5 Easy End of Year Tax Tips

With the year coming to an end, now is a great time to make some moves that will lower your tax bill.

Here are 5 quick and easy moves that will lower your tax bill.

Maximize Your Retirement Contributions

Anything you contribute to your 401k will reduce your taxable income, which is why we recommend putting your money there first in your hierarchy of savings.

IRA contributions can also be deducted if you make less than $73k in 2018, or $121k for married households.

Defer Bonuses

Any compensation you can push from December to January will push defer your tax obligations to the following year. If you have end of year bonuses, ask your company about deferring that payment until January.

Even though the payment is deferred a couple weeks, your tax obligations go back entire year. This is a no-brainer if you can pull it off.

Donate to Charity

The holidays are a great opportunity to clean out your household goods and give to those in need. Anything you donate can be deducted from your taxes if you itemize your return. You can also deduct any 14 cents for every mile you drive for charitable service.

As long as you make the donations by December 31st, you’ll be able to claim that deduction this tax year.

Take a Class

Taking a course that advances your career or builds your business can also be deducted.

As long as the institution is qualified, you can get a tax credit of up to $2k thanks to the Lifetime Learning Credit.

Sell Your Losers

Did you have any stock investments that went down this year? You can sell them for a loss and deduct it from your gains and income, which is known as tax loss harvesting.

After offsetting your capital gains, you can can also deduct up to $3k of your regular income per year. The only catch is that you cannot buy the stock back within 30 days.

End of Year Tax Tips – The Bottom Line

As you approach the end of the year, these 5 tax tips will lower your bill and maximize your refund.

Maximizing your retirement contributions, deferring bonuses, donating to charity, taking classes, and selling your losers are quick moves that you can make before the year ends.

Each of these moves are quick, and can make a massive impact on your tax bill.