ROCHESTER, N.Y. (WROC) — CPA Michelle Staebell discussed some tax moves you can make now before the end of the year that could impact your tax return next spring Monday during News 8 at Sunrise.
“The IRS has a withholding calculator on its website,” said Staebell. “It might be a good idea to get a head start on the 2019 tax return to see where you stand. Last year, there were a lot of taxpayers who had some surprises – and some not so good surprises and it might impact budgeting for the Christmas season. So maybe hop on the IRS website, check the withholding calculator, see if you might get a refund, or owe money because that definitely could come into consideration with Christmas purchases.”
Staebell said open enrollment is another decision to make now that will play out next year. “For the 2020 year, a lot of employers have open enrollment for health insurance, health savings accounts, retirement deferrals, dependent care benefits. All these things will impact 2020, but the decisions have to be made now and those things can turn into deductions on the 2020 tax return. So with a little bit of planning, taxpayers can save money down the road by putting money aside into those things now.”
Retirement accounts are another avenue to consider for year-end changes. “So for retirement accounts, if a taxpayer is trying to contribute for 2019, they have until the end of the year,” noted Staebell. “They can contribute up to $19,000 into a 401(k) or $25,000 if they’re over 50 years old. And then, also the deferrals for 2020 are happening now within open enrollment. They can be changed in 2020, but a lot of people set it and forget it. So maybe look at 2020 budgeting for a family, and see how much a taxpayer can put into retirement. Because all of those retirement contributions reduce taxable income. So those are huge areas of savings on taxes.”
Staebell added, “The tax return works on a calendar year tax basis. So by the end of the year, if people are itemizing their deductions, they can still make donations to qualified charitable organizations. Cash donations, non-cash donations, as long as they’re done by the end of the year, can be deductible on the 2019 tax return. Also for New Yorkers, contributions into a New York Education Savings Account could be deductible on the New York return. So that could turn into some significant savings.”
Remember, the end-of-year deadline is December 31.