility
This information is not tax advice. Information is from sources deemed reliable. Information is subject to error, omission, withdrawal, or change. Contact your own tax advisor before taking any action that would have a tax consequence.