With the end of the year fast approaching, let’s remember that we still have time to save on taxes. Even though we can’t control the markets, there are some things we do have direct control of and most are centered around taxes. We know the tax rules today and we can take steps now to help us for tomorrow. Here are five strategies to potentially reduce your tax bill for 2019:
As we are now in the thick of tax season, I get asked frequently “how can I pay less in tax?” While you should usually be happy to pay more in federal taxes (because that means you probably made more), there are strategies that with a little time and effort can reduce your overall tax payments. Because I have talked about most of these in past articles I am going to keep it brief and summarize them below.
We are in the last quarter of the year now and the holiday season is right around the corner. People are preparing by doing their holiday shopping (which I heard my mother-in-law is already done with –IMPRESSIVE) and it is also a time when charitable giving increases.
A simple way to reduce your tax liability can be to change how you calculate your cost basis on holdings that you sell. When investing in a globally diversified portfolio and using best practices by rebalancing on a standard time frame, you will end up having certain assets with varying cost basis, and hopefully capital gains. This cost basis refers to the amount of principal that you initially or subsequently invested in the asset.
With the new tax law comes lower taxes for some but it also changes the way you need to approach charitable giving if you want to take full advantage of the tax benefits. Now that the standard deduction has increased, many households will no longer be able to deduct their charitable contributions. However there are still two strategies that may allow you to take advantage of the tax treatment of charitable giving.