We’ve all heard a whole lot of “informed commentary” about the Tax Bill, but the fact is nothing has changed … yet. And even if Congress does pass it, most of the changes wouldn’t affect the current tax year. That said, they are discussing some pretty big changes. Most people will be better off, but the “rich” will likely be gouged. Hint: The government definition of “rich” has a very low bar!
But enough of that! Hopefully, we’ll be able to give you some real updates in our Newsletter next month. For now, most of the Year-End Tax Tips that have existed for several years are still good:
- Donations – Clean out the closets, donate holiday decorations you no longer use, buy toys for Salvation Army, Toys for Tots, the Angel Tree at church or work, send a check to your favorite charity. Whatever you do, KEEP THE RECEIPTS! Charitable Donations have become favorite audit item at IRS.
- Flex-Spending Accts – USE IT OR LOSE IT! Any money taken from your paycheck and held in a flex-spending account reverts back to your employer on Jan 1, so use it up!
- Capital Gains – Look over your stock sales for the year. You are limited to a capital loss write-off of $3000 per year. If your losses are higher than that, or if you have carryover losses from a prior year, now is a good time to get some ready cash by selling a winner. And the reverse of that, if you have net capital gains for the year, now is a good time to sell loser stocks to offset your capital gains.
- Retirement – If you find you still have extra money at the end of the year (yeah, right!), consider putting it into your 401k or SimpleIRA by December 31. The taxes are postponed on what you set aside until you withdraw funds in a future year. You can also put money aside in an IRA or SEP, if you qualify, but you have until tax filing time to make those deposits and still write them off. (Note: a Roth IRA is never a write-off on taxes).
Health Savings Accounts – If your employer offers a Health Savings Account, please PLEASE! Bring the statement to us when we prepare your taxes. The 1099-SA you receive must be included on your tax return even though you owe no tax on the money withdrawn.
Reminder – Bring us anything that says “1099” on it. Some of these look like a W-2 form, but many look more like a year-end statement. If it says “1099”, a copy was sent to you and a copy also went to the IRS.
As always, please feel free to call or email us if you have any tax related questions before tax season.