3 End of Year Tax Tips

Get Your Clients’ Charitable Contributions in Order

If any of your clients plan on giving to charity before the end of the year in order to itemize deductions, just remember that cash contributions need to be documented for them to be deductible. If your client wants to claim more than $500 in donations, then they must attach an 8283 Form. If claiming a deduction of $250 or more for a car donation, they will need written acknowledgement from the charity with a description of the car. They won’t be able to make deductions for donations to individuals, social clubs, political groups or foreign organizations.

Save Your Medical Receipts

Due to the Tax Cuts and Jobs Act, the amount for medical expense deductions has gone down from 10% of your adjusted gross income to 7.5% for all Americans. It’s an important time to keep track of all your unreimbursed medical expenses because you might not realize how much you spent out of pocket throughout the year. Every time you go to the dentist, pay for medication, or spend any money on healthcare in general, save your receipt.

File and pay on Time

Be sure to finish your return on time, but if for whatever reason you cannot, make sure you file form 4868 by April 15, 2019. This gives you a six-month extension. Requesting an extension is extremely important if you end up owing tax to the IRS. If you file and pay late, the IRS can hit you with a late filing penalty of 4.5% per month of the tax owed and a late penalty of 0.5% a month of the tax due. By filing a 4868, you can essentially save your self a lot of money!