October is Financial Planning Month, and what better way to plan than to take a look at your taxes! You thought you didn’t have to do that until January, right? Not true, because now is the time to do everything you can to reduce your taxes.
Here are some tax planning steps that you can take to minimize your 2018 taxes and help you with your finances:
Give away things you don’t need. If you missed cleaning out your closets or donating throughout the year, now is a great time to shuffle and sort your clothes and give things you don’t want or need to a charity. You may be able to get a tax deduction if you can itemize your deductions, more space in your closet, and others can even use the items you’ve been neglecting. TurboTax ItsDeductible can help you track and value your charitable donations year-round.
Contribute as much as you can to retirement plans. The best way to benefit financially is to sock money away for your future in a retirement account and garner tax savings to boot. If your employer matches your contributions, that’s even better. If you have a plan at work, the money comes straight out of your paycheck so you don’t even have to think about it.
And if your employer doesn’t offer a retirement plan, you still can contribute to an IRA or a Roth IRA. You can contribute up to $18,500 to an employer-provided retirement account and $5,500 to an IRA, and even more if you are 50 or older.
Get an education and a tax credit. If you are paying for post-high school education for yourself or your child, you may be eligible for the American Opportunity Tax Credit or the Lifetime Learning Credit. If you or your dependent are attending college next year, you can pay for the first quarter tuition before the end of this year and reap the benefits of one the education credits on your 2018 taxes.
Accelerate tax deductions. Received an unexpected bonus this year which moved you into a higher tax bracket? You may want to move some of your tax-deductible expenses from next year to this year to lower your taxable income and tax bracket if you itemize your tax deductions. You can pay the second half of your 2018 property taxes as long as they were assessed for 2018, pay your January mortgage payment in December, make donations this year instead of next, and make and pay for those doctor’s visits.
Also, be aware that the standard deduction increased under tax reform so if you once itemized your tax deductions and were able to claim things like charitable contributions, you may now have to take the standard deduction but you can possibly boost your tax deductions using these tips so you can still itemize.
Don’t worry about knowing all of these tax laws. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for. If you still have questions, you can connect live via one-way video 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 tax return.