Boost your tax benefits for 2018
If you want to boost your tax benefit for 2018, you must act before the end of this year. This is due to the recent changes in federal tax law.
There are a few things people can do in the next couple days to help them save money next year.
One of the best ways is paying some of your outstanding bills-- including those medical related charges.
If you're a small business owner, try to pay as many bills before the end of the year to get the deduction.
Try not to do any billing until 2018 to defer income. That's because the tax rate will be lower.
Adding money to a 529 Education Plan will also help maximize your deductions.
Another way to save in 2018 is by pre-paying your property taxes. This is only possible if your property is assessed and is allowed by your tax authority.
In 2018, the federal deduction will be scaled back under the new tax code. But the IRS recently came out with a warning that advantage does not apply to everyone.
"And just because somebody says to pre-pay a tax you may not have the cash flow to do that, so it really comes down to what's best for you and your family,” said Scott Eckart, Financial Planner at Westpoint Financial.
Tax experts suggest one of the best ways to save is donating to charity. That way you can deduct that amount on your 2017 tax return.
Many nonprofits, however, are bracing for a potential drop in donations starting the first of the year. The new tax law put into effect changes how charitable contributions will be taxed. They are concerned the new tax law lowers incentives for people to donate.
Before, people could reduce their tax burden by writing off charitable donations and itemizing them on their tax returns.
Under the new law, many middle class taxpayers no longer will need to itemize. Instead, it offers a bigger standard deduction-- doubled to $12,000 for individuals and $24,000 for couples. But here's the catch -- if you don't itemize, you can't deduct your charitable donations.
“People will continue to give to charity, they just won't give as much. If you get a thousand dollars more in your paycheck, and there's no financial incentive to give it to charity,” said United Way Worldwide President and CEO, Brian Gallagher.
Estimates suggest overall charitable giving will go down billions of dollars a year. Financial advisers say if you plan to stop itemizing, try to make some of your 2018 donations to charity before the end of the year.
Make sure your donations are going to tax-exempt organizations. That way you can take advantage of the deduction on this year's tax returns.
Be sure to consult your tax professional to check what is best for you.