It’s that time of year to cast an eye toward tax preparation. Most of us don’t like preparing for tax filing season as it is, and this year, there are many new changes to keep in mind with passage of the Tax Cut and Jobs Act 2017 (TCJA). Be prepared and do everything you can to make it easier on yourself. Here are a few ideas for you.
Start gathering your documents. If you have a box of receipts spend some time going through them and organizing and totaling the receipts by category. You should do this prior to giving your information to your accountant or tax preparer. It will save them time, and you money!
Work on your tax prep a little each week and it won’t be overwhelming. Create a specific space to organize your documents and work on your filing. If you start preparing now, the April deadline won’t be so stressful.
Sell stocks or funds that have lost value by December 31 if you need a loss to offset gains. You can apply this loss against gains to help reduce your overall tax burden. Check with your financial planner or accountant prior to making this move. Remember, this applies to taxable accounts, and not qualified, tax-deferred retirement accounts or IRAs.
Consider finalizing cash gifts to charities. Cash gifts to qualified charities are deductible in the year made. However, with the TCJA increase in the standard deduction to $12,000 for single filers, $24,000 for married filing joint, many people will no longer be itemizing. You may need to consider establishing a donor advised fund, or bunching your gifts and filing an itemized return every other year.
Keep in mind the new changes. Under the TCJA, as noted above, the standard deduction has dramatically increased. It is estimated that nearly 90% of US taxpayers will no longer itemize when they file. Here are a few other key changes: unreimbursed employee expenses, investment fees, tax preparation fees, employment related education expenses, moving expenses, job search expenses, theft, and many casualty losses are no longer deductible. State and local taxes (SALT) are now limited to $10,000. This may affect taxpayers in states with high local taxes or high property values or a combination of both.
On the plus side, long-term capital gains rates are retained at 0%, 15%, and 20%. The TCJA provides for a 20% qualified business income deduction (QBI). The QBI rules can get complicated pretty quickly, so talk to an adviser. Section 179 expensing rises from $500,000 to $1 million for small business. The Alternative Minimum Tax (AMT) is permanently repealed for corporations (but not for individuals).
Hire a financial planner! Your financial planner may not be able to help you with a lot of tax prep for 2018 at this time of the year, but getting you in financial shape in 2019 is something a financial planner can do. Set some goals and get started.
As an independent Certified Financial Planner™, I can help you get organized and create a plan for a less stressful filing season. Better yet, we can start working on your 2019 goals. Contact me and let’s get started! #talktometuesday #education #Hireaplanner #tax #taxfiling #stress #stressfree