Tend to end-of-year finances to save money at tax time
ATLANTA - As you round out 2018, there are a few financial homework items you really need to tend to.
Before you groan, noooo, take note: This is about saving you money. So think of it that way when you try to find time to carve out one more thing.
Let's start with the fact that there were lots of tax changes this year. So not to be caught off-guard April 15th, do a tax prep dry-run. Amy Mize, the chief accounting officer at Delta Financial Credit Union, explains how you do that.
"Use last year's tax return as a guide. And then you can pull things like your most recent pay stub to get your wages for the year then add in what the next couple of paychecks are going to be. And, also, you can use bank statements in place of 1099s and that'll give you somewhat of an idea of your dividends or interest you have earned on your retirement accounts," she told us.
This gives you a ballpark figure. Now, if you will owe more than you thought, there are ways to adjust that here at the end of the year.
Start by contributing more money end of year to your 401k or IRA. If you are 50 or older, you can add more than you could in year's past. It's called catch up.
End-of-Year 401k Boost
$24,500 - 50 and older
$18,500 - under 50
Same with your IRA. You can lower your tax bill by giving yourself some money.
End-of-Year IRA Boost
$6,500 - 50 and older
$5,500 - under 50
You can also give away some money through charitable donations to lower your tax bill. Also, if you had stock that appreciated, you can give it as a donation off-setting gains on that tax return.
If you do this dry run and find you are going to owe more this year than you thought, you can change your tax withholdings. Just reach out to your HR department for more details.