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Checklist of things to do before the end of 2018

There are many tax-saving steps that can be taken before the end of this year. Here is a list of the most important actions that should be taken no later than Dec. 31, 2018 to save taxes:

  • Realize losses on stock while substantially preserving investment position.
  • Convert investment income taxable at regular rates (e.g., interest income) into qualifying dividend income.
  • Arrange with employer to defer bonus until 2019.
  • Increase basis in S corporation or partnership to make possible a 2018 loss deduction.
  • Use credit card to pay expenses.
  • Pay contested taxes to deduct them this year while continuing to contest them next year.
  • Put equipment in service before year-end to qualify for 100% bonus first-year depreciation deduction.
  • Make expenditures qualifying for the business property expensing election.
  • Settle insurance or damage claim if doing so will maximize a casualty loss deduction attributable to a federally declared disaster.
  • Apply bunching strategy to medical expenses to increase deductible amounts.
  • Increase withholding to eliminate or reduce estimated tax penalty.
  • Set up self-employed retirement plan.
  • Make gifts taking advantage of the $15,000 gift tax exclusion for 2018.
  • Watch out for marriage penalty in regard to year-end marriage plans.
  • Consider deferring a debt cancellation event until 2019.
  • Decide whether to elect to deduct investment interest against capital gains and/or qualified dividends.
  • Avoid personal holding company tax by making dividend payments.
  • Take steps to avoid or minimize income tax on Social Security benefits.
  • Structure real estate deal to avoid paying interest on tax deferred under installment method.
  • Step up level of participation in business activity to meet material participation standard under passive loss rules.
  • Dispose of passive activity to free up suspended losses.