Stressed out about preparing and filing your federal income taxes this year? Check out these tips for lowering your tax bills, and increasing your potential refund.
Contribute to Tax Saving Plans
From IRAs to 401ks, Health Savings Plans and Education Savings Accounts, individuals can save and invest more money, take an immediate reduction on their taxable income, and enjoy tax deferred or tax free investment gains on those dollars year after year. In fact, up until the April income tax filing deadline you can still make contributions and get extra deductions for last year, and then immediately get ahead on reducing tax liability for next year.
Restructure Real Estate Investments
A new provision of the new tax code which many aren’t aware of yet is a 100% bonus depreciation break for some newly acquired properties, and improvements made to them. This can also be retroactive to September 2017, providing breaks for taxes filed this April and in 2019. This means it makes sense for many property owners and investors to sell off old holdings and acquire new ones. 1031 exchanges can also be used in this process to defer any capital gains on the sale of existing properties.
Upgrade Your Vehicle
The bonus depreciation break also applies to some vehicles, including luxury cars. If you’ve been planning to upgrade or replace a vehicle, talk to your CPA and find out how you might structure a new vehicle to lower your tax burden.
Hire a Great CPA
Unless you are a professional accountant yourself, it is far better to leave your tax prep and filing to an expert. There are now many online services. Some are even free. Yet, it is unlikely that most discount services will provide the savings of a better CPA. Remember these costs are tax deductible too.
Pay Off Your Mortgage
The new limitations on deducting State and Local Taxes (SALT) and mortgage interest call for many individuals to change the dynamics of their finances and living. With such low investment returns out there in most sectors, negative net returns on bonds, and a scary stock market, many may now be smart to pay off their home mortgages. It could provide the best return on your money.
Appeal Your Property Taxes
It is more important this year than ever to challenge your property tax assessment and bill. You can no longer deduct anything over $10,000. That’s a straight hit to you refund and net income for the year. Don’t squander the opportunity save here.