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5 Last-Minute Deductions That Could Shave Your Tax Bill


If you’re working on finalizing your 2019 income tax return, you might be looking for some last-minute deductions to help lower your tax bill. Here are 5 possibilities:

  1. Taxes and interest paid — A wide range of tax payments are deductible, including personal property (such as ad valorem taxes on vehicles) real property (such as taxes paid on a primary residence) and state and local income taxes. Note that the Tax Cuts and Jobs Act limits the deduction for state and local income taxes to $10,000 a year.

Some interest payments are also deductible, including mortgage interest and investment interest. Tax reform limits the mortgage interest deduction to the amount of interest paid on up to $500,000 of mortgage debt for singles, or $1 million of mortgage debt for married couples filing jointly. If you paid interest on a home equity loan of up to $50,000 (or $100,000 if you’re married and file jointly), this is also generally deductible, as are premiums paid for mortgage insurance.

Investment interest is interest paid on loans taken out to purchase taxable investments. In addition, you can deduct up to $2,500 of interest you paid last year on loans taken out to pay for higher education expenses (subject to income limitations).

  1. Charitable donations — This has traditionally been one of the most popular deductions because it enables taxpayers to benefit financially when giving money to their favorite charities. Cash, securities and property (like household items and gently-worn clothing) donated to qualified 501(c)(3) charitable organizations can generally be deducted on your tax return.

Keep in mind that you have to itemize deductions using Schedule A if you want to deduct charitable donations. Tax reform’s increase of the standard deduction has changed the itemizing equation for people for whom the standard deduction is higher than their itemized deductions. For tax year 2019, the standard deduction is $12,200 for singles and married couples filing separately, $24,400 for married couples filing jointly and $18,350 for heads of household.

If you’re 65 years of age or over, your standard deduction is increased by $1,300, or by $1,650 if you’re single and not a surviving spouse.

Note that deductions for charitable donations are generally limited to no more than 60 percent of your adjusted gross income (AGI). Lower AGI limits of 20 percent and 30 percent apply to some kinds of donations.

  1. Medical expenses — If you incurred large medical expenses last year, you might be able to deduct them on your tax return. Medical and healthcare expenses are deductible once they are more than 10 percent of your AGI.

There is a long list of medical expenses that qualify for the deduction. These include not only out-of-pocket costs paid at the doctor’s office but also:

  • Non-cosmetic dental work
  • Eye exams and eyeglasses
  • Chiropractic appointments
  • Acupuncture treatments
  • Psychiatric treatment
  • Prescription drugs

You can add up all of your medical expenses for the year to try to reach the 10 percent of AGI threshold — the expenses don’t have to come from just one medical incident. Only the amount of expenses that exceeds 10 percent is deductible.

  1. Casualty and theft losses — If you suffered destruction, damage or loss of property in 2019 that resulted from a sudden, unexpected or unusual event, you may be able to deduct these losses. Like the medical expense deduction, only the amount of losses that exceeds 10 percent of your AGI is deductible.

A wide range of different types of losses may be deductible. This includes but is not limited to damage related to storms, floods, earthquakes, fires, vandalism, terrorist attacks, auto accidents and property theft.

  1. Miscellaneous fees — There are a number of fees and other costs that may be tax-deductible. Some of the most common are professional dues, subscriptions to industry journals, job search expenses, job-related education expenses, moving expenses (if the move is necessary to start working in a new location) and fees paid for tax preparation services.

Be sure to consult with your tax advisor for details on your specific tax situation.

The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC’s (“Frontier”) investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.