Make a 2018 contribution to retirement accounts
There are all sorts of rules regarding tax deductions for various types of retirement accounts. However, contributions to traditional IRA’s for 2018–which provide a tax deductions for 2018–may be made until April 15, 2019, or the date you file your 2018 tax return (whichever comes first).
Making a deductible contribution in 2019 for 2018 will help you lower your tax bill this tax season. Also, all income growth within traditional IRA accounts are tax deferred. In other words, traditional IRA’s can reduce your taxes in the year contributions are made; and taxes (at the current rate for ordinary income) are due only on the amounts you withdraw in any future year.
To qualify for the full annual IRA deduction in 2018, you must either be:
- Not eligible to participate in a company retirement plan
- Not eligible, but your spouse is and your combined gross income is below $189,000.
- Eligible, but adjusted gross income is below $63,000 for single people ($101,000 for married couples)
For 2018, the maximum tax deductible IRA contribution is $5,500 ($6,500 if age 50 or older by the end of 2018).
For those who are self-employed, the maximum annual addition to SEPs and Keoghs for 2018 is $55,000.
Make a last minute estimated tax payment
If you owed money with your 2017 tax return, it’s possible that you also didn’t pay (or have withheld) enough tax withheld throughout 2018 either. This could generate another large tax bill when you file, along with the possibility of added interest and penalties.
Completing an IRS form 1040ES and mailing with a payment to IRS could help avoid a larger bill when filing taxes.
According to IRS rules, you must pay 100% of last year’s tax liability or 90% of this year’s tax or you will owe an underpayment penalty.
Organize your records for tax preparation
Start by reviewing your 2017 tax return and make a check list of all tax related documents (W-2’s, 1099’s, 1098’s, etc) that you received from:
- Brokerage Firms
- Daycare centers
- Retirement accounts
- Mortgage companies
- State/local tax returns
- Business expenses
- Medical expenses
- Charitable contributions
Then adjust your list to reflect 2018 activity (ie. add new employers and delete old employers for whom you did not work in 2018)
Keep all tax information that comes in the mail in January in a secure place. Be careful not to discard any tax related documents, even if they don’t look very important. An updated list of what to bring may be found HERE.
Know the price you paid for any stocks or funds you sold in 2018. If you don’t know, call your broker before you start the tax preparation process.
Be able to identify everyone listed on your tax returns. Full names, birthdates, and Social Security/ITIN numbers for yourself, spouse and dependents. Actual social security cards and ITIN letters must be presented to all Campaign for Working Families sites, as well as photo ID for taxpayer (and spouse).
Manage Your Assets–We’ll Help!
CWF now offers Asset Management Teams at select sites to help customers with:
- Public benefits enrollment
- Tax time savings programs
- Financial worksheets
- Help with FASFA
- Incentives for savings
- And more!