With the end of the year fast approaching, I wanted to share some time sensitive strategies that could help you pay less money to the tax man and keep more money in your pockets.
If you want help in getting this done, schedule a call with me and let’s get to work.
If you want to do it on your own, read on:
Maximize Your Employer Match Opportunities
A lot of companies offer to match contributions that their employees make to a retirement plan, like their 401K. For instance, an employee contributes 3% of their income to the retirement plan, and then the company will match that and put in 3% as well.
So you get 6% of your income put into your 401K, even though you only contributed 3%. Nice!
This is a great option for you to maximize your investments as well as the benefits that you work so hard for.
Depending on your company, you might be eligible for additional employer matches.
I was just looking at a friend’s benefit package, and they get a $500 match when they contribute to their Health Savings Account. That’s a sweet benefit!
It’s even better because, as you may know, I”m a huge fan of Health Savings Accounts.
Beyond all of these benefits, contributions to your 401K, and your HSA actually lower your taxable income, which lowers the taxes that you’ll pay. Which makes this great deal even better.
So are you taking advantage of all matching opportunities at work?
Review Tax Withholdings
Next, I want you to take a look at your tax withholdings.
My goal for you is to not have a tax bill come April 15.
That’s right, I actually don’t want you to get a big refund.
Why? Because that means you’ve been withholding too much money, and actually been giving the government an interest free loan throughout the course of the year!
I also don’t want you to owe the government money come tax time. Not only will you have to write a check to the IRS, but you might have to also pay a penalty for not paying enough during the year.
So try to get your withholdings so that you owe ZERO come April 15.
Not sure what to withhold? Go to this site and let the IRS tell you what to withhold: https://www.irs.gov/individuals/tax-withholding-estimator
Max Out IRA Contributions
What’s an IRA? An IRA is simply a tax advantaged retirement account that lets you save for retirement while getting some tax benefits.
In 2019, If you are under 50, you can contribute up to $6,000 into an IRA.
And if you are over 50, you can make an additional $1,000 catch up contribution, for a total of $7,000.
Even if you don’t think you can max out your IRA, at least consider if you can make some kind of contribution to an IRA.
Remember, just getting started is key. And once you get started, then you can make tweaks and improvements as you go on.
Generally speaking, if your income is lower today than you think it will be in retirement, you should consider contributing to a Roth IRA.
And if your income is higher today than you think it will be in retirement, then it might make sense to contribute to a Traditional IRA.
I know that this is a lot of information, and frankly, it’s a lot to do. If you want any help in getting all this done, I’ve got your back.
You can schedule a call here and I will personally make sure you take advantage of as many tax saving opportunities as possible.