As the year comes to a close, Liberty Tax looks at tax-savings strategies taxpayers can consider to decrease their tax liability.
• Know Before You Owe – Taxpayers who haven’t checked their withholdings at work, should do so before the end of the year. They can use a withholding calculator or visit their tax preparer to see if they are withholding enough from their paycheck to cover their tax bill. This is especially important this year because of changes made to withholding under tax reform.
• Spend flexible spending account (FSA) – FSAs are great tax-saving tools, but they often come with “use it or lose it” requirements. Any money left in the accounts at the end of the year could be forfeited by the taxpayer. Taxpayers should fill prescriptions, buy eyeglasses, and use the money in the FSA on qualified medical expenses, so they don’t lose it.
• Add up itemized deductions – The Tax Cuts and Jobs Act nearly doubled the standard deduction, so now is the time to tally your itemized deductions to see where you stand. If, for example, you’re a single homeowner who has $12,500 in itemized deductions, you may want to consider whether it’s OK to take the $12,700 standard deduction or give that more in charitable contributions in December instead of January and take an itemized deduction.
• Maximize retirement contributions – Taxpayers can contribute up to $19,000 to their traditional 401(k) plans. If the money is available, it may make good tax sense to meet the maximum.
• Sell loser stocks – Taxpayers can deduct up to $3,000 ($1,500 for single taxpayers or those married filing separately) of their excess losses. This can offset any capital gains and reduce overall income.
To find a local Liberty Tax office, call 866-871-1040 or visit on-lineyTax.com. Liberty Tax does take appointments; however, they are not necessary.