Last Minute Ways to Save On Your 2019 Taxes
Posted On March 03, 2020
Haven’t filed your 2019 taxes yet? You’re still weeks away from the 4/15/20 deadline, and you may even still have some opportunities to save. Although you may think when the calendar year ends so does your tax year, that is not always the case. If you haven’t filed your taxes yet, review these items with your tax preparer and see if you can reduce your tax bill.
Add to Your Retirement Savings
If you contribute to an individual retirement account (IRA) or health savings account (HSA), your contributions up until 4/15/20 are tax-deductible on your 2019 taxes. For 2019, you can add up to $3,500 to your HSA if you have single coverage or $7,000 if you have a family plan. If you are 55 or older, you can increase these contributions by $1,000. For your IRA, you can add up to $6,000 ($7,000 if you’re 50 and older).
The money you set aside in your IRA or HSA is tax-deductible and does not have to be itemized to get a tax break. Talk to your tax preparer about your current contributions and whether or not you can benefit from putting away more money before the tax deadline.
Review “Above the Line” Deductions
An “above the line” deduction is a deduction that a taxpayer is allowed to subtract from their gross adjusted income for the taxable year. These deductions are not included in the standard deduction of $12,200 for single taxpayers or $24,400 for married taxpayers filing jointly.
Student Loan Interest – if you are paying back student loans, you can deduct up to $2,500 in the amount of interest you paid in 2019. You should receive a Form 1098-E from your loan servicer either online through your payment portal or in the mail.
Childcare – if you have children under the age of 13 and you pay for daycare or after-school care you may be eligible for a credit of up to $1,050 for one child or $2,100 for two or more children. You will need the tax ID or social security number from your care provider in order to claim these credits.
Self-Employed Deductions – if you run your own business you can claim deductions for any health insurance premiums you pay or any money you save in your retirement plan.
Expired Tax-Breaks Back in Play
At the end of 2019, Congress renewed some previously expired tax breaks you may be able to use.
College Tuition and Fees – if you have a child in college and you are paying their tuition or other expenses, you can deduct $4,000 each year. You do not have to itemize this deduction.
Mortgage Insurance – if you own a home and currently pay private mortgage insurance, you can deduct your insurance premiums paid during 2019. You will need to itemize this.
Medical Expenses – if your 2019 medical expenses exceed 7.5% of your 2019 adjusted gross income, you can itemize these costs. However, if you use an HAS to pay these expenses you may not deduct.
If you have any questions about your 2019 taxes, it’s best to work with a tax preparer. Free online services may be a quick and convenient way to file, but a knowledgeable professional will be able to give your individual files a thorough review.