For Those over 70 ½ who Donate to Charity

If you are over age 70 ½, then you are forced to withdrawal money from your IRA each year and include that amount in your taxable income. Most retirees don’t itemize since their itemized deductions (state and local taxes, mortgage interest, and donations) don’t exceed the $27,000 standard deduction – thus their donations don’t save them any tax. The solution: If you donate to charity directly from your IRA, then you don’t have to include that donated amount as income on your tax return…so in a round-about way, you get to deduct that donation (i.e., your taxable income doesn’t include the amount you donated to charity directly from your IRA).

Need a Large Business Deduction This Year?

If you arrive at the end of the year and need a business or rental deduction to make sure that you don’t creep into the next tax bracket, then consider pre-paying 2020 expenses in 2019. You can pre-pay up to 1 year’s worth of 2020 expenses in 2019 and take a deduction for that pre-payment in 2019. You can pre-pay 12 months of phone bills, utilities, rent, supplies, insurance, etc. Remember, you get a deduction for what you charge on your credit card in 2019 on your 2019 return even if you don’t pay off the credit card until a future year.

Want Triple Tax Savings?

Health Savings Accounts (HSAs) are, in our opinion, the best tax-savings vehicle in existence. 1. You can deduct the amount you contribute (up to a maximum deduction of $9,000/year). 2. The money in the HSA grows tax-free. 3. In addition, you don’t have to pay tax when withdrawing the money from the HSA. There is no other tax-savings vehicle that provides all 3 of these benefits. Traditional IRAs and Traditional 401Ks only allow a deduction of contributions but not the other 2 benefits. Roth IRAs and Roth 401Ks only allow tax free earnings and tax-free withdrawals, but not deductible contributions. If you qualify, be sure to contribute the maximum each year to your HSA.

Have an AirBNB Rental?

Generally, if your income is more than 150K and you have a loss from a rental, then you can’t deduct that rental-loss on your tax return. AirBNB rentals generally aren’t classified as “rentals” for tax-purposes and instead are classified more like hotels – thus they aren’t subject to this loss-limitation. In addition, you can use cost-segregation techniques to ensure large depreciation deductions in the early years of your AirBNB rental and use those losses to offset your other income.