How to Prepare for 2019 Taxes
- May 9, 2019
- by Barsz Gowie Amon & Fultz
Though the April 15 deadline has passed, tax planning is a year-round endeavor. Since your relevant financial documents from 2018 are likely still top of mind, it is a great time to strategize for your 2019 filing. Maximizing your returns for the coming year will require thinking about retirement plans, charitable giving, and investing.
Roth IRAs and Roth 401(k) accounts are two of the most popular retirement plans offered by employers. Contributing to an IRA is one way to tax-shave up until April 15, but it’s essential to consider investments in retirement prior to filing day. In addition to setting yourself up for financial success and retirement stability, contributing to these plans earlier will allow your money to compound over time.
Many people delay their charitable contributions until the end of the year, but there are many benefits to distributing your giving throughout the year. Charitable donations are itemized deductions on federal refunds, which entices people to be in the giving spirit. While many people contribute to charitable organizations in November and December, your budget will benefit from spacing out these contributions. In addition to alleviating pressure from your holiday spending budget, this will allow you ample time to research organizations you would like to support, making your giving more meaningful.
Investing is key to diversifying your finances. If you have stocks, mutual funds, or other securities (outside of IRA plans), it is crucial to think about the timing of trading your assets. Investment losses are applied to reduce gains, but if your losses outweigh your gains, you can deduct up to $3,000 in excess losses for different incomes. Additionally, short-term gains are taxed at higher rates than long-term gains that are held for more than a year.
It’s a good idea to keep your tax returns and supporting financial documents for at least seven years, but some should be kept longer. According to the IRS, the length at which you should retain various documents depends on the action, expense, or event that each document records. These documents include housing and mortgage filings, statements of investments, and charity receipts. Keeping copies of previous tax returns will also help you when filing future tax returns and can assist you in filing an amended return.
Ultimately, staying on top of financial changes within your household and ensuring you have supporting documents will help you as you plan for next tax season. Planning for your 2019 return will help take away stress from next April and will support you in making smart financial decisions.