Less than two weeks left to go before the year ends. Wow! You meant to do some tax planning for 2018. Is it too late now? Believe it or not, there’s still time to implement some planning moves that can improve your tax situation for 2018 and the future.
Here are four last minute tax tips you can jump on and still enjoy the holidays:
Make HSA contributions
If you are an eligible individual under the health savings account (HSA) rules for December 2018, you are treated as having been eligible for the entire year and can make a full year’s deductible contribution for 2018. The maximum contribution provides a deduction of $3,450 for individual coverage and $6,900 for family coverage. Taxpayers age 55 or older also get an additional $1,000 catch-up amount.
Nail down stock losses
Consider realizing losses for stock you planned to divest anyway. Those losses can offset gains from other stock or investment asset sales. Losses that exceed gains may be deducted up to $3,000, $1,500 for married taxpayers filing separately.
Apply a bunching strategy to deductible contributions and/or payments of medical expenses
Beginning in 2018, many taxpayers who claimed itemized deductions in prior years will no longer benefit from doing so because the standard deduction has been increased and many itemized deductions have been cut back or abolished. A bunching strategy can help you get around these new limits — by accelerating or deferring discretionary medical expenses and/or charitable contributions into the year where they will do some tax good.
Use IRAs to make charitable gifts
If you are age 70½ or older, own IRAs, and are thinking of making a charitable gift, consider arranging for the gift to be made by way of a qualified charitable contribution, a direct transfer from the IRA trustee to the charitable organization, up to $100,000. The transferred amount isn’t included in gross income or allowed as a deduction on your tax return. A qualified charitable contribution before year end is a particularly good idea for retired taxpayers who do not need all of their as-yet undistributed required minimum distribution (RMD) for living expenses.
Yes, it’s late in the year for tax planning, but not entirely too late. Implementing one or more of these last minute tax tips will improve your tax situation for 2018 and future years. Makes the holidays even merrier, doesn’t it?