Taxes have been filed, major projects are being finished, and planning for 2020 is underway, the year is finally coming to a close. However, 2019 is not over yet, and financially you can still take advantage of it. Many things can change from year to year, and it is important to know and understand how these changes can affect your taxes for next year. Year-end tax planning gives you a clear visual of your tax picture for the year and allows you to avoid any surprises. Taking this proactive step allows you take action on items to help lessen the burden on your tax bill the next year. These are items that you can only take action on before December 31st in order to reap the benefits.
There are a number of different strategies and approaches available, including reviewing pre-developed year-end tax checklists, performing a marginal tax rate analysis to ensure that you won’t be pushed into a higher tax bracket unnecessarily, deferring income and more.
Proactive tax planning and investment decision making provides small business owners and high-wealth individuals an opportunity at substantial tax savings. The most important factor are the timing and the method by which you report your income and claim your deductions and credits. You should aim to time your income so that it is taxed at the lowest rate possible, and to time your deductions so they are claimed during tax years in which you are in a higher tax bracket.
The following items are a few of the options we need to review before year-end:
- Deferring income
- For spouses, calculating both “married filing jointly” and “married filing separately” to determine any advantages
- Recognizing when to take capital gains and losses
- Considering any children or elderly parents you may be able to claim
- Contributing to retirement plans
- Using investments options for charitable giving instead of cash
- Large equipment purchases
- Real estate purchases/ sales
While taxes are not due until the spring, the changes you can make to your tax situation greatly decrease upon January 1st. Contact us to learn more about how we can minimize your tax burden.