by James Rada, Jr.
As the end of 2018 looms, folks are thinking about holiday cheer, New Year’s Eve plans, and … taxes. Although tax returns aren’t due until April 15, the deadline for earning a tax deduction is Dec. 31. And these last-minute ideas from the experts at Sturgill Financial Group and H&R Block could save you money on your 2018 tax bill. These tips are meant to be considerations. They may or may not be appropriate for your particular financial situation. Consult with your tax adviser to determine what best helps you reduce your tax burden. Just make sure to do it before the end of the year.
Postpone Bonuses and/or Income
If you’ve had a particularly good year at work, you may find yourself getting a bonus. If possible, see if your boss will pay that bonus in January, since, depending on the amount, it could bump you into another tax bracket if paid in 2018.
Track Medical Costs
Keep a record of your unreimbursed medical expenses during the year. These include things like mileage to appointments, co-pays, and prescriptions. These can all be deducted if they aren’t being paid for using a health savings account. The combined value of all these deductions must also be more than 10 percent of your adjusted gross income (7.5 percent if you are older than 65). So if you have had a lot of medical expenses this year, consider scheduling any needed or elective procedures before Dec. 31. Just make sure that the procedure qualifies as a deductible expense (many elective procedures don’t).
The holidays are a great time to make donations to your favorite charities. Financial contributions and goods donated to a qualified charity can be deducted from your taxes. If you are giving used goods, value them as if you were selling them at a yard sale, and be sure to get a receipt. For cash donations, write a check or use a credit card for record keeping — and remember that for donations over $250, you will also need an acknowledgment from the organization. If your volunteer efforts for a charitable organization require driving, track your mileage. You can deduct it at 14 cents per mile. And best of all: Not only will these donations lower your tax bill, you will also be helping others.
Consider accelerating tax deductions that are recognized the year in which you pay them. For example, if you own a home and get a mortgage interest deduction, if you make an extra mortgage payment on Dec. 31, you can claim that additional interest as a deduction for 2018.
Sell Off Securities
If you have a large net capital gain so far this year, consider selling some stock to generate a loss before Dec. 31. Doing so could reduce the amount of tax you pay. But don’t let the possible tax savings lure you into decisions that are contrary to your investment interests.