10 Easy End of Year Tax Tips to Increase Your Tax Refund

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The article below is up to date based on the latest tax laws. It is accurate for your 2018 taxes, which you will file by the April 2019 deadline. Learn more about tax reform here.

It’s hard to believe that we are in the last quarter of the year! With 2018 coming to an end, now is a great time to make some easy and smart tax moves to help lower your tax bill and increase your tax refund when you file.

So, get all of your receipts for any tax-deductible expenses and sources of income ready because these 10 quick and easy tax tips will help you get your finances organized before the year ends!

1. Electric vehicle credit: In the market for a car? You still have until December 31, 2018, to purchase an electric vehicle and get the $7,500 credit. According to the IRS, since Tesla is the first manufacturer to reach the 200,000 cars sold threshold, the credit will begin phasing down in 2019 – so take advantage of this credit while you still can.

2. Defer bonuses: If your hard work paid off this year and you are expecting a year-end bonus, this extra money in your pocket may bump you up to another tax bracket and increase how much taxes you owe. If you can hold off on seeing any extra income this year, do it! See if your boss will pay you your bonus in January. You will still receive it close to year-end, but you won’t have to pay taxes on it when you file your 2018 taxes. TurboTax TaxCaster can help you see where you stand with and without this income.

3. Accelerate deductions & defer income: There are a handful of tax deductions that are recognized in the year in which you pay them. For example, if you own a home and get a mortgage interest deduction, and if you make an extra mortgage payment on December 31, you can claim that additional tax deduction on this year’s taxes.

This lets you take the deduction immediately rather than wait an additional 12 months when you do your taxes for next year. Before using this strategy be aware that under the new tax law, if you purchased a new home after December 15, 2017, you can deduct the mortgage interest you paid based on a home loan up to $750,000 instead of $1,000,000 for homeowners who purchased before that date.

4. Donate to charity: The holiday season is coming, which is a great time to clean out your closet and household goods to give to those in need. You can help someone in need and reap the benefits of a tax deduction for non-cash and monetary donations donated to a qualified charitable organization if you can itemize your tax deductions.

If you volunteer at a qualified charitable organization, don’t forget that you can deduct your mileage (14 cents of every mile) driven for charitable service. TurboTax ItsDeductible will accurately value and track your yearly-donated goods and mileage for volunteering. Make these donations count on your taxes by donating by December 31st. Even if you make a donation by credit card, you do not have to pay it off in 2018 to receive the tax deduction.

5. Take a class: Taking a course to advance your career and build your business is also a great way to boost your tax refund. Paying for next quarter’s tuition by December 31 may give you a valuable tax credit up to $2,000 with the Lifetime Learning Credit.

6. Maximize your retirement: Another great way to reduce your taxable income while building your nest egg is to make a contribution to your retirement savings account. Whether you contribute to a 401(k) or a Traditional IRA, you can take a dollar for dollar reduction in your income and also save for the future. Additionally, if you are self-employed and contribute to SEP IRAs, you can deduct up to 25% of compensation or $55,000 for 2018.

7. Spend your FSA: If you have a Flexible Spending Account and have money left, get caught up on your doctor’s visits. The old “use it or lose it” rule may not still apply, but if you have unused money in your FSA account on December 31, you may only be able to carry over up to $500 into your 2018 FSA or your plan may limit the amount of time to 2 1/2 months after the end of the plan year to use your funds.

8. Buy low, sell low: Chances are you have a few investments in your portfolio that have gone down in value, but did you know you can recognize your losses and use them to offset investment winners? To do this, you need to sell the losing investments and offset your losses against your gains recognized. If your losses exceed your gains, you can apply $3,000 of that against your regular income. Any extra will then be passed to the next tax year.

9. Estimate your household income for Marketplace Insurance: Are you applying for a subsidy or discounted insurance in the Health Insurance Marketplace this open enrollment season, which is from November 1st to December 15th for 2019 Marketplace insurance? If so, you will have to project your 2019 household income and family size when you apply. Start looking into any changes that may take place in 2019 (growing your family, job promotion, heading into retirement, etc.). These changes may affect the amount of subsidy you are given to help you pay for health insurance.

10. Increase your Marketplace Premium Tax Credit: If you received assistance for Marketplace insurance in the form of an Advanced Premium Tax Credit, one smart move you can make is to lower your adjustable gross income by contributing to your retirement plan, which may increase the premium tax credit you’re eligible for when you file your 2018 taxes.

Don’t worry about knowing these tax laws. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for based on your answers.

If you have questions, you can connect live via one-way video, on demand, to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered.  A TurboTax Live CPA or Enrolled Agent can even review, sign, and file your return.

Comments (24) Leave your comment

  1. My husband had 3 surguries, 5 months out of work. Had to pull money out of 401 k to survive. Is any of expense of pulling out early tax deductible?

  2. Weve had the same foster children all year.will we be able to claim them and if so are there any changes as far as claiming our own kids.

  3. My husband has been deemed disabled and is now collecting ss disability, he is under 65. He had to take his work pension early. Are both of these totally taxable or is there a percentage?

  4. I filed a return in 2018 for the 2017 tax year the found more information and filed an amended return. Then I found more data that would give me more deductions. Can I file a second amended return? When must I file?

  5. . If your losses exceed your gains, you can apply $3,000 of that against your regular income, but what if you can’t use all of the entire $3000 to offset income. Can you not take the entire $3000 as a deduction? Or is it mandatory to take $3000 as a deduction?

  6. What version do I need to purchase this year that includes investments. Last year I had to take back the premium version for the deluxe

    1. Hi Richard,
      We do have info about social security and retirement, but we will take this into account.
      Thank you,
      Lisa Greene-Lewis

  7. I did my 2015 taxes through turbo tax. I did not complete my state tax part. What should I do since its going to be another year.

  8. I need to file a 1041 return for my deceased wife’s trust return as well as my 1040. What TT package will handle the interface?

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