With the individual extension deadline just coming to an end it’s never too early to think about next year’s tax return. Maybe you had to pay in this year when you thought you would get a refund. Or maybe you didn’t get the refund that you were expecting. One easy thing you can do right away before making any financial decisions is use the IRS tax withholding estimator.
You’ll go through a series of questions and at the end it will estimate how much of a refund you will get or how much you’ll owe if you don’t change your withholding. If you fall into the owing category you should consider changing your withholding amount.
You should also consider whether it is worth it or not to itemize your deductions instead of taking the standard deduction. This year the standard deduction for individuals filing single is $12,200 and married filing jointly is $24,400. If you have more than 10% of your AGI in qualified medical expenses you can deduct the difference on Schedule A.
You can always donate money or non-cash items such as clothing, household goods, stock and such to qualifying charitable organizations which will add to your total itemized deductions. You cannot completely wipe out your income by donating to charity but you can donate up 60% of your AGI.
If you had a profitable year in the stock game but don’t want to pony up the money to pay the tax on those gains you can sell stocks for a loss to try and offset your gains which is referred to as “loss harvesting”. Losses offset your gains dollar for dollar but keep in mind any excess loss is capped at $3,000. Anything more than $3,000 will be carried over to the next year.
There are many other strategies to consider so feel free to reach out to your SDK tax advisor to discuss what would be best for you.