Page 6 - Lifestyles in Palm Beach Gardens - February '19
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Page 6, Lifestyles in Palm Beach Gardens
      New Tax Laws May Change How You Approach



      Your 2018 Tax Return



        Now that 2018 is over, it’s time to think about if and     1. Claiming The Standard Deduction Or Itemizing     3. Whether You Are Able To Deduct State Or Local
      how you may be able to reduce the taxes owed on your   Deductions                                    Taxes
      next tax return. New tax laws, which generally took effect     As in prior years, you have the option to either take the     Under previous law, you were generally allowed to
      on Jan. 1 of this year, mean you may need to approach   standard deduction (an amount set by law and adjusted   fully deduct your state and local income taxes (or state
      your tax strategy differently than you have in the past.   for inflation) or itemize deductions. The new tax laws   sales taxes, if elected) and property taxes from your
      Talk to your tax professional about whether the following   nearly doubled the standard deduction, which may make   income. Under the new law, the taxes are capped at
      five considerations apply to you:                  it more attractive for people to choose this option. For   $10,000. This limit may impact your decision to itemize
                                                         individuals, it is now $12,000 (up from $6,350 in 2017)   deductions.
                                                         and for married couples filing jointly it is $24,000 (up     4. If You Qualify For A Deduction As A Business
                                                         from $2,700 in 2017). Those age 65 or older or who are   Owner
                                                         legally blind may claim an additional standard deduction     If you are a business owner in a sole proprietorship,
                                                         of $1,300 to $1,600, depending on your filing status.  partnership, LLC or S corporation, a new tax provision
                                                           However, if your total available itemized deductions   may apply to you: 20 percent of your qualified business
                                                         are nearing the amount of the standard deduction, you may   income may be deductible from your income. Certain
                                                         want to take steps to qualify for additional or increased   limitations  apply,  including  those  based  on  your  line
                                                         deductions. Donating to charity, making an additional   of business and taxable income. The rules around this
                                                         house payment with mortgage interest or for medical   are complex, so contact a tax advisor for additional
                                                         expenses (subject to an AGI floor) are common itemized   information.
                                                         deductions. Incurring these expenses in this calendar     5. Reducing Your Taxable Income
                                                         year may allow you to reduce your taxable income by     Many of the strategies previously used to reduce
                                                         more than the standard deduction. Certain limitations and   taxable income are still applicable under the new laws.
                                                         deductions may no longer be available to you, so review   A few to consider are:
                                                         your situation with a tax advisor.                  • Deferring revenue into next year, if you’re able to
                                                           If you believe you’ll be closer to the threshold in 2019,   do so;
                                                         you may want to delay deductible expenses until next     • Selling investments to generate capital losses that
                                                         year to the extent you are able to do so. Going forward,   can help offset capital gains; and
                                                         it might be beneficial to bunch deductible expenses in     •  Increasing  pre-tax  contributions  to  workplace
                                                         alternating years to utilize the itemized deduction option   retirement plans to help boost savings while simultaneously
                                                         when you can.                                     reducing your current tax liability.
                                                           As you review your tax strategy, remember that if     While it’s always a good idea to be thoughtful about
                                                         you claim the standard deduction on your federal return   your tax strategy, the new tax laws mean it’s important
                                                         you may still be able to itemize deductions on your state   to prioritize reviewing your plan this year. Consult with
                                                         income tax return.                                a tax professional and financial advisor for guidance on
                                                           2. Converting A Traditional IRA To A Roth IRA   the best financial strategy given your goals.
                                                           You can convert a traditional IRA to a Roth IRA     John A. Rojas, CFP  is a private wealth advisor
                                                                                                                                ®
                                                         anytime, however it may be more attractive to do so in this   with Ameriprise Financial Services Inc. in Palm Beach
                                                         lower tax environment, particularly if you think you’ll   Gardens, Fla. He specializes in fee-based financial
                                                         be taxed at the same or a higher rate in retirement. This   planning and asset management strategies and has
                                                         is for two reasons.                               been  in  practice  for  21  years.  Contact  him  at  11300
                                                           First, you may avoid higher future taxes on the dollars   U.S.  Highway  1,  Suite  600,  Palm  Beach  Gardens,  FL
                                                         earned in your Roth account. A Roth IRA differs from   33408.  O:  (561)  383-3643,  F:  (561)  383-3601,  www.
                                                         a traditional one because it is free from federal income   ameripriseadvisors.com/john.rojas/.
                                                         taxes and the requirement to take a minimum distribution     Ameriprise Financial Services Inc. and its affiliates do
                                                         from the account after age 70 ½. This means you may be   not offer tax or legal advice. Consumers should consult
                                                         able to keep more of your hard-earned retirement dollars.   with their tax advisor or attorney regarding their specific
                                                           Second, converting triggers federal taxes because you   situation.
                                                         would be withdrawing the money (which is considered     Investment advisory products and services are made
                                                         taxable income) from the traditional IRA to put it into the   available through Ameriprise Financial Services, Inc., a
                                                         Roth account. If you convert this year, you will pay the   registered investment adviser.
                                                         lower 2018 rates on this additional taxable income. This     Source: Ameriprise Financial Services Inc. Member
                                                         is a perk to taking action now, if converting to a Roth   FINRA and SIPC.  2018 Ameriprise Financial Inc. All
                                                                                                                           ©
                                                         IRA is a strategy you’re considering.             rights reserved. File No. 2278053 (Approved until 10/2019)




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