Tiffany Huntington, EA
December 9, 2019
Another great year is coming to an end, and the tax team at Purely Solutions wanted to urge our readers to be mindful of the year-end and how your financial decisions between now and December 31st can impact your tax liability for 2019.
Below are our tax team’s top tips for lowering your 2019 taxes and putting your most mindful foot forward as we enter the new year.
Please keep in mind that these are general tips, so the best course of action for your individual circumstances may differ from the strategies listed in this article. It’s always a good idea to work with a financial planner and tax advisor to develop a customized tax strategy tailored to your needs and goals.
Pay vendor invoices received before December 31 in order to claim the expenses in the current year.
If it is necessary to purchase a major fixed asset, make the purchase before year end, allowing the option of taking up to 100% depreciation (through Section 179 or Bonus Depreciation) in the current year.
If selling an asset, be strategic in scheduling the closing date:
- before year-end if you need the gain/loss in the current year, or
- after year-end if you need the gain/loss in the following year.
Consider having your accountant prepare a tax estimate for you. This will help you ensure enough tax payments are made to the IRS throughout the year to avoid or minimize underpayment penalties and interest when your return is later filed, as well as to help you plan for year end and the following year.
Make contributions to retirement accounts in order to defer income and reduce your tax liability. Plus, you’re saving for retirement which is always a good thing. We recommend you consult a financial planner since there are a wide variety of retirement contribution options for both businesses and individuals.
If you are at least 70 ½ years old, consider using a qualified charitable distribution (QCD) to make a donation from your IRA to a qualified charity. A direct transfer from the IRA is excluded from taxable income and satisfies the annual required minimum distribution (RMD) up to the amount transferred. For this one, we encourage you to work with a financial advisor to ensure it is handled correctly and be sure to provide documentation to your tax advisor (extremely important).
This is a lot of information but try not to feel overwhelmed! As always, the tax team at Purely Solutions is here to help you navigate your tax planning strategy and answer any questions you have. Get in touch:
512-394-8020 | firstname.lastname@example.org
Special thanks to members of our tax team for collaborating on this article: Sally Curtis, Donna Morrison, and Jessica Volkmann.
*Any accounting, business or tax advice contained within the Purely Solutions website, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, Purely Solutions, LLC would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.
**Purely Solutions, LLC is not a CPA firm.