As Americans adjust to the Jobs Act of 2017, it’s worth noting that military enlistees have a great tool on the IRS website available to help keep them from falling prey of paying too much or too little in taxes. The tax estimator, which was called the tax calculator last year, will ask you to estimate values of your 2019 income, the number of children you will claim for the Child Tax Credit and Earned Income Tax Credit, and other items that will affect your 2019 taxes. The process takes about 30 minutes. The estimator can help in the tax planning process, which last year yielded an average refund that was significantly less than 2017. Better yet it can provide a means to adjust income in the last month of 2019 to ensure smooth sailing – or sledding – as tax season rolls in next month.
The few remaining tactics to avoid a tax liability this year remain in place. I don’t know why we’re going bonkers giving away clothes and household items. Maybe it’s because tacky Christmas sweaters are not in style along with Christmas vacation egg nog mugs. This upcoming year, 2020, Dobbins will once again feature the IRS services of the Voluntary Income Tax Assistance program (VITA) at the base on each drill weekend for the second, third and fourth drill weekends of the month. For E-6 and below, some of Greater Atlanta’s top accountants will prepare returns on a complimentary basis on Saturday and Sunday afternoons. Private appointments will be available as well.
The first decision an Airman should make is to decide whether itemizing still makes sense for you. If you are a business owner, there are a number of legitimate ways to transfer business-related income.
- Make sure that you are contributing the full $19,000 to your TSP so you can not only take advantage of the reduction in taxable income but the matching contribution that the government makes as well.
- For an enlistee in the military claiming Georgia as their residence with $81,000 in income filing jointly, a $19, 000 contribution means nearly a $5000 reduction in taxes for calendar year 2019. Next year, a member of the military can defer $19,500 in tax year 2020. These amounts exclude catch-cup contributions of $6500 if one is over the age of 50. Make sure that HSA and FSAs are being maximized to reduce income as well. You can make a contribution to an IRA, FSA or HSA right up until April 15 of 2020.
- If one qualifies for a mortgage deduction, health care and charity donations, make sure you expedite planned giving and mortgage payments in the current year to reduce taxable income.
- Remember all deployment related tax breaks that are available and available if deployed in a combat zone.
- File taxes in the spouses state of residency with the lowest state income tax rates.
- Make a 529 education savings plan in the plan and state of your choice.
- Use stock losses to offset capital gains.
- Since taxes have been trending down, it still might make sense to convert a pre-tax IRA or 401(k)
to a Roth. This decision is contingent upon age, market performance, and tax status.
Consider utilizing tax free bonds for income alternatives as yields are favorable compared to taxable bonds at year end 2019.