In the midst of all of the holiday excitement, don’t forget tax season is just around the corner. There’s still time to make a few year-end adjustments to your finances that could save you money on tax filing day.
Contribute to retirement accounts
Retirement could be a year away or more, but it’s always good to contribute to your plan. That’s because maxing out your 401(k) and IRA contributions may help reduce your tax bill and help you reach longer term goals.
For 2019, the maximum you can contribute to your 401(k) is $19,000. If you're 50 and older, the $6,000 catch-up contribution remains unchanged from recent years. IRA contributions max out at $6,000 with catch-up contributions of $1,000 for those 50 and over.
If you’re under that cap and your finances allow, go ahead and bump up those contributions to get as close to the maximum contribution limit set by the IRS.
Help a charity and help yourself
If you itemize your tax return, contributing to a charity is a good way to get an additional tax deduction. In addition to cash, you can donate appreciated stock or even personal property to IRS-approved charities. If giving clothing or household items, remember the IRS only allows deductions for items that are at least in good condition. Be sure to ask the charity for a receipt or letter with your donation you can reference with your returns. Also keep a copy with the rest of your tax records.
Look for lesser known deductions
Did you spend a lot at the doctor this year? Were you hospitalized at any point? If your out-of-pocket medical expenses amounted to more than 10 percent of your adjusted gross income, include them in your deductions.
Other, less commonly known deductions may apply to you as well, such as the cost of tax preparation or the rental cost for a safe deposit box at your credit union. If you are a teacher, you may be able to take the educator expenses deduction for supplies you purchase with your own funds.
Find and organize receipts
Gather and organize your receipts now, so they’re ready when you visit your tax preparer. If you don’t have a filing system for your tax records, start one. Having all your tax records organized is a real time-saver come tax prep time. Plus, the IRS typically requires you to keep tax records for at least three years unless your tax preparer suggests otherwise.
Decide how you’ll file your taxes
You could prepare your taxes on your own or seek help from a professional. Either way, LGFCU can help. If you like doing taxes yourself, you can get a special discount using TurboTax online. If you prefer to leave it to the professionals, there’s low-cost tax help available at your nearest branch.
The advice provided is for informational purposes only. Contact your tax advisor for additional guidance.