2018 Last Minute Tax Moves
If the 2018 tax changes left you owing more than you thought you would, all hope is not yet lost. There are still some 2018 last minute tax moves available to you. In this article, we will go over three strategies that might help you save.
1. Contribute to a Traditional IRA
You can make contributions to your IRA as late as April 15, 2019 and still have them count towards 2018. These contributions count as tax deductions and can help to dramatically lower your tax liability while simultaneously helping you to save for retirement. You can contribute up to $5,500 pre-tax into a Traditional IRA annually. If you are 50 or older by December 31, 2018 your can contribute an additional $1,000.
However, to qualify for these contributions you must meet the following requirements:
- You must have earned compensation in 2018. This includes W-2 wages, self-employment income, or alimony payments. Earned compensation does not include interest, dividends, capital gains, social security benefits, pensions, or distributions from retirement accounts.
- Your date of birth must be after July 1, 1948.
It is important to note that if you participate in an employer sponsored plan and/or your income exceeds certain thresholds your contribution limits may be lowered or completely phased out.
2. Contribute to an HSA
The deadline for 2018 HSA contributions is April 15, 2019. Make HSA contributions offers you triple tax benefits. Your contributions are tax deductible, you have tax deferred growth, and you have tax free distributions if you use the money for qualified medical expenses.
Only those enrolled in HSA eligible High Deductible Health Plans can make qualified contributions. Additionally, the total amount you can contribute has limitations. For 2018. You can contribute up to $3,450 for an individual plan and up to $6,900 for a family plan.
3. Contribute to a SEP IRA
There is another retirement contribution option for small business owners, the SEP IRA. If you are a business owner you can establish and fund a SEP IRA up to the tax filing deadline, including extensions. This means that owners of partnerships and S-corporations can establish and fund one by March 15, 2019 or September 15, 2019 if they file an extension. Sole proprietors have until April 15, 2019 or October 15, 2019 if they are filing an extension.
This type of retirement account can be very helpful to small business owners, as it allows them additional time to save up and contribute. However, there is a potential drawback if you have employees. Depending on their qualifications if you set up a SEP IRA for yourself, they may also be entitled to receiving such an account.
Making Your 2018 Last Minute Tax Moves
You still have time for making your 2018 last minute tax moves! If you think any of the above-mentioned tips would be helpful, but you do not have the proper accounts set up, meet with a qualified investment advisor who can help you get set up before times runs out. If you are finding this article too late, do not despair, instead get a head start on your 2019 tax returns. Meet with a qualified tax planner who can help you set up a plan to have a less stressful 2019 tax season.
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