Even if your clients didn’t owe money last tax season, it’s more important than ever for them to start planning for the upcoming tax season now due to tax reform changes. Here are tips for end-of-year planning to help minimize taxable income and tax liability.
With reduced tax rates due to tax reform, clients may be seeing more money in their paycheck – and they can reduce their taxable income or tax liability by the end of the year with some of the following strategies.
Maxing out their retirement
- Taxpayers have until Dec. 31 to max out their 401(k) to $18,500 (or $24,500 for those 50 and over) and reduce their taxable income.
- If they are self-employed, they can contribute up to $55,000 into a SEP IRA for 2018.
- They have until the tax filing deadline to contribute up to $5,500 to their IRA ($6,500 for those 50 and over) and get a tax deduction for their contribution.
- They may even get a Saver’s Credit of up to $1,000 ($2,000 for those who are married filing jointly) for contributing to their retirement.