Congrats. You filed your 2018 tax return. But don’t stuff it in a file cabinet just yet. Instead, look it over to uncover steps you can take right now to lower your 2019 tax bill.
The IRS revised the withholding table early in 2018 which resulted in less withholding for most taxpayers and consequently smaller refunds or even balances due at tax time, says Robert Westley, a CPA and member of the AICPA’s Personal Financial Specialist Credential Committee.
His advice: Check to see if you may need additional withholdings from your paycheck.The IRS calculator can help you with that. Use IRS Form W-4 to indicate any additional amount you want to be withheld.
Evaluate your filing status
Choosing your filing status is generally a straight forward decision, but it can pay to compare the filing statuses you are eligible for each year, says Westley.
“A married couple can file jointly or separately, but in most cases filing separately is unlikely to decrease the overall tax bill,” he says.
If, however, one spouse has substantial unreimbursed medical expenses, filing separately will lower their adjusted gross income and allow the spouse with significant unreimbursed medical expenses to obtain a higher deduction amount, says Westley.
Maximize chances for pre-tax dollars
Maximizing the use of pre-tax dollars is a smart way to lower your 2019 tax burden. Ask your human resources department about any your pre-tax employee benefits, says Westley. Those might include health and/or dependent care flexible spending accounts, commuter benefits; a Section 125 premium-only insurance plan, and a health savings account (HSA).
The IRS revised the withholding table early in 2018 which resulted in less withholding for most taxpayers and consequently smaller refunds or even balances due at tax time, says Robert Westley, a CPA and member of the AICPA’s Personal Financial Specialist Credential Committee.
His advice: Check to see if you may need additional withholdings from your paycheck.The IRS calculator can help you with that. Use IRS Form W-4 to indicate any additional amount you want to be withheld.
Evaluate your filing status
Choosing your filing status is generally a straight forward decision, but it can pay to compare the filing statuses you are eligible for each year, says Westley.
“A married couple can file jointly or separately, but in most cases filing separately is unlikely to decrease the overall tax bill,” he says.
If, however, one spouse has substantial unreimbursed medical expenses, filing separately will lower their adjusted gross income and allow the spouse with significant unreimbursed medical expenses to obtain a higher deduction amount, says Westley.
Maximize chances for pre-tax dollars
Maximizing the use of pre-tax dollars is a smart way to lower your 2019 tax burden. Ask your human resources department about any your pre-tax employee benefits, says Westley. Those might include health and/or dependent care flexible spending accounts, commuter benefits; a Section 125 premium-only insurance plan, and a health savings account (HSA).