The Millstone Times December 2018

EXPERT TAX ADVICE FAMILY MATTERS

As the end of the year approaches, now is the time to take a look at what you can do to save on your 2018 tax bill so that you will enjoy either a bigger refund or owe less money in April. SOME TAX-SAVING STRATEGIES YOU CAN CONSIDER:

1. Defer the receipt of any income until January – you have an additional year to pay tax on it. Tax rates will be lower in 2019, indexed for inflation. But you should take as much income in 2018 to max out the lower brackets!!! 2. If you own stocks, bonds, or mutual funds, and don’t already have loss carry forwards from last year, sell those securities you have incurred paper losses on prior to December 31 – net capital losses up to $3,000, or $1,500 if MFS, are fully deductible on your Federal return. In addition, long-term capital gains and dividends frommost stocks still enjoy preferred tax rates for Feder- al purposes. Some of you could even pay a “zero” percent rate!!! Conversely, if you have those loss carry forwards from last year, you might want to lock in gains that will be free from Federal tax. 3. With the increased standard deduction and limits on taxes, you may want to consider “bunch-

ing” your medical expenses and charitable contributions so that you have two years of deductions in one year. This will give you a better chance of being able to get some benefits from deducting them vs. actually getting no benefit because you are better off with the standard deduction. 4. Max out your retirement plan contributions. IRA’s can be deposited up until April 15th of next year to get the contribution this year. 5. Converting some or all of your IRA’s to Roth’s might make sense. You should max out income in a lower bracket now vs. taking a taxable distribution in the future if you will then be in a higher bracket. The above are the most common ways individuals can reduce their current year tax bites or see their taxes unexpectedly go up, but not the only ways. If you wish to discuss these or additional ways to reduce taxes, please contact Kenneth R. Deitz, CPA as soon as possible.

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