The 2020 tax season is almost underway, but the final weeks of 2019 can provide unique opportunities to avoid unpleasant surprises on your tax returns.
Here are some ways to prepare for next year’s tax season:
Donating to charity: Accelerate or “bunch” your charitable donations this year, and optimize your deduction allowances by making two or more years’ worth of donations in one year. This is helpful in a year when your income may be higher than in other years.
Capital losses: Stock investors may wish to speak with a trusted wealth management adviser to harvest capital losses to offset your capital gains. You can claim losses only if they exceed capital gains. You’re allowed to claim the difference up to $3,000 per year if you’re married filing jointly. Net losses that exceed $3,000 can be carried over into future years.
Quarterly estimated tax payments: If you have any income in 2019 with no taxes withheld, whether it is earned income as a consultant or investment income in a non-retirement account, you should be paying taxes to the IRS and your state each quarter. Your CPA and wealth manager can typically help you estimate these amounts so you can make payments and avoid interest and penalties.
Other taxes: Remember that changes produced at the federal level with the Tax Cuts and Jobs Act affected state and local governments. Be sure you understand the differences and how to best maximize deductions on both your federal and state returns.
Advance planning may help you to take advantage of the opportunities and benefits available under the current tax code. Discuss your unique situation with trusted advisers to help you make the best choices as tax season approaches.
Kelly Haggerty, MBA, CPA
Partner, The Haggerty Group
79 Chestnut St., Suite 101, Ridgewood