Make moves that will trim your taxes

The Morning Call (Sunday) - - BUSINESS CYCLE - By Erin Arved­lund

It's time again to pon­der some year-end tax moves.

Here is a start­ing list of ideas from Dean Mi­oli, di­rec­tor of in­vest­ment plan­ning at SEI In­vest­ments in Oaks:

Max­i­mize your re­tire­ment-sav­ing con­tri­bu­tions.

If you turned 50 this year, you're en­ti­tled to a catch-up con­tri­bu­tion of $6,000 for your 401(k), and there's still time left in 2018.

Re­view cap­i­tal gains and losses.

The new Tax Cuts and Jobs Act re­tained the 0 per­cent, 15 per­cent, and 20 per­cent rates on long-term cap­i­tal gains and div­i­dends for in­di­vid­ual tax­pay­ers. How­ever, for 2018–2025, these rates have new brack­ets, so make sure you check those be­fore fil­ing.

There are sig­nif­i­cant changes to item­ized de­duc­tions for 2018.

For in­stance, state and lo­cal tax de­duc­tions are lim­ited to $10,000 for mar­ried and sin­gle fil­ers. That alone will re­duce the num­ber of tax­pay­ers item­iz­ing de­duc­tions to un­der one in three Amer­i­cans.

Re­mem­ber to make char­i­ta­ble do­na­tions by year end.

Do­na­tions charged to a credit card be­fore the end of 2018 count for this year, even if you don't pay the card bill un­til 2019. Also, checks count for 2018 as long as they are mailed in 2018. Also con­sider gift­ing ap­pre­ci­ated se­cu­ri­ties in­stead of cash, which is very tax in­ef­fi­cient, Mi­oli noted.

Con­sider a qual­i­fied char­i­ta­ble dis­tri­bu­tion.

Re­tirees in good fi­nan­cial health may wish to con­sider a qual­i­fied char­i­ta­ble dis­tri­bu­tion, a taxfree trans­fer (up to $100,000) di­rectly from an IRA to a qual­i­fy­ing char­ity. You must be age 70½ at the time of the dis­tri­bu­tion to be el­i­gi­ble and the money must be trans­ferred by Dec. 31.

The ben­e­fit of this ap­proach? A di­rect con­tri­bu­tion by­passes the is­sue of tak­ing the pro­ceeds from a re­quired min­i­mum dis­tri­bu­tion and re­port­ing it as tax­able in­come, and then us­ing it for con­tri­bu­tions. Some bro­kers or banks might give checks to write from the IRA ac­count di­rectly to the char­ity. Larger con­tri­bu­tions, say over $250 or $500, might be best han­dled by just us­ing the checks for small con­tri­bu­tions.

But tax­pay­ers should be care­ful not to use these checks for any other pur­poses. It is best to work with a tax prac­ti­tioner to make sure that it is done prop­erly, and that the proper ac­knowl­edg­ment let­ters are re­ceived from the char­ity, said Blue Bell CPA David Zalles.

If you are con­sid­er­ing gift­ing to fam­ily or friends, do so by year end.

You can give up to $15,000 to any­one with­out fil­ing a gift tax re­turn. Con­sider gift­ing ap­pre­ci­ated se­cu­ri­ties, which re­moves the gains from your portfolio and pos­si­bly re­duces the tax

bill on the sale if the donor has a lower tax rate than you.

We've come across sev­eral handy on­line tax guides, in­clud­ing one from the Pennsylvania In­sti­tute of CPAs at www.picpa.org, from Citrin Coop­er­man

at www.cit­rin­coop­er­man.com, and from Is­daner LLC at www.is­dan­er­llc.com.

And of course, con­sult the In­ter­nal Rev­enue Ser­vice's web­site page about get­ting a jump on 2019 taxes at www.irs.gov.

And re­mem­ber, tax­pay­ers who earned less than $66,000 in 2018 may qualify for IRS Free File and can ac­cess no-cost tax soft­ware on­line.

The IRS Vol­un­teer In­come Tax As­sis­tance and Tax Coun­sel­ing for the El­derly pro­grams of­fer tax­pay­ers who earned less than $55,000 in 2018 free face-to-face tax re­turn prepa­ra­tion and free e-file from IRS-trained volunteers. For more in­for­ma­tion and lo­ca­tions, go to IRS.gov/VITA.

The IRS is al­ways look­ing for volunteers for these two pro­grams to pro­vide free tax prepa­ra­tion ser­vices in 2019.

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