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How much money are you leaving on the table because you are not aware of what you can claim on your taxes? According to an article by News 10,  20% of Americans are leaving money on the table. Are you paying too much in taxes? If you believe you’re paying too much tax, selecting investment vehicles that emphasize tax-advantaged opportunities could help reduce the amount of taxes you owe. There are tax-free and tax-advantaged options available.

Here are some tips and things to consider when it comes to filing taxes for 2019:

1. Batching

If you used to itemize before the standard deductions were increased, consider batching two years’ worth of charitable donations into one year. This will allow you to itemize every other year while taking the standard deduction in the non-batching year. The current standard deductions are:

Single $12,200

Married filing jointly $24,400

Head of household $18,350

Here’s an example, if your family has given $15,000 in 2019, you may not benefit from itemizing your deductions as the standard deduction is much higher, but if you double your giving contribution for the year to 30,000 you can itemize for this year and not give in 2020. So you give double every other year. We recommend using a DAF (Donor Advised Fund) if batching is right for you. By doing so, you will be donating the money in 2019, but the money can still be evenly distributed to the organizations of your choosing over the course of the 2 year period while you get to reap the tax break every other year by exceeding the minimum requirement for itemized deductions. Talk to your Certified Public Account or Financial Advisor for details.

2. Charitable Contributions

Charitable contributions can only reduce your tax bill if you choose to itemize your taxes. Generally you would decide to itemize when the combined total of your anticipated deductions, including your charitable gifts, add up to more than the standard deduction.

Fidelity Charitable has a great tool  – Charitable giving tax savings calculator

According to Fidelity, “when you donate cash to a public charity, you can generally deduct up to 60% of your adjusted gross income. Provided you’ve held them for more than a year, appreciated assets including long-term appreciated stocks and property are generally deductible at fair market value, up to 30% of your adjusted gross income. Combining more than one type of asset can be a tax-efficient move to maximize the amount that you can take as a charitable tax deduction.”

3. Long-term appreciated assets

If you are able to donate long-term appreciated assets like bonds, stocks or real estate to charity, you typically won’t have to pay capital gains, and you can take an income tax deduction for their full fair-market value. This amount can be up to 30 percent of your adjusted gross income.

4. You can write off miles

Did you know you can write off miles in 3 different categories?

1.) Business miles – Any miles you have incurred while self employed are deductible at 58* cents a mile.

2.) Charity / Volunteer miles – If you are volunteering for a church or local non-profit organization you can right off 14* cents a mile driven in service of these charitable organizations.

3.) Medical — If you are traveling to and from hospitals, or ongoing medical care you can write off these miles you can write off 20* cents per mile.

*according to www.irs.gov

5. IRA contributions

You can contribute to your IRA up until the date you file your taxes. Keep in mind you have the option to file and add to your IRA all the way up till the deadline of April 15. If you choose to file earlier your IRA contributions will only be counted up to your filing date.

At GIA we have a unique philosophy on IRAs, which is “pay now play later”. If you have cash you may be better off with a ROTH then a traditional IRA. A ROTH can be better for you in the long run even though a traditional IRA might save you money on taxes this year. Even though contributions to a Roth IRA don’t give you a yearly tax deduction, they still qualify for the valuable Saver’s Credit if you meet income guidelines.

6. Schedule Dr. visits and treatments

Schedule health-related treatments and exams in the last quarter of the year to boost your medical expense deduction potential.

7. 401K

If you can afford it, make sure you are contributing the maximum to your 401k

8. Donate items to charity

Clean out your garage, or your closets and kids rooms. Not only is it beneficial for you to get rid of items you are no longer in need of, but you get to help provide these items at a minimal cost, or even for free to a family in need. Donating to Goodwill or the Salvation Army, or even a local non-profit, might allow you to exceed the standardized deduction requirements.

9. Income + Retirement Exclusion Rule

Income Exclusion Rule
Sets aside certain types of income as nontaxable. There are many types of income that qualify under this rule, such as life insurance, death benefit proceeds, child support, welfare, and municipal bond income.

Retirement Income Exclusion Rule
Do you live in a state that is not income tax free?  For GA residents and other income tax paying states there is a Retirement Income Exclusion Rule that allows taxpayers who are 62 or older, or permanently and totally disabled regardless of age, eligibility for a retirement income adjustment on their Georgia tax return*.

See Form IT-511 for the Retirement Income Exclusion Worksheet to calculate the maximum allowable adjustment for this year.

Retirement income includes:

  • Income from pensions and annuities
  • Interest income
  • Dividend income
  • Net income from rental property
  • Capital gains income
  • Income from royalties
  • Up to $4,000 of earned income

*Source