With a new year around the corner, beginning your tax preparations now will help ensure you maximize your deductions. Federal and state tax exemptions can evolve yearly, meaning you may not be getting the most out of your filing if you’re not familiar with the new rules. By using these four tax preparation guidelines before the year ends, you can better plan what is happening with your income.

4 End-of-the-Year Tax Tips

1. Reconfigure Retirement Contributions

One tax preparation strategy you can take advantage of is maxing out your retirement plan contribution. Currently, the federal yearly limit on this amount is $18,500 — or $24,500 if you are over the age of 50. The funds you allocate to your 401(k) will reduce your taxable income, which, in turn, will lower the taxes you owe.

2. Stay Insured

While the Tax Cuts and Job Acts eradicated the monetary penalty, you could receive for not having health insurance, this will not go into effect until 2020. This means if you do not maintain health insurance coverage, you could be subjected to a fine of $695 per adult or two-and-a-half percent of the annual household earnings — whichever is greater.

3. Defer Income

If you receive a year-end bonus but have the option of waiting until the new year to receive it, you are eligible to defer this income. If you know next year you or a household member may be earning less money, or if this year you simply cannot afford to slip into the higher tax bracket, deferring your income can help postpone this increase.

4. Monitor FSAs

Flexible spending accounts are an excellent way to set money aside for health purposes without having taxes deducted, but these policies are often “use it or lose it.” This means if you do not monitor the money you have in your FSA account, you may lose the money you’ve put aside at the end of the year. Talk to your employer about a possible grace period the IRS introduced, which allows you to use your FSA from the previous year through March.

If you’re looking for tax preparation services in Watertown, CT, trust the professionals at Bergamo Tax & Financial Solutions. Conveniently serving Middlebury, Waterbury, and Litchfield as well, Bergamo Tax & Financial Solutions handles tax planning and audits with a personalized approach for each client. To learn more about how you can get the most out of your tax returns this year, visit these professionals online or call (860) 274-1655.