as we're getting close to wrapping up 2019 I'm starting to get a lot of
comments a lot of questions on the channel from viewers like yourself about
how do you save on taxes before the end of the year? what moves can you make
right now so you can minimize your tax liability as much as possible come next
year when you're filing your 2019 tax return that's what we're gonna talk
about today how's it going Internet so good to see all of you my name is Mike
the CPA on this channel we teach videos around finances investing taxes and more
thank you so much for being here I really appreciate it so let's just talk
about some of the things you can do to start saving on taxes one of the first
things I recommend that anybody regardless of where you're at is when
you want to save on taxes the first thing you need to determine is where are
you right now tax wise to help you determine that is I
have a video it's a wage for ejection worksheet I've created that you can
download for free and I'll link the video below in the comment section check
it out it's gonna walk you through how you can forecast your wages before the
end of the year because most people are employees and that's the bulk of their
income and even business owners often pay themselves a wage so the first thing
to do is figure out where you stand where's your wages gonna end up for you
and your wife if you're married where's your taxable business income going to
end up before the end of the year your investments and so on and so forth step
number two is really consider doing tax planning with a professional now I don't
think a lot of people need tax planning it's only if you have a business and a
lot of other income sources coming in that get a little hairy gets a little
complicated at that point I would start to recommend you do tax planning or if
you typically Oh a lot of money when you go to file your tax return that might be
another reason you consider tax planning a lot of the best tax saving things you
can do guys is the simplest things so one I talked a lot about Roth IRAs on
this channel if you're under the age of 50 you can put up the six thousand
dollars per year in these retirement accounts if you're over the age of 50
you can put up the seven thousand dollars per year in these accounts
they're great now it's not gonna save you now Roth IRA is not gonna save you
taxes right now but it will save you taxes in the future when you go to take
out that money once you're ready to retire the other
thing you can look at is doing not a Roth IRA but a traditional IRA the good
news about the traditional IRA is it's gonna give you an immediate tax
deduction so for some people this makes more sense if you're in a high tax
bracket you can get that immediate tax deduction right now and for example you
can get a maximum of a six or seven thousand dollar deduction currently this
year depending upon your age and that's per person so if you're married you can
double that amount and open to IRAs now remember Roth IRA no tax benefit
right now your tax benefits in the future a traditional IRA you can get a
tax benefit now but you pay taxes on the money when you take it out in the future
the next thing you can do one of the easiest things you can do is contribute
more to your 401k right now in 2018 the limit is $19,000
so if you you have time you might look at trying to max it out before your end
if you can afford to do so and if it makes sense if you're over the age of 50
you can actually put up to $25,000 into that account before the end of the year
something to look at if you're married obviously you can do that twice as long
as both of you qualify for that kind of plan which gives you a tax deferral of
like $50,000 or close to it it's pretty substantial of what you can put into
these things and invest for your retirement
the next easiest thing you can do guys is use your health savings account now I
know not everybody has one but a lot of people will at their company they'll
either have a flex pinning account or they'll have a self health savings
account no this is HS a reflects spending the plan I think you can for
2019 you can put up to twenty seven hundred dollars in their max I think
it's per person in that plan now remember though with that plan you you
can only roll forward a small amount if you don't use it so be cautious of that
now I love the HSA and with the HSA if you have one of those kind of plans you
can contribute up to thirty five hundred dollars per year if you're finally in
status is single and if you're married get this guys you can put a double that
so seven thousand dollars per year if you're married and that contribution to
that HSA our flex spending account whatever plan you have what's nice about
those plans is it's gonna reduce your taxable income by those amounts okay so
if you had a hundred grand in wages and you put for your family
a total of 7,000 in and your HSA now you're not paying tax on a hundred
thousand wages you're now paying tax on ninety three thousand dollars in wages
when you actually have medical expenses as long as they're for qualified medical
expenses you take that money out to pay for those expenses it's completely
tax-free and it's like having a big discount on all of your medical bills
the next thing to be looking forward is maximize your tax deduction is tax
credits because tax credits are much better far superior than tax deductions
because a tax credit can reduce your actual tax liability dollar-for-dollar
or a tax deduction cannot do that so tax credits are always more valuable than
tax deductions the most popular credits that people look at is the Earned Income
Credit the child tax credit child dependent care credits they look at
American Opportunity Credit so if you have some if one of your sons or
daughters are in school then this is a credit and you can probably apply for
you look for the Lifetime Learning credit if you're currently in college
and you're pursuing your master's degree or something like that
now my uncle he just bought a home and he was required to you know was here in
California and he was required to put solar energy panels on the home but
because he had to do that at least he gets an Icee tax deduction for it so
that the cost of the solar energy panels he gets a 30% deduction off the total
cost so for example if the solar energy credits are the solar energy panels cost
$30,000 he's pretty much gonna get a $10,000 tax credit from that so look for
credits there's a lot of them out there and keep in mind which ones apply to you
and how you can maximize them for tax efficiency as you guys know I make a lot
of videos around investments on this channel and so I have also created some
videos it's kind of an overlap of this but on how to save taxes on stocks but
if you're looking to save taxes on your investments one way to do that is tax
loss harvesting for example let's say you sold some time during the year now
Apple stock has had a great run up in value this year huge run up in value if
you sell apple stock and you know you have a $10,000 capital gain on Apple but
you also know in your brokerage account you have some other duds that you've
lost some money on whether it's Jenner electric whether it's PG&E that you're
looking to sell let's say you have a $5,000 loss on PG&E stock what you can
do is if you finally decided you want to get rid of PV stock or whatever stock
you have a loss on you sell that off right so you you sell that off at a
$5,000 loss that $5,000 loss can offset your $10,000 gain on Apple so your
$10,000 game gets reduced down to only $5,000 now and so you only pay capital
gains taxes now on $5,000 in that example now if you don't have any
capital gains and you still want to deduct losses from your investments
remember for capital gain purposes you can only deduct a maximum of three
thousand dollars in losses let me say it again you can only deduct three thousand
dollars in losses and maximum against your other forms of income like wages
and whatever anything in excess of that is going to carry forward into future
years keep that in mind the next thing you can do to minimize your taxes with
your investments is think of your retirement accounts if you have
traditional IRAs and many of you do many of them come from people who was rolled
over their 401k from their employer into a traditional IRA once you start to take
that money out that's one thing you're gonna start to get taxed so you if you
can't afford to do so you might delay if you can delay taking additional money
out of your retirement accounts like your 401k your IRA things like that
that's gonna help minimize your tax liability in the current year because
it's gonna keep your income your taxable income as low as possible so it's just
spreading out your income over time that's usually going to give you a
better tax result based on what you can afford
all right the next area of tax deductions and this is the biggest one
probably of them all is if you own a business that's why I've been
encouraging people for the last couple years they have to start a business if
you all the tax laws are available to you as same as the rich but you have to
have a business in order to take advantage of them because that's what
the government rewards the government rewards people who invest and build
businesses and then especially businesses who employ people they like
to keep people working because that's going to generate more tax revenue for
them and stimulate the economy that's why if you have a bit
think about whether it's a farm a rental a Schedule C like a sole proprietor then
there's a lot of deductions you can take advantage of one of the largest business
deductions you can take guys is the qualified business income deduction I
have two videos on this that go over in in detail it's very complicated but
basically you can get up to a maximum deduction of 20% of your taxable
business income of your net business income which is fantastic that is
something you should check out especially if you're a business owner
and see if you qualify for that because it's gonna save you a lot and I mean a
lot it taxes you know if you have a business there's all you can always help
plan your income this is what the professionals do this is what
professionals do for their clients as the one they help them keep track of
their net business income throughout the year with good accounting records and
projections and things like that and then towards the end of the year they
help them make some moves with their business or throughout the year they're
doing this of what type of expenses or deductions they can take what a lot of
CPAs do with their business clients are quite see owned businesses is they'll
work with them to determine a profit target for their business they'll
forecast where they think this business owner where their business will land by
year in what their net profit will be and then the lease Gus
or have an open dialogue of how much the business owner would like to and
reinvest into his business to drive his taxable income down his or her taxable
income down so let's say the business owner has a net profit of one hundred
thousand dollars so that's where it's projected the be by year-end
well the CPA will discuss that with him or her and say well how much better
would your taxes be if we can get your net business income down to eighty
thousand dollars the reason that's important is for most businesses like
pass-through entities like S corporations partnerships a sole
proprietorship a farm that kind of income is eventually going to flow into
that person's 1040 so that income gets taxed on the person's individual tax
return which is why it's so crucial to not only do tax planning for the
business but for the individual in this kind of circumstance they'll look for
deductions this person could take where they can spin their capital
a lot of times the business owners you'll talk to them and they would retch
rather reinvest in their business then to give the IRS of the state governments
more money through taxes so what they'll do is they'll look at purchasing more
equipment more supplies they might look at continuing education programs they
might give their employees bonuses I had one business owner do that quite often
every Christmas they would give a large bonus out which is really nice they
might look at putting more money into the profit sharing plan of the business
if the business owner if the business has that kind of plan anything they can
do to drive their business and come down help their employees rather than sending
more money to the government they are more than pleased they're usually more
than happy to do so while taking cash flow management into consideration one
thing a lot of people don't talk about and the what the professionals look at
is not always taking the most tax deductions right now what do I mean a
lot of times as a business owner when you buy new equipment our new vehicle
people want to deduct as much as possible with accelerated depreciation
ratha get go but that's not always the best idea you have to do a little deeper
level of thinking more critical thinking as your income Rises you're you're gonna
land in higher and higher tax brackets your overall marginal tax rates gonna
increase right and same with your effective tax rate that's gonna go up
too so what we recommend often is you wanna if your income like right now what
if you think your income is gonna go up like double next year or even you keep
rising as as time goes on which I hope it does then you might not maximize the
tax deductions with depreciation right now but you might look at just you know
annualizing out that depreciation over five years or seven years whatever the
life of that asset is rather than writing off the whole thing right now
because you're gonna get a much greater tax benefits much much greater that if
you're offsetting you know the tax rate of like 30-something percent versus
offsetting a tax rate of 20% if that makes sense you're gonna get more bang
for your buck when your tax rates higher and so that's nice to have deductions
available when you're hitting those higher brackets there's still a few tax
planning opportunities with itemized deductions most people now are using the
standard deduction because it got a nice bump under the new
tax law starting in 2018 of 12,000 if you file single or 24,000 if you file
jointly so now less and less people are actually itemizing however if you do
itemize then there are still things to consider to boost your deductions even
further look at medical deductions look at now remember your state and local
property taxes or income taxes is limited to ten thousand dollars in total
so you're stuck with ten thousand there but your mortgage interest isn't so
stuck the most people can deduct all of their mortgage interest or more even if
they have multiple properties depending on how much mortgage debt in total they
have the other thing to look at is charitable contribution so remember if
you're already able to itemize you might consider donating even more to charity
because you're gonna get more benefit from it from a tax perspective also look
at investment interests and things like that those are all things they're gonna
help you tax wise now the thing that's important to know about itemized
deductions with especially with charities or giving the charity even
though they say it's a tax deduction when you're donating to a particular
organization it's not really a tax deduction to you unless you're actually
able to itemize if you less you are actually able to itemize don't expect to
get a tax deduction for donating to charity anymore it's very important you
understand that's not saying no no don't donate to charity I'm just saying that
be aware that every dollar you donate to charity might no longer be deductible if
you can't itemize to begin with the last thing I want to mention in this video is
if you feel that if you look at your prior your tax return and you notice
that you're feeling that your income has gone way way up this year or you haven't
had as much tax withheld from your paychecks you throughout the year you
might look at paying in estimates before a year in so that you don't owe a ton of
money come April 15th plus that's gonna help you offset some interest in
penalties you might have to pay if you owe a huge balance when April 15th
arrives now I have several videos on tax estimates how they work I have a video
of how to pay them how the general rules of how they work and a video of how to
roughly calculate your tax estimates I'll link those all below so you guys
can check them out if you want to all right guys well thank you so much for
hanging out with me spending time with me on youtube if you enjoy this content
you want to see more videos like this in the future let me know by dropping a
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you guys got a lot out of this video I'll see you in the comments section
below let me know what you're doing to save on
taxes or how you go about minimizing your taxes as much as possible I will
see you guys in the comments have a great week everybody live life on caged
and I'll see you soon peace