Just a reminder that the last day you may make a tax-deductible purchase, pay a tax-deductible expense, take advantage of tax credits, or make tax-deductible charitable contributions for 2018 is Dec. 31. Every taxpayer’s situation is unique, and the suggestions offered here may not apply to you. The best way to ensure that you are putting yourself into the most tax-advantaged position is to seek tax-planning advice, usually earlier in the year. However, the following are some tax strategies that can be utilized at the last minute.
Maximize Education Tax Credits
If you qualify for either the American Opportunity or Lifetime Learning education credit, check to see how much you have already paid in qualified tuition and related expenses in 2018. If it is not the maximum allowed for computing the credits, you can prepay 2019 tuition as long as it is for an academic period beginning in the first three months of 2019. That will allow you to increase the credit for 2018.
Employer Health Flexible Spending Accounts
If you contributed too little to cover expenses this year, you may wish to increase the amount you set aside for next year. As a reminder, you cannot set aside amounts to get tax-free reimbursements for over-the-counter drugs for which you don’t have a doctor’s prescription other than insulin, and the maximum contribution for 2018 is $2,500.
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