Tax Tips to Implement Before Year’s End
Undoubtedly, you are interested in your retirement so here are some ideas for you to consider implementing before year-end.
- Albert Einstein called compound interest the “eighth wonder of the world”, adding: “He who understands it earns it; he who doesn’t pays it.” Start early as you can and its never too late.
- Get the 401k match- best is 50 cents of every dollar up to 6% of pay.
- Set up automatic witholding so you never get a chance to spend it. Or direct deposit into an IRA , SEP IRA or taxable account
- Save on taxes whether you’re in the 15%, 25%, 28%, 33%, 35% or 39.6% – pay taxes when you take distribution when you are in a lower tax bracket.
- Consider a ROTH IRA. You can contribute if you have earned income up to $5,500 ($6,500 for catch-up at 50 years). Also there is a phaseout if you are single and make $114,000 to $129,000, married filing jointly $181,000 to $191,000 and married filing separately over $10,000
- Savers credit of 10%, 20% or 50% if you have adjusted gross income ( under $30,000 for singles, $60,000 for couples and $45,000 for heads of household). Credit is a % of IRA, 401k contributions up to $2,000 for singles and $4,000 for couples.
- Minimize fees by choosing the least expensive mutual funds that suit your investment needs. Also consider consolidating IRAs’ into one rollover IRA.
- Avoid early withdrawals which will cost you a 10% penalty if you take distribution before you’re 591/2. There are some penalty abatement exceptions. Instead save so that you have an emergency fund for unexpected expenses.
- Consider rolling over your IRA to a ROTH IRA especially if you find yourself with lower income so that you can take advantage of lower taxes.(15% up to $36,900 for singles and married filing separate, 15% up to $73,800 for couples, 15% up to $49,400 for heads of household)
Contact us at (303) 447-1626 to ensure that you are meeting all the recordkeeping requirements in these areas.
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