1. Although many deductions have been eliminated under the new laws, it might still be helpful to write down or keep all receipts you think are even possibly tax-deductible. Sometimes, taxpayers assume that various expenses are not deductible and do not even mention them to their tax preparer. Do not assume anything—give your tax preparer the chance to tell you whether something is or is not deductible.
2. Be careful not to overpay Social Security taxes. If you received a paycheck from two or more employers, and earned more than $128,400 in 2018 (up from $127,200 in 2017) you may be able to file a claim on your return for the excess Social Security tax withholding.
3. Do not forget items carried over from prior years because you exceeded annual limits, such as capital losses, passive losses, charitable contributions and alternative minimum tax credits.
4. Check your 2017 tax return to see if there was a refund from 2017 applied to 2018 estimated taxes.
5. Calculate your estimated tax payments for 2019 very carefully. Many computer tax programs will automatically assume that your income tax liability for the current year is the same as the prior year. This is done to avoid paying penalties for underpayment of estimated income taxes. However, in some cases this might not be a correct assumption, especially if 2018 was an unusual income tax year due to the sale of a business, unusual capital gains, the exercise of stock options, or even winning the lottery!
6. Remember that IRS.gov is a valuable online resource for tax information.
7. Always double check your math where possible and remember it is always wise to consult a tax preparer before filing.
Tax planning should always be a key focus when reviewing your personal financial situation. One of our goals as financial professionals is to point out as many tax savings opportunities and strategies as possible for our clients. Sign up for our mailing list to receive our Special Tax Report that reviews some of the broader tax law changes for filing 2018 income taxes.
One of our primary goals is to keep you informed of the changes that will be affecting investors like you. We believe that taking a proactive approach is better than a reactive approach—especially regarding income tax strategies!