Still time to minimize your income tax obligation

On Behalf of | Dec 21, 2018 | Income Tax

With the year quickly coming to a close, most Connecticut residents probably feel it is too late to adjust things that will minimize their tax liability. The simple truth is, that is not true. There is still time to take action and make a few changes that will help one’s income tax situation.

First, let’s talk deductions. When it comes to charitable contributions, the Internal Revenue Service requires receipts for any donations made that value $250 or more. So, those making any last minute contributions to charitable organizations to help with their deductions should make sure they get a receipt and keep a record of their donation just in case the IRS asks to see proof.

Now, let’s talk itemization. Itemizing deductions can greatly reduce one’s tax liability if one has enough allowable expenses to itemize. Those considering making year-end contributions to charities but know that they will not be able to itemize deductions for this year may want to wait and make the contribution next year.

Next, let’s talk retirement contributions. Money placed in an Individual Retirement Account, 401(k) or 403(b) can increase one’s tax deduction. It is possible to play catch up or dump money into the account at year’s end to boost one’s contributions. Doing this can also put one in a lower tax bracket.

Finally, let’s talk business expenses. December is a good time for business owners to purchase what they need for their companies. If they do it now, they may be able to write off the expense in their 2018 taxes, reducing how much they may have to pay.

December is flying by. Connecticut residents who want to reduce how much they owe in income tax have a little time left to take action. Those who want to make sure any changes they make are on the up and up legally can turn to legal counsel for guidance.