With the end of the year and the beginning of the 2019 tax season approaching, now is the perfect time to start making moves to lower your tax bill. If you’re looking to yield significantly lower tax savings in 2019, these individual tax planning strategies can help you reduce the amount you owe.
Choose between the standard deduction and itemizing
Every year, tax filers can choose between taking the standard deduction provided by the Internal Revenue Service or itemizing their deductions. In 2019, the standard deduction will go up to $12,200 for individuals and $24,400 for married couples filing jointly, so there will be fewer people itemizing their returns. However, if you expect your itemized deductions to total more than the standard deduction, it might be worth it to choose to itemize.
Update your withholding
In 2018, the IRS urged filers to update their tax withholding after a massive tax overhaul took effect. If your withholding isn’t up to date, you could risk underpaying your taxes during the year and owing money or overpaying your taxes during the year and not having that money available to you if you need it. Making adjustments to your tax withholding can help you avoid underpaying or overpaying your taxes on your earnings throughout the year.
Evaluate your investment portfolio
Liquidating your investment holdings and taking a loss can be beneficial if you’re getting a raise in 2019. You can apply up to $3,000 worth of capital losses to offset any ordinary income. While you may not want to act hastily by liquidating any holdings that are underperforming, it may make sense to take an investment loss in 2019.
Make paying as little as possible in taxes your goal for 2019
Find a tax strategy that works best for your finances. If you need help with individual tax planning, contact us to learn more about how we can help you with your retirement and tax planning.