Here are five tax saving ideas that can be used by most taxpayers. But act soon, there’s not much time left until our tax year comes to an end.

1 Make late-year charitable donations. Consider making donations with appreciated stock you have owned over one year. You can typically receive the higher value donation without paying capital gain taxes. Also consider non-cash donations of items in good or better condition. But pay attention to your total deductions. With higher standard deductions, you should use your charitable giving to ensure you can maximize your tax savings. This may mean making next year’s donations this year!

2 Make contributions to your qualified retirement plans. Remember there is still time to make contributions to traditional IRAs, SEP IRAs and 401(k) accounts to reduce your taxable income this year. While you’re at it, take a look at next year’s limits and plan to increase your contributions to make next year’s tax obligation even better than this years.

3 Take distributions from your retirement accounts. If you are over 70 1/2 years old you will need to take required minimum distributions. The penalty for not taking minimum distributions is 50%. But if you are over 59 years old you should also be taking distributions from tax deferred accounts in the most tax efficient way possible. This may mean taking some money out, even it you do not quite need it now.

4 Take any final investment gains and losses. Capital losses can be used to net against your capital gains. You can also take up to $3,000 of capital losses in excess of capital gains each year and use it to lower your ordinary income. 

5 Consider making any final gifts to dependents. You may provide gifts of up to $15,000 per year per person. Remember all gifts given (birthday, holiday and cash) count towards this total. This can provide a future source of possible investment income for your kids. While the “kiddie tax” may ultimately come into play, this can be avoided by using the gifts to fund a 529 college savings account.

With the new tax rules in place beginning in 2018, tax planning is more important than ever.  You still have time to lower your tax bill, but the clock is ticking.

Tax identification theft is becoming all too common. Victims know how frustrating the experience can be. Thankfully, the IRS is willing to help.

The frustration

If you are a victim of IRS identity theft, your first instinct is to find out what was filed and who filed it. In the past, most requests by victims of this theft could not receive this information. The IRS often stonewalls these requests because of active investigations and because it wishes to protect other potential victims’ identification.

There is help

As long as you follow IRS instructions, you are now able to get transcripts of what thieves attempted to do with your tax information. But be forewarned. The IRS may mask or redact information on the fraudulently filed tax return. Its goal is to provide you with enough information to determine how your personal information was used on the tax return without putting other information at risk.

To receive a transcript you must:

• First, file an identity theft Form 14039, Identity Theft Affidavit
• Then file Form 4506-F, Identity Theft Victim’s Request for Copy of Fraudulent Tax Return

To be successful in your request, your name and Social Security number (SSN) must be listed as the primary or secondary taxpayer on the fraudulent tax return. Plan on receiving an acknowledgement from the IRS within 30 days and a copy of the transcript within 90 days. Be prepared to have to work through masked or redacted information to determine what was stolen.

Why the stolen information may be important

• You can see what personal information has been stolen. What has been compromised? Name, address and SSN? Do they have your dependent’s or spouse’s information? Perhaps they also have your income and withholding data. Knowing this will help you plan the extent of data protection you will need.
• There may be clues as to where the identity theft occurred. Of the information stolen, who had access to it? Did the data breach involving your information happen through the IRS or somewhere else?
• There may be more tax years impacted than you thought. Request information from the year you first became aware of the identity theft at the IRS. But you may wish to request information from a prior year and from the year following the theft. The IRS has access to up to six years of tax returns. Try to determine whether the theft is ongoing or a one-time occurrence.

The request requires specific information. You can read more about it in the IRS’s Instructions for Requesting Copy of Fraudulent Returns.

Thankfully, the IRS is now more helpful in sharing fraudulent information to allow victims to take action to protect themselves.

The Social Security Administration announced a 1.6 percent boost to monthly Social Security and Supplemental Security Income (SSI) benefits for 2020. The increase is based on the rise in the Consumer Price Index over the past 12 months ending in September 2019.

For those still contributing to Social Security through wages, the potential maximum income subject to Social Security tax increases 3.6 percent this year, to $137,700. A recap of the key amounts is outlined here:

2020 Key Social Security Benefits

What does it mean for you?

• Up to $137,700 in wages will be subject to Social Security taxes, up $4,800 from 2019. This amounts to $8,537.40 in maximum annual employee Social Security payments. Any excess amounts paid due to having multiple employers can be returned to you via a credit on your tax return.
• For all retired workers receiving Social Security retirement benefits the estimated average monthly benefit will be $1,503 per month in 2020 – an average increase of $24 per month.
• SSI is the standard payment for people in need. To qualify for this payment you must have little income and few resources ($2,000 if single/$3,000 if married).
• A full-time student who is blind or disabled can still receive SSI benefits as long as earned income does not exceed the monthly and annual student exclusion amounts listed above.

Social Security & Medicare Rates

The Social Security and Medicare tax rates do not change from 2019 to 2020.

Note: The above tax rates are a combination of 6.20 percent Social Security and 1.45 percent for Medicare. There is also 0.9 percent Medicare wages surtax for those with wages above $200,000 single ($250,000 joint filers) that is not reflected in these figures. Please note that your employer also pays Social Security and Medicare taxes on your behalf. These figures are reflected in the self-employed tax rates, as self-employed individuals pay both halves of the tax.

Too often a charitable tax deduction is disallowed upon review by the IRS. Do not let this happen to you. Here is what you need to know.

Think all your stock sales will be subject to capital gains tax? Think again. With proper planning some of your gains may not be taxed at the federal level. Here is what you need to know.

This publication provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, rewritten or redistributed without permission, except as noted here. This publication includes, or may include, links to third party internet web sites controlled and maintained by others. When accessing these links the user leaves this web page. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does Willis & Jurasek have any control over, or responsibility for, the content of any such Websites. All rights reserved.

If Benjamin Franklin were alive today, his famous quote “Nothing is certain, except death and taxes.” might include a third item — paying medical expenses. Medical expenses, in one form or another, are unavoidable. Fortunately a health savings account (HSA) is a great way to cut your spending on medical expenses.

A major tax break

If you have a high deductible health insurance plan (deductible of at least $1,350 for an individual or $2,700 for a family), you can add an HSA to pay for medical expenses with pre-tax income. Contributions to an HSA can be made via payroll deduction or directly to the account and deducted as an adjustment on your tax return. This approach effectively reduces your medical bills by as much as 37 percent!

Tips to maximize your HSA

Once your HSA is established, here are three simple ideas you can use to take full advantage of this great tax-savings vehicle:

1. Maximize your HSA contributions every year. Set an annual goal to contribute the full amount allowable by the IRS into your HSA. Unlike other funds, HSA contributions do not have to be spent each year. Unused balances can remain in the account, giving you a great way to build up a nice emergency fund over the years. The 2019 total contribution limits are $3,500 for single taxpayers and $7,000 for a family (add $1,000 if you are 55 or older). You have until April 15 of the next year to make contributions, but when figuring out how much to contribute, remember to include contributions by your employer in your total.
2. Pay for all medical expenses with your HSA. Typically you can pay for medical expenses directly from your HSA account via a debit card. If not, track all payments you make for medical expenses and take matching distributions from your HSA. If you don’t have enough in your HSA to cover an expense, make a contribution to your HSA first and then pay the bill. Keep ALL your medical bills and receipts to prove that the distributions are for qualified medical expenses.
3. Prioritize HSA contributions. HSA contributions are tax-deductible and distributions are tax-free (for qualified medical expenses). Traditional IRA distributions, on the other hand, are taxable. 

Knowing you will always have medical expenses, prioritize your HSA contributions to take advantage of its additional tax benefits.

Unless you experience identity theft, the IRS will not provide you with access to their Identity Protection PIN program … until now. Read on to learn about the new voluntary participation in this identity theft enhancement.

Really? There are educational tax breaks for older taxpayers? Yes. Here is what you need to know.

Now is a good time to assess your current situation and address those lingering tax moves that may improve your tax picture for 2019. Here are five things to consider:

1. Check on your withholdings. Review your taxable income and the amount of tax you’ve paid to Uncle Sam so far this year. How do the numbers compare to last year? Based on your analysis, you may have to adjust your paycheck withholdings or make quarterly estimated tax payments during the balance of the year to avoid underpayment penalties or a surprising tax bill.

2. Build up your retirement accounts. Don’t neglect your retirement savings during the remainder of the year. In fact, setting aside more money for retirement can lower this year’s tax bill. For instance, if you have a 401(k) plan at work, you can defer up to $19,000 of salary in 2019, plus an extra $6,000 if you’re age 50 or older.

3. Identify potential taxable events. It’s easy to overlook one-time events that will have an impact on your 2019 tax liability. For instance, if you win a prize at a church raffle, the prize is generally taxable to you. Perhaps you changed jobs, lost a child as a dependent, or got married. Each of these events can create a change in your tax obligation. Review your records now to avoid any unpleasant tax surprises later.

4. Consider business property needs. If you acquire business property, you can often choose to write off the cost in the first year the property is placed in service under the latest tax laws. If it makes sense, consider combining the benefits of the Section 179 expensing deduction, up to a maximum of $1 million (indexed for inflation), with 100% bonus depreciation for both new and used property.

5. Account for gig taxes. Finally, workers in the gig economy (like Uber and Lyft drivers) should understand the basic tax rules. Generally, income from such jobs is fully taxable, but you may be entitled to offsetting deductions. Essentially, you’re treated like a self-employed individual. Estimated quarterly tax payments are often required for these workers.

Should you wish a review of your situation, call now. It’s better to be prepared than surprised when it comes to your tax obligation.