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The new year is approaching quickly, but it is not too late to take advantage of some last-minute strategies to optimize the outcome of your tax preparation.

7 Year-End Tax Preparation Tips for 2018

1. Group Your Charitable Contributions 

Consider making charitable contributions in alternate years. This may enable you to itemize one year and take the standard deduction the next.

2. Donate Appreciated Stock to Charity

If you have a stock that has appreciated in value, consider donating it to a charitable organization. This will result in a charitable deduction (if you are eligible to itemize) for the full market value of the stock without having to recognize a gain on sale of the stock.

3. Donate Required Minimum Distribution to Charity

If you are 70 ½ or older and you are required to take a minimum distribution (RMD) from a retirement plan, you may want to do a direct qualified charitable distribution to the organization (up to $100,000 each year). The RMD requirements will be satisfied, and you will not be required to report the distribution as taxable income.

4. Make 529 Plan Contributions Now 

tax preparationIf you are contemplating a 529 plan contribution for 2018, it must be made prior to December 31, 2018. 

5. Realize Your Losses

If you had investment losses in 2018, consider using the losses to offset any gains and potentially reduce your tax liability for the year.

6. Purchase New Business Equipment

If you are a business owner, it may be beneficial to make an equipment purchase prior to the end of the year. Many businesses may be eligible for a 100% write off on equipment purchases in the year acquired.

7. Finalize Alimony Agreements

If you are in the process of a divorce, it may be important to consider the date of finalization, as it may have a significant impact on tax planning. Under existing tax laws, alimony payments are deductible by the payer, and reportable as income by the recipient. For divorce agreements executed after December 31, 2018, alimony payments will no longer be deductible or taxable, which may potentially result in increased tax liability for the payer.

 

Working with a CPA to maximize your tax deductions makes great sense. Donna J. Troutman, CPA, PC, has been the tax preparation professional of choice in Lewisburg, Pennsylvania for over 19 years. Specializing in helping you understand the complexities of new tax laws, their firm will work to ensure accuracy and optimal results. Call them today at (570) 523-7337 or visit their website for more information on their services. 

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