2019 Individual Year End Income Tax Planning

Published by Heather on

2019 Individual Year End Income Tax Planning

As year-end approaches, it is a good time to think of planning moves that may help lower your tax bill this year.

Below we have compiled a list of items that may help to save or defer taxes if taken into account before the end of 2019:

  • A 20% deduction may be available for your rental real estate income under the Tax Cuts and Jobs Act of 2017. Beware: significant limitations apply.
  • Determine if there is any opportunity to accelerate or defer income and/or deductions between 2019 and 2020.
  • Consider bunching your itemized deductions, deferring or accelerating them into a tax year in which you plan to exceed the increased standard deduction.
  • Charitable contributions of appreciated securities can avoid income tax on the gain from appreciation and be deductible as an itemized deduction.
  • Consider timing the recognition of capital losses on the sale of securities before year-end to offset current year taxable gains.
  • Conversion of Traditional IRA funds to a Roth IRA in a low tax year may be a good strategy for long term tax-free appreciation on the Roth IRA assets.
  • Pay your required minimum distribution from retirement accounts before the end of the tax year (if over the age of 70½). Consider gifting a portion of your RMD directly to a charity, especially if you can no longer itemize.
  • Make any gifts sheltered by the annual gift tax exclusion of $15,000.
  • Keep in mind that tax on unearned income incurred by your minor children may be subject to kiddie tax at the higher trust and estate income tax rates.
  • Possibly defer or reduce income taxes on capital gains by making use of an IRC Section 1031 exchange or an investment in a “qualified opportunity zone” fund.
  • Maximize your use of employer sponsored or self-employed retirement accounts.

Please visit our website for additional details of the above noted items in addition to other potential year end planning opportunities. You should examine any tax planning options thoroughly before initiating action. We are happy to discuss these with you and tailor a tax plan that will work best for you.