global Tax Last Minute Tax Saving Opportunities for Self-Employed Taxpayers September 04, 2019 Attention self-employed taxpayers who extended their 2018 returns…you have until October 15, 2019 to get your filing done! Here are some last minute tax saving opportunities. Did you request an automatic filing extension from the IRS for your 2018 return? Your deadline for filing is fast approaching! You have until October 15, 2019…and don’t forget to take advantage of tax saving strategies by then, too. Tax-deductible retirement plan contributions Consider making a tax-deductible contribution to a Simplified Employee Pension (SEP) or Keogh plan. A SEP provides business owners with a simplified method to contribute toward their employees’ retirement as well as their own retirement savings. Contributions are made to an Individual Retirement Account (IRA) or Annuity (IRA) set up for each plan participant. A Keogh plan is similar to a 401(k), as it is personal and tax-deferred, and is available to self-employed individuals. It can be set up as either a defined benefit or defined contribution plan. Deadlines You have until your regular tax return due date plus any extensions to contribute, meaning as long as you get the money in by October 15, 2019 you can still reduce the amount of tax you owe for last year. The maximum deductible contribution for a SEP is the lesser of 25% of compensation or 20% of net self-employment income, subject to an overall maximum of $55,000 for 2018 (increases to $56,000 or 2019). Keogh contributions can only be deducted for the year if the plan was in place before January 1, 2019. Savings Incentive Match Plan for Employees (SIMPLE) You might also qualify for a SIMPLE IRA plan. A SIMPLE plan allows employees and employers to contribute to traditional IRAs set up for employees. This is the best start up retirement savings option for small employers not currently sponsoring a retirement plan. A SIMPLE must be established by October 1 of the year in which you’re claiming the deduction (so the deadline has passed for 2018). Stick with a SEP if you’re ineligible to make a 2018 tax year SIMPLE contribution. A SIMPLE IRA plan allows you to contribute up to $12,500 for the 2018 tax year. If you are 50 or over as of 12/31/18 you can contribute up to $15,500. For 2019, this increases to $13,000 for those under 50 and $16,000 to those over 50. For the 2018 tax year the SIMPLE contribution deadline is also October 15, 2019 if you extended your return. Questions on your contribution options? Contact us. The TCJA…So Many Changes, So Many Questions…we can help you navigate this huge tax overhaul! Need help with your tax planning? Contact any member of our Tax Services Team.
