Are you sitting down? Is there someone nearby to help bring your blood pressure down after this terrifying, yet true information is shared with you?
Tax returns will be sent out in less than three months! Shocking, I know. While that may seem like ages away, most people find themselves missing out on precious dollars and cents because they either wait until the last minute or really just have no idea what they can do to save more money. Whether you’re the former or the latter, we’re here to help.
Timing is Everything
When it comes to keeping the most of your money come Tax Day, as cliché as it sounds, timing really is everything. For instance, if you regularly make donations to charity, the “when” of making these donations is just as important as the “how” and “why.”
For instance, let’s say you want to donate around $20,000 to a few of your favorite charitable organizations. Rather than donating it all at once, you may want to consider setting up a donor-advised fund. This will allow your money to be spread out amongst the different charities over a few years while allowing you to take the entire $20,000 deduction on your 2017 taxes.
Change Up Your Donations
Speaking of donating to your favorite worthy cause, did you know that you can claim more on your 2017 taxes if you donate stock that has appreciated in value rather than donating cash? There are some stipulations regarding this type of donation as you would have had to own the stocks for at least a year, but the difference is clear.
If you chose to donate $10,000 in cash in 2017, you would only be able to save $4,500. While that definitely sounds like an awesome number, you would be able to save $5,990 in taxes by donating stocks, bonds, or another type of security worth $10,000 that had doubled in value, including the $1,490 you would save in future capital gains taxes.
Also, keep in mind that if you live in Arizona, there are donations that are eligible for a tax credit on the state return. You’ll want to take advantage of that whenever possible.
Update Your W4
Did you know that you can update your W4 tax withholdings any time during the year? Most people make these changes when they get a second job, change jobs, or get married, but you can also change it with the sole intention of maximizing your tax return as well. One thing to remember, though, is that the timing of that adjustment can make a world of difference come spring in 2018. The later in the year you make that change, the less of an impact it will have on your return.
Tax time doesn’t have to be the most stressful time of year. In addition to these potential savings, we may be able to help you find even more. Let The Hopman Group clear up the muddy waters that surround tax time, tax laws, and everything in between so you have one less thing to worry about as the New Year arrives.