It is five weeks before taxpayers close the books on 2019. There is, of course, plenty of time to procrastinate before the April 15, 2020 filing deadline, but there are still steps to take in 2019 that can help lower the tax obligations or increase that return.
Gathering up all those receipts and organize the financial records is an excellent place to start, but other proactive yet straightforward steps to lighten the burden include:
- Defer bonuses: It may be smart to defer year-end bonuses if income in 2019 was higher than usual. This can help taxpayers avoid going up a tax bracket and thus increase the amount they owe.
- Donate to charities: Giving Tuesday is December 3, but any day before the end of the year works for donating monetary and non-monetary gifts. This enables those who donate to feel better for helping the less fortunate while also qualifying for tax deductions.
- Take a class: This can advance one’s career, improve work skills and it is a great way to get a tax credit worth up to $2,000. One needs to simply pay this year for a class that starts in the new year.
- Maximize retirement: Another way to stay in a lower tax bracket is to pay the maximum for a 401(k) or IRA.
- Use your FSA: Those who have a flexible spending account (FSA) at work should try to use up that money rather than carrying this balance over to 2020. A simple way of doing this is to go in for a medical checkup or take care of that previously delayed medical procedure.
- Sell low: Some stock investments in 2019 may not fulfill their initial promise. It is often a good idea to sell off under-performing stocks to reduce obligations for ones that were profitable.
Have questions about a potential dispute?
It is always recommended to follow all applicable tax laws, but sometimes there will be a dispute over the correct amount of tax obligation. Those in dispute with the IRS or the state may wish to discuss their situation with an experienced tax law attorney on how to best address their matter.