The end of the year is drawing close and we are getting many calls for ideas on how to save on 2019 income taxes. Not every idea below may apply to your situation, but the following moves collectively could save you significant tax dollars!
Parents may qualify for more childcare credit if they prepay January’s childcare costs in December. Any parent who has not reached the limit of $3,000 per child in 2019 should consider this move.
If you are considering redeeming savings bonds, you may want to split the redemption and cash half of them in December and half in January 2020. This will split the income over two years and may prevent you from moving into a higher income tax bracket.
You can gift up to $15,000 to any one person without reporting it and the recipient will not have to pay any income tax on the money. After January 1, 2020 you may gift them another $15,000. This is a per person, per year limitation. A married couple can each donate $15,000 to their child for a total of $30,000 in 2019.
In 2019 you may deduct charitable donations up to 50 percent of your adjusted gross income. We emphasize this is a deduction and not a dollar for dollar credit. Your tax savings will only be a percentage of the value of the money or goods donated.
Parents of college students may want to prepay the January semester tuition in December. If you have not already paid in excess of $4,000 per student dependent, you could recognize a higher tax credit on your personal income tax returns.
If you have not already funded your HSA to the 2019 limit for your filing status, $3500 for singles and $7,000 for a family, you may want to before January 1. Any unspent money may be rolled over to future years. This money goes in pre-tax and can accumulate earnings tax deferred while in the plan. Over time, this can function as an additional pension.
The majority of taxpayers will find these year-end moves applicable to their circumstances. We appreciate the opportunity to share these ideas with you, and wish you all a happy and healthy New Year’s.
