Never too early to start tax preparations

The end of the year is only a few days away, which means tax season is right around the corner.

There are still a few things you can do to optimize your 2019 tax return before the year is out and plenty to keep in mind when you go on to file next year.

You could make a contribution to a charitable organization, make an extra interest payment on a loan or contribute or withdraw money from an individual retirement account fund as last-minute options to get your tax return right where you want it, assuming you plan to itemize deductions.

David Tucker, the IRS media relations representative for New Mexico, said making a donation to a charitable organization would be the easiest way to earn a little more on your deductions this year, at least at this late date.

Generally, you can deduct up to 50 percent of your adjusted gross income when donating money or property to a qualified charitable organization.

The IRS provides a searchable database of qualifying organizations free on its website, along with guidelines on what sort or organization would qualify.

Some examples include a church or other religious organization, a war veteran's organization, a non-profit volunteer fire department, a non-profit cemetery, a civil defense organization or a domestic fraternity, provided the funds will be used for a charitable purpose.

If you have outstanding loans with accumulated interest, you could also make an extra payment to go toward this year's return.

Loans that qualify for a tax deduction include investment loans, qualified mortgages, student loans and farm and non-farm business loans as separate items. Interest payments on personal car loans and credit cards do not qualify.

Contributions made to a traditional IRA fund can earn you a deduction with limits depending on your marital status and the overall amount contributed. Notably, withdrawals from a traditional IRA fund need to be reported as income and are often subject to a 10 percent penalty if withdrawn before 59 1/2 years of age. Such withdrawals become mandatory after reaching 70 1/2 years of age.

For the first traditional IRA distribution of the year, you can get up to a three-month extension, meaning you wouldn't necessarily need to make the withdrawal before the end of the year. Similarly, IRA contributions can be made until the tax-filing deadline on April 15.

This doesn't apply to workplace retirement accounts, contributions for which must be made by the end of the year.

Contributions to a Roth IRA fund are not tax-deductible however, as withdrawals from such a fund are not considered taxable income.

It's important to note that these deductions apply to itemized tax filings, which isn't always the best option.

John J. Schonberger, a certified public accountant in Clovis, said it’s fairly common for people to have many items on their itemized lists, only to find when filing they would still be better off taking the standard deduction.

“I know of a couple over in Portales, both work and have PHDs, but even with all the things that would be on their itemized list they'd be better off taking the standard deduction every year,” Schonberger said.

One's standard deduction rate is usually determined by filing status, age and whether or not someone has a disability that impacts their ability to work, like blindness. The trickiest part is determining filing status, which varies most based on marital status.

Both Schonberger and Tucker agree that filing taxes can be a complex affair and it's hard even for professionals like themselves to keep track of every possible deduction. For those in need of a little help, nearly everything you need can be found on the IRS website, from tax code itself to the best place to hire an accredited tax service.

Information: irs.gov