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Year-end tax tips

As we come to a close on another gyrating year, when it comes to tax tips, this time it’s different. With the launch of the Trump tax plan January 1, 2018, the “Tax Cuts & Jobs Act” implemented material changes. One significant example is that it removed personal exemptions and increased the standard deduction. This means that if you were once itemizing, you may no longer.

It’s also worth noting that most of these changes sunset in 2024, making this decade a potential windfall for high income earners with low deductions. If you find yourself not in this category, you may still benefit, and if not, here are some things that you can do to improve your tax situation even more:

Retirement plan contributions - the biggest impact that you can have is to shelter your income by contributing to your employer’s retirement plan, ie. 401(k) or 403(b). The maximum that you can contribute is $18,500/year, plus $6,000 “catch-up,” for people 50+. Next year, this increases to $19,000/year, plus the same $6,000 “catch-up,” so you’ll want to make the necessary adjustments to your paycheck soon.

Health savings account - if you have a health insurance plan with a deductible greater than $1,350 for an individual plan or $2,700 for a family, then you’ll be able to open and fund a health savings account (HSA)^1. Contributions are tax-deductible, can be invested tax-free, and spent tax-free on qualified medical expenses. The most you can contribute is $3,450 for an individual plan or $6,900 for a family plan. You have until April 15, 2019 to make the contribution for the 2018 tax year.

Tax-loss harvesting - if you currently have investment unrealized losses (who doesn’t), then you might benefit from selling those positions to realize those losses. The first $3,000 would be a write-off against your ordinary income and the remainder could offset future capital gains. Don’t buy back the same security immediately as you’ll trigger a “wash sale,” eliminating your ability to take the deduction. Instead, buy another investment or wait 31 days to buy-back the same investment.

Charitable gifting - if you give every year, you’ll find that this year you won’t be able to take the deduction, unless your itemizing. To make a difference on your taxes, you’ll need to gift a sizable amount that’s above the standard deduction: $12,000 for single filers, $24,000 for married filing jointly.

Gift appreciated stock - if you are sitting on a few successful investments, you could benefit from transferring appreciated assets to a charity or a family member who might be in a lower tax rate up to the gift tax-free amount of $15,000. Gifting this to a charity could have the double whammy of removing the capital gain from your portfolio and providing you with the charitable deduction.

At Eureka Wealth Management, I help my clients identify areas that could improve their tax situation and set them up for a better financial future. Call me for a free, initial consultation at (760) 537-0791 or online at As always, consult your tax advisor if you have specific tax questions.

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