Last Minute Tips for 2019 Taxes
Summary
- Tax Day is quickly approaching, but there is still time to take advantage of strategies that may help minimize your tax liability. We encourage you to reach out to your advisor with any questions.
- Consider working with your advisor and tax specialist now to proactively plan for 2020, so that you can minimize your tax liability and keep more of your wealth.
Fund Your Retirement in 2019
- Fund your Individual Retirement Account (IRA). Until April 15, you can make contributions to your retirement account and have those funds count toward your 2019 goals. The maximum amount you can contribute is $6,000 if you’re under age 50 and $7,000 if you’re over 50.
- Fund your 401(k) if you are self-employed. If you are self-employed, you can still fund your 401(k) for 2019 as long as you do it by the April 15 tax deadline.
- Boost your Health Savings Account (HSA) for maximum retirement savings. Like IRA contributions, you can fund an HSA until April 15 and have it count toward your 2019 contributions. HSAs can lower your taxable income while increasing your tax-exempt contributions. Take a look at HSAs.
What to Think about for 2020
- If you’re retired, keep saving. The SECURE Act brings significant changes to the retirement system, including eliminating the age cap on contributions to an IRA, whether it’s a Roth IRA or a traditional IRA. Even if you are already retired, it may make sense to continue to fund your retirement account as long as you have earned income.
- Not retiring anytime soon? Get started and keep saving. If you haven’t begun saving for retirement, it’s not too late to start. Take advantage of your employer-sponsored retirement plan. You can also open a traditional or Roth IRA account to save more. For 2020, you can contribute:
- $19,500 in your 401(k), 403(b) retirement plans if you’re under age 50
- If you’re over 50, additional catch-up contributions of up to $6,500
- $13,500 in your SIMPLE 401(k) if you’re under age 50
- If you’re over 50, additional catch-up contributions of up to $3,000
- $6,000 in a traditional or Roth IRA ($7,000 if you’re age 50 or older)
- $19,500 in your 401(k), 403(b) retirement plans if you’re under age 50
- Delay taking Required Minimum Distributions (RMDs) from your IRA. Another provision of the SECURE Act, you can now delay taking RMDs from your IRA or employer-sponsored retirement accounts until age 72. This applies to anyone who is not currently in RMD status.
- Start planning now for 2020. While you may be focused on gathering all your relevant tax documents for your 2019 tax return, the beginning of the year is a great time to plan ahead. Working with your advisor, our tax specialists can help anticipate how the choices you make today can affect your future taxes and wealth. We can review your past taxes and, through discussions with you, anticipate and adjust your tax projections as needed. Our 2020 Income Tax Essentials fact sheet includes useful tax information to help you plan ahead, such as income tax brackets, deductions, exemptions, exclusions, and relevant tax rates for capital gains and trusts. We encourage you to reach out to your advisor about your 2020 tax planning needs.
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