Tax tips after January 1, 2019

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tax planning and tax checklist

1. Contribute to retirement accountsHowever, if you have a Keogh or SEP and you get a filing extension to October 15, 2019, you can wait until then to put 2018 contributions into those accounts. To start tax-free compounding as quickly as possible, however, don’t dawdle in making contributions.If you put away $5,000 a year for 20 years in an investment with an average annual 8 percent return, your $100,000 in contributions will grow to $247,000.The same investment in a taxable account would grow to only about $194,000 if you’re in the 25 percent federal tax bracket (and even less if you live in a state with a state income tax to bite into your return).not be eligible to participate in a company retirement plan, orif you are eligible, you must have adjusted gross income of $63,000 or less for singles, or $101,000 or less for married couples filing jointly.If you are not eligible for a company plan but your spouse is, your traditional IRA contribution is fully-deductible as long as your combined gross income does not exceed $189,000.Withdrawals from a traditional IRA are fully taxable in retirement. To contribute the full $5,500 ($6,500 if you are age 50 or older by the end of 2018) to a Roth IRA, you must earn $120,000 or less a year if you are single or $189,000 if you’re married and file a joint return.2. Make a last-minute estimated tax paymentIf your adjusted gross income for 2017 was more than $150,000, you have to pay more than 110 percent of your 2017 tax liability to be protected from a tax year 2018 underpayment penalty. If your tax payments were a bit light, you may be stuck.But if your income windfall arrived after August 31, 2018, you can file …

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Source:: AOL.com

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