Most people have filed their 2018 tax return and are thinking about 2019 tax planning. If you were not already aware, below are the three of the main tax items that changed in 2018.
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New tax rates, which were either lower or unchanged from the previous years.
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Standard deduction increases.
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Reduced deductions, and limits on certain itemized deductions.
After looking at these three major changes, Fidelity and CFO 4 Your Biz suggest the following items to consider for your 2019 tax planning.
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Consider bunching charitable contributions in a specific year to be able to itemize them. Since the standard deduction increased, not as many people can itemize anymore and they lose the deduction for contributions they gave to various charities throughout the year.
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Consider changing your W-4 allowances, and have additional tax withheld from your paycheck, if you are under withholding.
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Consider contributing the maximum amount to retirement plans and flexible spending accounts if your employer offers them.
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If you own a business, consider making the maximum contribution to an IRA account.
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Consider tax-free municipal bond income in your investment portfolio. This income is normally federally tax-free, therefore you won’t have to pay any federal tax on it. Be Aware, states have varying tax rates; knowing if you live in a high tax state or a low tax state is beneficial when it comes to tax time.
Check out the article from Fidelity for more in depth knowledge. Click here to read the article from Fidelity.