Three Ways to Lower Your 2018 Taxes
As you race to get all your shopping, wrapping and baking done in time for the holidays, you may want to set aside some time to think about your tax return. Some action now could wind up saving hundreds or maybe even thousands of dollars when you go to file your tax return next spring. Gilmore Jasion Mahler Tax Partner Charlie Heid shared some suggestions on WTOL-11, including three ways to lower your taxes before the end of the year.
#1: Bunch or bundle your charitable contributions
With the new higher standard deduction, which is now $12,000 for individuals and $24,000 for joint filers, smaller charitable donations will no longer get you that tax break that they used to. Many more people will now be taking the standard deduction, and itemizing their deductions won’t apply.
You don’t have to stop giving to charity, just change up your timing a bit. For example, rather than donating $15,000 a year, bump that up to $30,000, but do it every other year instead.
#2: Finalize the divorce
Another change that the new tax law brought will affect anyone going through a divorce right now.
The big impact will be for the person who will be paying the alimony once the marriage is over.
If you’re in the process of a divorce and still finalizing the agreement, be aware that December 31, 2018 is a critical deadline… if you finalize the divorce before the 31st any alimony paid can still be deducted, and alimony received is still considered taxable income. After December 31, that alimony paid will no longer be deductible, nor will it be taxable for the recipient of the alimony. So if you’re in the process of a divorce, and you’re the one who will pay alimony, you want to get it finalized before the end of the year.
#3: Feed the 401k
You can protect a good portion of your income from taxes by moving it into a 401k. You won’t pay tax on the money until it is withdrawn during your retirement. You’re allowed to contribute up to $18,500 to your 401k this year. If you’re over 50, you can contribute up to $24,500.
If you don’t have a 401k you can put the money into an IRA. The great news with the IRA is that you have up until April 15th of 2019 to move the money to that IRA and still have it count as a 2018 contribution.
One final thought: If you sold any investments this year and made money, you may be looking at paying capital gains tax… you could take a look at any of your holdings that show a loss and sell them to offset the gains. If you have more losses than gains, you might be able to deduct the difference, up to $3,000 per year.
Tax Partner Charlie Heid contributed this blog. He joined Gilmore Jasion Mahler in 2002 and brings decades of experience to his clients. Charlie serves individuals as well as business clients across many industries, including manufacturing & distribution, retail and construction. He shares timely information on tax and money issues monthly on WTOL's Your Day.
Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers outsourced accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.