Now that the 2018 tax season is behind you, it's a good idea to review your situation and make note of any changes you may have experienced under the new tax rules. Below are some areas you should look at.
Did the adjusted tax brackets, the increase in standard deduction amount, and the elimination of personal exemptions have more of an impact than you expected? If you answer yes to any of the above or below questions or don't fully know how you were impacted, take the opportunity to review your situation to see if there is any action that you can take to positively impact your tax situation in the next year.
Did you owe money to the government for the tax year 2018? If yes, did you have to pay a penalty for underpayment? If yes, check to see if you are having the appropriate amount withheld from your paycheck or your pension, annuity, or IRA distribution checks. Make any adjustments so you don't owe or have to pay the penalty for underpayment. If you would prefer not to have withholding, you can make quarterly estimated payments into the IRS instead. The goal is to have enough on deposit with the IRS so that you do not get penalized for underpayment.
Did you get a large refund from the IRS? If so, check to see if you are having too much withheld from your check. There is no reason to deposit more with the IRS than you need to.
Has there been a major event in your life, like a marriage, or a new baby, or the death of a spouse? These life-changing events may have an impact on your tax situation, so it is important to review your withholding or estimated tax payments with your tax preparer.
Did your IRA required minimum distribution put you into a higher tax bracket? If you are over 70 ½, you can have your IRA trustee/custodian make your charitable gifts directly to the charities from your IRA
(up to $100,000). The distribution would not be considered as taxable income to you and may keep you in a lower bracket.
Did you receive 1099s from too many institutions? Consider consolidating some of your accounts into one financial institution such as Covenant Trust Company. This could help simplify and streamline your collection of tax statements. For help,
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