Where has the year gone? Throughout the year we have several ways to help lower our tax bill and save more money. Although most of the year is behind us, there is still time to take advantage of some things that can help put you ahead. Take a minute to review this end of year checklist.
Maximize retirement account contributions.
How much more can you save before year-end in your IRA or company retirement account? Traditional and Roth IRAs have a limit of $5,500 with catch-up contributions of $1000 for those over age 50. The 401K contribution limit is $18,500 with a catch-up contribution of $5,500. These extra contributions may push you into a lower tax bracket, so it’s worth evaluating.
Don’t miss your Required Minimum Distribution (RMD).
At age 70 ½ you are required to withdraw at least the required minimum distribution from your IRA or face a steep penalty. Remember the option of doing a Charitable IRA Rollover. This allows individuals to use their RMDs to make a direct transfer of up to $100,000 per year to qualified charities without incurring federal income taxes. Remember though, because taxes are not taken out when you complete a Charitable IRA Rollover, these funds may not be listed on your tax return as a charitable contribution.
Spend your Flexible Spending Account (FSA) money.
Is there money left in your company FSA? Use it before the end of the year, or lose it. Buy those glasses, or get the dental work done, before the money disappears.
Capitalize on tax-loss harvesting opportunities.
At Perspective, we regularly review portfolios for tax-loss harvesting opportunities. This helps to offset taxable capital gains you have had throughout the year by selling investments that have lost value.
Review your spending.
Are you confident you know where your money is going? Begin the process of reviewing your statements and identifying opportunities to save more. By focusing on what you can control, you can help kick off 2019 in the right direction.