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Severn, MD: End of Year Tax Saving Ideas
With less than one week left in the year and taxes being a significant percent of where our income goes, consider the following to reduce your 2018 tax bill:
1) Estimate your Total Income. Update your accounting records; estimate your total income. Work with your CPA (or do it yourself) to do a quick estimate of your tax liability.
2) Business owners reduce Taxable Income to below 20% QBID Threshold of $157.5K ($315K married). If you can reduce your taxable income to below $157.5K ($315K married), your qualified business income will be eligible for the new 20% qualified business income deduction (QBID). Your taxable income = AGI (adjusted gross income) – deductions (itemized or standard).
Below are 13 ideas to consider at year end to reduce your taxable income:
1) Max Out Retirement Contributions (401K, IRA, SEP-IRA). You have until Dec 31 to max out your 401K contribution to $18.5K ($24.5K if > 50yrs old). If you are self-employed, you can contribute up to $55K ($61K if >50yrs old) to a SEP-IRA, and you have until 4/15/19 to do so (or 10/15/19 if filing on extension). You also have until 4/15/19 to contribute to an IRA ($5.5K, $6.5K if >50). For those who have maxed ... more
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