NEW YORK--(BUSINESS WIRE)--As 2018 comes to an end, so does the window of opportunity to take advantage of certain tax and financial planning strategies. To help Americans be best positioned come Tax Day 2019, members of the American Institute of CPAs (AICPA) share the following 2018 year-end tax and financial planning tips. For members of the media, the AICPA has tax and financial planning experts ready to assist with stories to help Americans make proactive moves before the end of the year.
1. Bunch Charitable Contributions
Deadline: December
31, 2018
Quote: “For those individuals who are considering the
standard deduction instead of itemizing, consider bunching your
charitable contributions into alternate years if it will enable you to
take the standard deduction one year and itemize the next. If you do not
want to give the money to charity at one time, contribute to a donor
advised fund and then make the distributions to charity over time.” -
Lisa Featherngill, CPA/PFS member of the AICPA PFP Executive Committee
2. Give Appreciated Stock to Charity
Deadline: Stock
received by December 31, 2018
Quote: “This is a good time to
rebalance your portfolio and capture some of the stock market gains of
the last few years. Consider donating some appreciated stock to charity.
This has the double benefit of a charitable deduction for the full
market value of publicly traded stock (without recognizing the gain) and
a partial rebalancing of your portfolio if you are over-weighted in
stocks.” - Lisa Featherngill, CPA/PFS member of the AICPA PFP Executive
Committee
3. Donate Required Minimum Distribution to Charity
Deadline:
Distribution made by December 31, 2018
Quote: “Taxpayers age 70 ½
or older who need to withdraw their required minimum distribution (RMD)
for the year should consider leveraging a Qualified Charitable
Distribution (QCD). The taxpayer may direct the distribution of up to
$100,000 each year from their employer sponsored retirement plan or IRA
to one or more qualified charitable organizations. This distribution
counts toward satisfying their RMD and will not be taxable to the
individual. This is a smart way to gain an effective deduction for
charitable gifts without the need to have itemized deductions in excess
of the newly increased standard deduction.” - Robert Westley, CPA/PFS
member of the AICPA PFS Credential Committee
4. Use-It – Don’t Lose-It
Deadline: Check with your
plan provider
Quote: “As we approach the end of 2018, it is
important for taxpayers to focus on the use-it or-lose-it type planning
opportunities. For example, taxpayers should strive to maximize
contributions to their available retirement plans, keeping in mind the
additional contributions that may be made if age 50 or older. Taxpayers
should also take the time to review their flexible spending accounts
(FSAs) and plan how to use the funds before year-end. Any funds not used
by the end of the year or account deadline will be lost.” - Robert
Westley, CPA/PFS member of the AICPA PFS Credential Committee
5. Gift to Heirs Today to Reduce Future Estate Tax
Deadline:
December 31, 2018
Quote: “The year-end is a great time to make
annual exclusion gifts. For those looking to reduce their estate tax
exposure, individuals can give up to $15,000 to an unlimited number of
beneficiaries per year without decreasing their lifetime estate tax
exclusion amount or paying a gift tax. These planning opportunities will
be lost once the year ends and should be top of mind to review now.” -
Robert Westley, CPA/PFS member of the AICPA PFS Credential Committee
6. Check in On Your Financial House
Deadline: Make it
routine.
Quote: “The end of the year is an opportune time to ensure
that your financial house is in good working order and on track with
your life and financial goals. Good financial housekeeping involves
ensuring your emergency fund is sufficient, reviewing outstanding debt
and thinking through whether it makes sense to pay some down, as well as
reviewing insurance policies and confirming the coverage is adequate.
Also, revisit estate planning documents to confirm they are still in
line with your wishes.” - Robert Westley, CPA/PFS member of the AICPA
PFS Credential Committee
7. Maximize Employer 401(K) Match Opportunities
Deadline:
Deferred from last paycheck or December 31, 2018
Quote: “Make sure
you’ve taken advantage of your employer’s match to your 401(k) plan.
Better yet, make sure you’ve maxed out how much you can contribute.
Leaving this benefit underutilized is the same as leaving money on the
table.” - David Desmarais, CPA/PFS member of the AICPA PFP Executive
Committee
8. If Your Tax Bracket Is Low, Here’s Where Your Retirement Money
Should Go
Deadline: April 15, 2019
Quote: “For anyone
who is early on in their career or in a lower tax bracket, consider Roth
401(k) contributions to build tax free assets. If you are able, be sure
to contribute the maximum amount for the year in order to take full
advantage of this year’s opportunity to put away retirement savings
dollars for tax free growth.” - Leonard Wright, CPA/PFS member of the
AICPA PFS Credential Committee
9. Make Your 529 Plan Contributions Now
Deadline:
Check with your state.
Quote: “Remember that if your state allows a
deduction for a contribution to a 529 plan, generally a contribution
must be made in 2018 to get the deduction on the 2018 state tax return.
This is unlike IRAs and HSAs that allow until the April 15 tax
deadline.” - Julie Welch, CPA/PFS member of the AICPA PFP Executive
Committee
10. Check Your Withholdings
Deadline: Make it routine.
Quote:
“Check your withholding and update your W-4 if needed. If additional
withholding is needed before year-end, you can use Line 6 of the W-4 to
state the amount of additional withholding. Remember to submit another
updated W-4 if you wish to remove that extra withholding in the future.”
- Julie Welch, CPA/PFS member of the AICPA PFP Executive Committee
11. Leverage Your Losses
Deadline: December 31, 2018
Quote:
“Harvest your losses! It’s been a strong year for US equities, but
international stocks and fixed income have had negative returns for the
most part. Therefore, take advantage of tax loss harvesting to offset
any of the gains you’ve taken throughout the year. Bear in mind, though,
that you can’t buy back the same holding you sold at a loss within 30
days or else you’ll run afoul of 'wash sale' rules.” - Michael
Landsberg, CPA/PFS member of the AICPA PFP Executive Committee
12. Financial Planning Tips for Small Business
Deadline:
December 31, 2018
Quote: “Businesses should review equipment needs
to determine if it makes sense to make the purchase and place the
item(s) in service before December 31, 2018. Many businesses can write
off 100 percent of equipment purchases with either bonus depreciation or
Section 179 expensing.” - Julie Welch, CPA/PFS member of the member of
the AICPA PFP Executive Committee
EXTRA. For Divorce Proceedings Underway, A Big Change Is on Its Way
Deadline:
December 31, 2018
Quote: “For most people going through a divorce,
alimony has been both an incentive to the payor and a useful settlement
tool to avoid trial. Soon, that will change. The elimination of the
spousal support tax deduction will affect a lot of people – according to
the IRS, more than 600,000 Americans claim it on their tax returns,
totaling $12.3 billion. For divorces completed in 2019 or later, any
alimony paid will no longer be deductible by the person paying, nor will
it be taxable as income to the person receiving the money. Those in the
process of finalizing their divorce should consider the date everything
is finalized, as it will have a significant impact on their future tax
planning.” - David Stolz, CPA/PFS, member of the AICPA PFS Credential
Committee
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 431,000 members in 137 countries and territories, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession.
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About the Association of International Certified Professional Accountants
The Association of International Certified Professional Accountants (the Association) is the most influential body of professional accountants, combining the strengths of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA) to power opportunity, trust and prosperity for people, businesses and economies worldwide. It represents 667,000 members and students across 184 counties and territories in public and management accounting and advocates for the public interest and business sustainability on current and emerging issues. With broad reach, rigor and resources, the Association advances the reputation, employability and quality of CPAs, CGMAs and accounting and finance professionals globally.