There is still time to take advantage of ways to minimize your 2019 tax bill before the end of the year. Below are a few items that you might want to consider before the end of the year. If you have any questions on how any of these techniques may apply to your personal tax situation, please contact us.
A key deadline for opportunity zones, an incentive including in the 2017 tax law for taxpayers to invest capital gains income into distressed areas, runs out at the end of the year. Before this happens you should consider trying out these financial services marketing tactics to learn how to save money and keep your finances on track.
Taxpayers can defer the tax bill on their investment until the end of 2026, or whenever they sell. Additionally, if they invest by the end of this year, they can get a 15% “basis step up,” meaning that they are only taxed on 85% of their investment. If they invest after this year, they have to pay tax on 90% of the money contributed.
Additionally, that money grows tax-free while invested in the fund, giving investors another reason to consider opportunity zones. Investors have 180 days from the time they sell stock or a business to put that money into an opportunity zone fund.
Home Mortgage Tax Deduction
The 2017 tax law also restricted the mortgage interest deduction to loans equal to or less than $750,000. The result is that some taxpayers buying expensive homes are finding other ways to finance their purchases, Sprong said, and you can also contact professionals family lawyers.
Instead of taking out a mortgage for the full amount, some taxpayers are taking out a mortgage up to the $750,000 limit, and then in a separate transaction borrowing the additional funds through a regular loan.
Estate Tax Deduction
The 2017 tax law approximately doubled the estate tax resolution, which gives wealthy taxpayers some time to make plans for their assets when they die. The lifetime exclusion for 2019 is $11.4 million for an individual or twice that for a married couple, and the annual gift tax limit is $15,000.
The IRS has said it won’t make those gifts taxable if a future Congress votes to lower the estate tax limit. But still, it’s smart to make those gifts now. This doesn’t have to be done by the end of 2019, but waiting beyond the 2020 election risks the political mood shifting in favor of estate taxes.
Small Business Tax Break
If you’re self-employed or a small business owner you may be eligible for a 20% deduction off your business income. But it can be subject to lots of limitations depending on your field, the amount you invest in equipment, or how much you pay employees. If you’re below certain thresholds -- $321,400 for a couple or $160,700 for an individual in 2019 -- you automatically get the tax break.
For people above those limits, there are several ways to legally reduce your taxable income to get under the caps, which is particularly important for doctors, lawyers and accountants who can’t claim the deduction at all if they are above those levels.
Self-employed individuals can also reduce their taxable income by as much as $225,000 if they make contributions to a defined benefit retirement plan.