Before the clock strikes midnight this December 31st, review some of these easy but powerful tax strategies:
Maximizing the HSA contribution
Maximizing this pre-tax deduction is a powerful way to reduce your taxable income. In 2019 individuals can contribute $3,500 and families can contribute $7,000. Plus if you are 55 or older you can make an additional ‘catch-up’ contribution of $1,000. Keep in mind, if you are in a 25% tax bracket, this could save you $2,000 in taxes.*
Manage gains and losses in your investment account
If you have investments in taxable investment accounts, (non-IRA’s) that you have held for more than a year, consider the tax advantage of selling them in 2019. If this gain is the only income in 2019, it is possible to realize just over $105,000 before any taxation kicks in. If you have other investments that have experiences depreciation in value, consider selling them to offset the gains in other holdings. Blended correctly, you could shelter the gains on your appreciated stocks, bonds, or mutual funds.
Retirement account contributions
Generally as a minimum I like to see individuals contribute at least enough to their workplace retirement plan to receive the maximum match from the employer as that is essentially free money. That being said, if you would like to really move the tax savings needle in your favor, consider maxing out the annual contribution to the plan. 401k’s in 2019 allow for a maximum of $19,000 and if you are over 50 you can make a catch-up contribution of $6,000. Using our approximate tax bracket of 25%, the maximum contribution to your 401k could save you $6,250.*
If you would like to review many of the more opportunities that you may have at your disposal, please
*Assuming a 25% marginal tax bracket. Please consult your tax advisor.