Go Back

4 Last Minute Tips to Save on Your 2018 Taxes

6 years ago

  • Share this:

There are only a few business days left in the year, but still time to reduce your 2018 tax bill. Below are a few simple, easy things you can do now to save money later.

1 Maximize Retirement Savings – The most obvious move to make is to maximize your 401(k) contribution for 2018. The contribution to your 401(k) or employer’s retirement plan must be made by December 31st and will reduce your taxable income dollar-for-dollar. The maximum amount that can be contributed for 2018 is $18,500 for those under age 50 and $24,500 for those age 50 or older. Additionally, if you are self-employed, consider the establishment of a SEP IRA for 2018. Contribution limits for a SEP IRA for 2018 are 25% of compensation or $55,000. Either of these contributions will aid you in reducing your tax liability and will help you build your retirement nest egg at the same time.

2 Tax-Loss Harvesting – With the market volatility of 2018, if you have investments that have lost value, you can use those losses to offset your capital gains. Additionally, these losses can be used to offset $3,000 of ordinary income with the remainder, if any, being carried forward for future tax years until the full value of the loss has been used. In difficult years in the stock market, tax loss harvesting is a valuable tool for maximizing your after-tax return.

3 Maximize Deductions – Due to the 2018 tax reform law, fewer taxpayers will be itemizing deductions on their 2018 tax returns. The main reasons for this is that the standard deduction was doubled this year and certain deductions were eliminated. With that said, if you are itemizing deductions, you will want to consider these strategies: (a) If you own a home and have a mortgage, make an extra payment on or before December 31st so that you receive an additional deduction on this year’s tax return; (b) Add up your health-care costs for 2018. If they exceed 7.5% of your adjusted gross income, you may be able to deduct those expenses. Included within the list of health-care costs is health insurance premiums, Medicare premiums, long-term health insurance premiums, nursing home care, dental or orthodontic care and other medically related out-of-pocket expenses; and, (c) Bunch your charitable contributions together into one year. For example, if you intend to make a charitable contribution of $5,000 per year, consider giving $10,000 this year and $0.00 next year.

4 Defer Year-End Bonus – The receipt of a year-end bonus will certainly increase your tax liability for 2018 and it could have the additional negative impact of bumping you to a higher tax bracket. Knowing this, you may want to discuss this issue with your employer and see if they will agree to pay your bonus after the 1st of the year.

If I can be of assistance with any of the above recommendations, please do not hesitate to contact me at (972) 383-5300 or via email at louis@cabanaportfolio.com.

-Louis Shaff, CFO

Disclaimers:
 

All written content on http://cabanaportfolio.com website (the “Website”) is for informational purposes only. The material presented is believed to be from reliable sources and no representations are made by CABANA, LLC (d/b/a “Cabana Asset Management”), Cabana Law Group, or Cabana Financial, LLC (collectively, “Cabana”) or its affiliates as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with a financial advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, Cabana and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of Cabana or its affiliates. Any content provided by our bloggers or authors are of their opinion, and are not intended to malign any religion, ethnic group, club, organization, company, individual or anyone or anything.

Information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a financial advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation.

Viewers or recipients of the information herein that do not agree with the term and conditions of use, should not utilize this website or any information contained herein. Decisions based on information contained herein are the sole responsibility of the person viewing the website. In exchange for utilizing the information on this website, the visitor agrees to indemnify and hold Cabana, its officers, directors, employees, affiliates, agents, licensors and suppliers harmless against any and all claims, losses, liability, costs and expenses (including but not limited to attorneys’ fees) arising from the use of this website, violation of these terms or from any decisions that the viewer makes based on such information.

Please consult with a tax advisor before making any investment decisions.

Disclaimers

January 17, 2024

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material may only be distributed in its original format and may not be altered or reproduced without the prior written consent of Cabana. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.  

“CARA” is Cabana’s Cyclical Asset Reallocation Algorithm. Scenes assigned as per the judgment of The Cabana Group. Scene names and number of scenes have changed over time in an effort to obtain efficiencies and provide clarity of investment objective. 

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.  

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV Part 2A or Form CRS. A copy of which is available upon request or online at www.adviserinfo.sec.gov/. 

Past performance is no guarantee of future results. All investment strategies have different degrees of risk and the corresponding potential for profit or loss. Asset allocation and diversification will not necessarily improve returns and cannot eliminate the risk of investment losses. “Target Drawdown” is merely a descriptive term used to describe the general strategy and objective of the portfolio, it is not a guarantee, nor should it be construed to suggest safety or protection from loss. There is no guarantee that portfolio performance will remain consistent with the targeted drawdown parameter. While risk tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account and there is no guarantee that Cabana’s strategies will be suitable for any investor. Investors and advisors should not simply rely on the name of any portfolio to determine what is suitable. It is the responsibility of investment advisors to determine what is suitable for their clients. Cabana manages assets on multiple custodial platforms. Performance results for specific investors will vary based upon differences in associated costs and asset availability.  

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

All recommendations made in the prior 12 months are available upon request. Cabana’s allocation history is available here. For additional information regarding our services, including performance disclosures and award methodology, please visit https://thecabanagroup.com/disclaimers/. 

Commonly used index/benchmark definitions:  

All indices and categories are unmanaged and an individual cannot invest directly in an index or category. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/. 

Morningstar’s Moderate Target Risk index  follows a moderate equity risk preference and is based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company.  

Morningstar’s Tactical Allocation category includes portfolios that seek to provide capital appreciation and income by actively shifting allocations across investments. These portfolios have material shifts across equity regions, and bond sectors on a frequent basis. 

The S&P 500 Index is a market-capitalization weighted stock market index of 500 widely held large-cap stocks often used as a proxy for the U.S. stock market.  

The Russell 2000 and 3000 indices are market-capitalization weighted stock market indices that include, respectively, 2000 and 3000 of the most widely-held stocks and are often used as proxies for the U.S. stock market. 

The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq