We officially put 2018 in the rearview mirror the second the clock struck midnight on New Year’s Eve, yet there is at least one way you still need to rewind your focus back to 2018 — taxes.
No one likes taxes. It’s like some unwritten rule in the book of life. Yet we all must deal with them unless we want the IRS to come knocking at our door and escort us in handcuffs. So what tax planning and preparation do you need leading into April 2019? Here are our suggestions…
New 2018 Tax Laws
The Trump Administrations has enacted some new tax rules for 2018. The new Tax Cuts and Jobs Act will likely lead more taxpayers to opt for the newly raised standard deduction this year:
- $12,000 for single taxpayer
- $18,000 for head of household
- $24,000 for married and filing jointly
Taxpayers will no longer benefit from writing off property taxes, medical bills, and charitable donations like they have in the past so they will want to itemize in order to take advantage of deductions.
Capitalize on Energy-Saving Improvements
The U.S. government may be currently shutdown but when it reopens it plans to reward homeowners that made energy-saving improvements to the structure in 2018. The government set aside tax breaks for people that added qualified upgrades to power systems like solar power, wind energy and geothermal heat pumps. Learn more about the tax credits by visiting: https://news.energysage.com/2018-energy-tax-credits-can-save-money/
Manage Capital Gains & Losses
Did you know that gains and losses from the sale of capital assets (bonds, stocks, property, etc) that went down in value and were sold in 2018, are recognized for the following year? So if you had a significant devaluation in 2018, you can use those losses to offset capital gains from the current year. It helps weather the storm of unfortunate losses from capital assets.
One trending term you may hear a lot about for 2018 taxes is RMD-to-charity rollover. The term is popular these days due to new, higher standard deductions that can help taxpayers capitalize on the investment.
RMD-to-charity rollover exists for individuals that are 70 and older with tax-deferred retirement accounts (i.e. IRAs), and must already take taxable required minimum distributions (commonly called RMDs) from the account each year. Instead of paying the tax on the distribution, taxpayers can instead opt to distribute the RMD directly to a qualified charitable organization and avoid the tax altogether.
Consult a Professional Tax Service
Whether you know a personal accountant or consult a professional firm, it’s never a bad idea to reach out for tax advice and help. These people are experts on the IRS and maximizing deductions. With the introduction of tax reform like the Tax Cuts and Jobs Act, it is wise to see how professionals would handle your own unique situation.
How do you find a qualified tax accountant? Enrolled agents are licensed by the U.S. Treasury, while certified public accountants and attorneys are licensed by their respective state. Some states also license their own tax professionals as well. You can scan the IRS directory of tax preparers here: https://irs.treasury.gov/rpo/rpo.jsf