Don't Procrastinate
Many taxpayers put off their tax preparation until the very last moment. Why wait for crunch time to prepare and review your information? Visit with your financial professional several months before the year-end to discuss your situation and review your recordkeeping. If your tax records are systematically organized and all of your receipts are coordinated, you will save a lot of time when it comes to preparing and filing your return. The IRS literature suggests that you review your income, deductions and tax items from the prior year’s return as a potential way to make sure you have not missed anything for this year’s return. If you spend a little time up front preparing and thinking about tax planning, you can be confident that you maximize your opportunities and minimize your tax bill.
One of the areas that is frequently overlooked is when we, as workers, do not maximize our Retirement Plan Contributions. Whether it is a 401(k) plan, SEP plan or individual IRA, all taxpayers should consider the advantages of using any tax deferred savings vehicle available to them for tax reduction strategies. Remember however, not all retirement contributions are deductible. For example, there is no immediate tax benefit for a contribution to a Roth IRA. However, your investment will grow tax-free, and your earnings and contribution withdrawals can be accessed tax free if you've had the account for at least five years and the distribution is made after you've reached age 59½. However, non-qualified withdrawals may result in a 10% IRS penalty tax, and future tax laws can change at any time. These changes may impact the benefits of Roth IRAs. Limitations and restrictions may apply, and tax treatment may change. This can be a very strong strategy that should be considered by all taxpayers.
A good financial planner can help with this process. Like with many other things, knowledge, strong organization and proper planning can help you comply with the tax laws and at the same time take advantage of tax saving options.
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision. No strategy assures success or protects against loss. Investing involves risk including loss of principal.
Email me your questions at financial.feedom@lpl.com or call 541-574-6464. You can also post your question on our Facebook page: https://www.facebook.com/FinancialFreedomWealthManagementGroup
