Ideas to Further Reduce your 2018 Taxes

​By Roy Larsen, CFP®, AAMS®

​Still time for a 2018 IRA: Since we are talking about deductions, let's look at the income limits first. If you are covered by a retirement plan at work and have Modified Adjusted Gross Income of $63,000 or less as a single filer, or $101,000 or less, filing jointly, it is fully deductible. Up to $73,000 MAGI for singles and $121,000 for joint filers you can still claim a partial deduction. You must at least have enough earned income to support your contribution up to the limits of $5500 for an individual and $11,000 per couple. If you are age 50 or older, add another $1,000 to your maximum.

Open a Sep or Simple IRA: Do you own a business of any kind? Large, small or even a hobby that generates income, you can still create a retirement plan around it up to April 15th, 2019! There would be requirements to contribute to employees as well if you have them. If you are just a solo business owner, the amounts you can contribute and the structure of the plan  will vary depending on the option you choose. Let's not get in the weeds as to which plan may be right for you; call a competent Certified Financial Planner™ in your area for all the details. 

Qualified Business Income Deduction:   Are you a business owner? Make sure you are aware that 2018 will be the first you where you can potentially claim the QBI deduction. This is available to every business structure other than a C corp.  Even if you are a sole proprietor, don't miss this opportunity as in effect, if you qualify, you will only pay taxes on 80% of your income. Although this is a business deduction it is applied on your personal tax return so all income will be used to determine if you qualify. Again, the rules can get complex so please call our office or a competent CPA who specializes in tax planning and is up to speed on the complexities of the new law.

Still time for 2018 HSA contributions: this is probably the best vehicle out there as it not only reduces your tax obligations, but all earnings come out completely tax free if you use them for qualified medical expenses! Since HSA funds can be rolled over each year, we advise clients however to just build the fund and not use it in the early years as medical expenses will only increase in later years and would like to see you build a tax free behemoth! 

To qualify, you had to be in a high deductible health plan as of the end of 2018. Individuals can contribute $3450 and a family can contribute $6900. There is also a catch-up provision if you are 55 or older to contribute an additional $1000.00.

There are so many ways to tax plan each year and these are just a few options as we approach the deadline. Make sure you know all of them as we move through 2019 and you are working with a seasoned and competent Certified Financial Planner™ who can guide you in every area of your financial journey. Feel free to call our office at 678-696-8755 if you would like additional information on Larsen Wealth Management. 



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Roy Larsen, CFP®, AAMS® is a Fee Only Certified Financial Planner practitioner and acknowledged fiduciary. He works with clients in the Gainesville, GA. area outside of Atlanta and throughout the United States. Larsen Wealth Management specialized in the distribution phase of retirement or your version of chapter two. Roy has been quoted in the Wall Street Journal as well as the New York Times and has won the 5-Star Professional award for 6 consecutive years as one of the top Wealth Managers in Atlanta. Roy can be reached at 678-696-8755 or roylarsen @investinretirement.net. 
 
The opinions voiced in this material are for general information purposed only and are not intended to provide specific advice or recommendations for any individuals(s). To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.