Article Highlights: Maximize Education Tax Credits Employer Health Flexible Spending Accounts Maximize Health Savings Account Contributions Conversions to Roth IRAs Don’t Forget Your 2018 Minimum Required Distribution Advance Charitable Deductions Utilize IRA-to-Charity Transfers Maximize Tax-Deductible Medical Expenses Don’t Waste the 2018 Annual Gift Tax Exemption Take Steps to Avoid Underpayment Penalties Prepay State and Local Taxes for 2018 Defer Capital Gains by Investing in an Opportunity Zone Fund Sell Loser Stocks Not Needing to File May Be an Opportunity Maximize IRA Distributions Make Business Purchases 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 CreditsIf 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 AccountsIf 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 $2,650.Maximize Health Savings Account Contributions If you become eligible to make health savings account (HSA) contributions late this year, you can make a full year’s worth of deductible HSA contributions, even if you were not eligible to make HSA contributions for the entire year. This opportunity applies even if you first become eligible in December. In brief, if you qualify for an HSA, contributions to the account are deductible, or nontaxable if made by your employer (within IRS-prescribed limits); earnings on the account are tax-deferred; and distributions are tax-free if made for qualifying medical expenses.Conversions to Roth IRAs If your income is unusually low this year, you may wish to consider converting your traditional IRA into a Roth IRA. The lower income results in a lower tax rate, which provides you an opportunity to convert to a Roth IRA at a lower tax amount.Don’t Forget Your 2018 Minimum Required Distribution If you have reached age 70 1/2, you must make required minimum distributions (RMDs) from your IRA, 401(k) plan, and other employer-sponsored retirement plans (but if you are still working, distributions from your current employer’s plan can be postponed until you retire). Failure to take a required withdrawal can result in a 50% penalty of the amount of the RMD not withdrawn. If you turned age 70 1/2 in 2018, you can delay the first required distribution to the first quarter of 2019, but if you do, you will have to take a double distribution in 2019. Carefully consider the tax impact of a double distribution in 2019 versus a distribution in both this year and next.Advance Charitable DeductionsIf you regularly tithe at a house of worship, you might consider pre-paying part or all of your 2019 tithing, thus advancing the deduction into 2018. This can be especially helpful to individuals who marginally itemize their deductions, possibly allowing them to itemize this year and then take the standard deduction for 2019.Utilize IRA-to-Charity Transfers You can combine your charitable contributions with your required minimum distribution. Once you reach age 70 1/2 and begin your required minimum distributions mentioned above, you can request that your IRA trustee directly transfer funds from your IRA to a charity. In doing so, the distribution is not taxable and goes toward satisfying your RMD requirements. This also reduces your AGI, which in some circumstances can reduce the amount of taxable Social Security income. There is no minimum charitable distribution, but the maximum amount per individual is $100,000 per year.Maximize Tax-Deductible Medical Expenses For example, if you have outstanding medical or dental bills, paying the balance before year-end may be beneficial, but only if you already meet the 7.5% of the AGI floor for deducting medical expenses, or if adding the payments would put you over the 7.5% threshold and you are itemizing your deductions. You can even use a credit card to pay the expenses, but you would only want to do so if the interest expenses you’d incur if you don’t pay off the card right away would be less than the tax savings. You might also wish to consider scheduling and paying for medical expenses such as glasses and dental work before the end of 2018, since the medical floor is slated to increase to 10% of the AGI in 2019.