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Over 50 year end tax questions

12/9/2019

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It's that time of year and just after the holidays that you will need to get your tax paperwork together to file in April 2020.  In all tax matters you should hire or consult with a qualified tax professional for advice or preparation. Pay attention to law restrictions and allowances. 

Here are a few items you may want to consider:
  • You actually should have done this last year, but check your withholding percentages.  Missed calculations may have put you in for a "pay the IRS" situation.  So... double check and make it right for the next year.  Good for you if you did it right.
  • If you itemize try and pay items that are allowed deductions early (in 2019) rather than waiting for January or February 2020.  If you have a quarterly payment due to the IRS or State due in January 2020, consider paying in December 2019.  Mortgage payments could be paid early if you can.
  • Medical expenses are deductible.  Gather all of those receipts and travel time spent for the itemized deductions under medical procedures. In 2019, you were allowed to deduct unreimbursed medical expenses that exceed 10% of your Adjusted Gross Income (AGI).  This may not apply to most because of AGI.  However, you may have had a very high cost procedure or treatment.  Put in what you can for your filing.
  • Investments that you have held for a year or less are taxed as ordinary income, but investments you have held longer are taxed at the long-term capital gains rate (range from 0% to 23.8%).  Match short-term losses against short-term gains, and long-term losses against long-term gains, the excess losses can be used to offset the opposite kind of gain. If you still have a net capital loss, you can use up to $3,000 of your loss to offset ordinary income and roll the rest over to 2020.   Check with your tax consultant professional.
  • 401 (k) contributions should be considered, make sure you know what is allowed.   You can contribute up to $19,000 to a 401(k), 403(b) or federal Thrift Savings Plan in 2019, plus $6,000 in catch-up contributions if you are 50 or older. If you do this, you have until April 15, 2020.
  • If you are self-employed or have freelance income, you may want to consider opening a solo 401(k) plan. You must open it by December 31, 2019 (you have until April 15, 2020, to contribute and take a tax deduction for 2019). You can contribute up to $19,000 ($25,000 if you are 50 or older) to a solo 401(k), minus any contributions you've made to a 9-to-5 employer's 401(k) for the year. You can also contribute up to 20% of your net self-employment income to the plan. Contributions to the solo 401(k) can total $56,000 in 2019 (or $62,000 if 50 or older), but they can't exceed your self-employed income for the year.  Please consult your tax consultant professional for your situation.
  • Charitable giving is up to you, make sure you keep good records and receipts from allowed recipients of your generous gift.  
​This is not a total representation of what to do, only a reference to get you on track to save on your tax bill within the law.

​You may want to 
access the following URL's for more detailed information:
State by State Tax Reference - 

https://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php

7 Free Programs for Filing Your Taxes - 
https://www.kiplinger.com/slideshow/taxes/T056-S003-7-free-programs-for-filing-your-taxes/index.html
​
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