Under the new tax law here are ways to save on your taxes
Here at Your Financial Freedom Network, we look for ways to help individuals and families maximize their financial situation. We work hard to helping families secure a solid financial future for them and their loved ones. We hope this information is helpful regarding the new tax plan as we wind down 2018.
1. Max out your Savings
defer your contributions by maximizing out your accounts such as a 401(k), SEP, and other accounts. Maximizing your accounts will help keep you under a tax bracket and will help you defer taxes on your money.
2. Contribute to an old IRA
you can contribute up to $5,500 and $6,500 if your 50 or older to minimize your taxable income.
3. Use HSA’s
Putting away money for health expenses is another way to put pre-taxed money away. If you take medications, doctor visits, or any health planned operations here is a great way to plan pre-taxed money away. Another benefit to these types of accounts is your balance grows tax-deferred. Your withdrawals that are used for medical expenses are also tax-free.
4. Max out Flexible savings accounts
Pay attention to how these work or you could lose your money. These are sponsored by most employers. This type account helps you to put away pre-taxed money and allows you to use them for health expenses, It is similar to an HSA but you have to use this money before the end of the year or the amounts revert back to the employer and you lose your funds. You can also roll over a small amount into the new year. One thing to note is that you cannot use an FSA alongside an HSA, you have to decide which one you want to use.
5. You can give away money
You can make a contribution to a charity, you can also giving stocks away by doing this gives you a tax advantage, but you have to itemize your deductions.
6. Get Tax Credits
doing volunteer/charitable work can also have advantages. Here you have to keep track of your expenses on what you spend while doing charitable work. This comes with the responsibility of itemizing your taxes to take advantage of this type of work.
7. Perfect time to start up a business
Participating in the gig economy has its advantages. If you form a small business and have your business in some type of corporation the new tax law allows you to deduct 20% of your income before figuring out your tax bill. You have to pay attention to how the new tax law comes in to play for lowering your tax rate. There are also limitations to this benefit, the 20% deduction has a limit for incomes over $157,000 on an individual return, there is a limitation for a joint return as well of $315,000.
8. Using your home as an office
There is a percentage you can deduct from your personal expenses, beware that you can be exposed to an audit if you do not properly handle this area respectively. There is a standard deduction you can take that makes this easy for you. The IRS offers a standard deduction of $5 for every square foot of office space up to 300 feet. There is a new caveat to this rule if you are an employee these benefits are now gone for you to take advantage of.
9. Go Green!
This area is growing as new green technology enters our commercial market. The IRS offers tax credits to homeowners who install alternative forms of energy-saving items. The IRS has not put any caps on this topic, but as time passes the percentage to take advantage of these credits starts to drop as the years go by.
10. Caring for people?
Do you have child care expenses? Most employers offer some time for childcare accounts, you can take advantage of these accounts by putting away pre-taxed dollars. The maximum you can set aside is $5,000. The new tax plan allows you to put away up to $14,000 for any one of your family members with special needs. This is due to the new ABLE law.
11. Earnings could lead to double taxation!
Investing is a great thing to do, but the most important thing you need to be aware of is, did you receive a capital gain that year? Remember the IRS can tax you on your gains, so most investors reinvest their dividends back into stocks to defer them. Failure to reinvest dividends opens you up to double taxation on your accounts.
12. Bonds are a great tax-free strategy
To figure out how you can come ahead with investing into tax-free bonds is easy, simply divide the tax-free yield by 1 and subtract your federal tax bracket to realize your equivalent yield.
13. Don’t forget about the Education tax break
Take advantage of the Lifetime Learning Credit, this credit is worth 20% of up to $10,000 in expenses that qualify. This could save you a couple thousand of your tax bill.
If you live in the greater Austin area, we would be happy to sit down with you to make sure your family is properly protected while we set up a strategic financial plan to help you build a legacy for you and your family. Contact us today! Sit down with us to receive a free financial plan for your future.
Rene Gonzales
Senior Representative
c. 512-568-7203
e. [email protected]
www.Primerica.com/ReneGonzales
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