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Not that any of us like to procrastinate, but there could be people asking: what can we still do on December 31st to save money on 2018 federal income taxes? That depends on your specific situation; for most people, probably including you the reader, not so much. But, if you do see yourself in any of these scenarios, you may still have options today. (Many people also have options in effect until the tax filing deadline of April 15, but those are not today's topic.)

This is not intended to be a complete description of everything possible, and in particular, it doesn't list all of the hoops one must jump through to be eligible to take these, so do your research before making the decision to buy a shiny new electric car based on something you read on reddit.

  • Losses in taxable investment accounts. If you own any stocks or bonds (or funds of same) in a taxable account (i.e. not an IRA) that declined in value since you bought them, then you can deduct up to $3000 in losses against other income, whether or not you can itemize; you only need to sell enough to claim the loss. (If you exceed $3000, you can carry that loss forward to future years.) You can't replace the shares until 30 days pass if you want to own the same thing. (Look up "wash sale" rule for more about this.) Your losses have to exceed any realized gains to take advantage of this.

https://www.investopedia.com/articles/investing/111315/deducting-stock-losses-guide.asp

  • Adjustments to income. These reduce your taxable income whether or not you itemize. The ones that are calendar-year based include: alimony payments, student loan interest, interest penalties for early withdrawal, armed forces moving expenses, and expenses incurred by educators and performing artists. If you have the option to pay these today, then that will help your 2018 taxes.

https://www.thebalance.com/adjustments-to-income-3192985

  • Itemized deductions. These only apply if you have enough of these to exceed your standard deduction of $12,000 ($24,000 for joint filers). If you can itemize, then increasing your 2018 expenses for things like charitable contributions, state and local taxes (up to $10,000 annually), and mortgage interest will reduce your 2018 taxes.

https://www.thebalance.com/new-tax-bill-itemized-deductions-4160594

  • Schedule C/E expenses. If you have self-employment or rental property income, any expenses incurred as of today can still be taken to reduce taxable income for 2018. This also reduces your self-employment taxes. You can also take an adjustment for health insurance premium payments.

https://smallbusiness.chron.com/list-deductible-business-expenses-schedule-c-21156.html

  • Tax credits. You can take a tax credit for at least part of certain types of expenses. These are mostly calendar-year based, and include dependent care, college tuition and fees, and electric vehicles. Also, adoption expenses. Clearly, most of these involve some significant advance planning, but to the extent you can time your payments favorably, today would be the day to do so.

https://www.nerdwallet.com/blog/taxes/what-tax-credits-can-i-qualify-for/

You may also have state tax options; those are outside the scope of this discussion, but 529 contributions might be one place to look at deductible expenses with a calendar-year deadline.



Submitted December 31, 2018 at 08:52AM by yes_its_him http://bit.ly/2F0jzVg

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