Tax-conscious actions for the rest of the year

Robert Malina
Senior Vice President
Frost Private Banking

Now that this year’s tax filing duties are history for most of us, taxes may not seem like a much of a pressing concern.

But pushing taxes onto the back burner for most of the year is a mistake, especially if you want to manage your tax liability as much as possible. A better approach is to actively plan for and manage taxes throughout the year, enabling you to make the most of strategies that could positively impact your tax bill.

Maximize contributions to your retirement plan accounts, including 401(k)s and IRAs. Although you may make tax-deductible contributions to some types of accounts, such as a traditional IRA and SEP-IRA, as late as your tax-filing deadline next year, there is nothing that says you must wait until then to make those contributions. It is actually easier to invest throughout the year and get that money working in your tax deferred accounts sooner.

If you are 70½ or older, take the required minimum distribution from IRAs and defined contribution plans between now and December 31. If you miss the end-of-year deadline, you face a costly consequence—a 50 percent excise tax on the amount not distributed as required.

Review your payroll withholding. The recent Tax Cuts and Jobs Act that overhauled the tax withholding applied to pay delivered a few surprises to some taxpayers when they filed their 2018 taxes this year. Although many have already adjusted their withholding, you may still need to modify your W-4 and make other adjustments. Visit with your tax advisor or CPA for assistance, and look for a helpful withholding calculator at apps/irs.gov/app/withholdingcalculator.

Be charitable. Many nonprofit organizations especially appreciate financial support during the slower summer months. You may be able to claim a tax deduction for your gifts made to qualified charitable organizations by making tax-deductible donations to your favorite nonprofit organizations before midnight December 31, as long as you have adequate documentation.

Make an appointment with your CPA, tax attorney and wealth advisor to review your financial plan and assess your tax strategy for 2019. What is working so far this year? What are you concerned about going forward? A midyear review of your progress and goals, including tax management and strategies, is an opportunity to reset and make adjustments.

Would you like more information? Contact Evans at 713.388.1367 or evans.attwell@frostbank.com.

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