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Top 5 tips to Maximize your refund

As we close in on the end of 2018, many taxpayers are wondering whether or not the new Trump tax cuts will have a positive impact on their tax situation. In a number of areas, the rules of the game have definitely changed. There is no substitute for talking to your CPA this fall and running detailed tax projections but here are a few strategies to consider before year end:

  1. With the new $24,000 standard deduction, will you be able to itemize? If not, could you double up charitable contributions or some other itemized deduction to get you over the threshold this year and then take the standard deduction next year?
  2. If you’re over 70½ years old and you won’t be able to itemize, strongly consider making a qualified charitable distribution (“QCD”) through your IRA rather than paying the charity directly. This will lower your taxable income instead of giving you an itemized deduction that you can’t use.
  3. Maximize your retirement contributions. IRA, 401(k), SEP IRA, etc. This is still one of the best ways to defer income. Just don’t contribute too much where you wind up having to pull some out before age 59½.
  4. Can you defer income into 2019? If you’re self-employed, maybe delay invoicing until late December so the payment isn’t received until January. Or perhaps your employer would consider paying that yearend bonus in January instead of December. This strategy only works when you expect to be in a similar or lower tax bracket in the subsequent year.
  5. If you receive K-1s, or file a Schedule C or E, the new 20% deduction could have a major impact on your tax situation. Not everyone will get it but there may be things you can do to capture and/or maximize this deduction. It’s complicated so you’ve got to call your CPA on this one.

-Paul Wade

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