Year-End 2021 Tax Advice. Many of us don’t like paying taxes, and most everyone wants to save money. Our founder Casey Marx was just featured on Money Tips to prepare for the 2022 tax season WTHR 13 NBC Indianapolis telling everyone to start making tax moves right now because it can help increase our tax break before the end of the year.
You can start by making all of your charitable donations by December 31st. Any deductions for cash contributions must be made to qualified charitable organizations. Taxpayers who claim a standard deduction claim up to $300 $600 per tax return for those married filing jointly. Make sure you get and keep donations receipts for any contributions regardless of the amount.
Our next move to reduce your tax liability is to look at your retirement accounts like traditional IRAs or 401(k)s and convert these to Roth IRAs. You will pay taxes on those deferred tax savings now, but in retirement, you get the benefit of having tax-free income distributions in retirement.
We know a lot of people initially are afraid of paying the taxes upfront because nobody likes to pay taxes. When you look at this objectively, and you do that in a measured way, you’re then allowing your money to grow and it completely tax-free environment going forward. In retirement you are able to take those funds out tax-free later if you are retired age 72 or older.
Don’t forget about the required minimum distribution from your retirement accounts each year. If you don’t take that from your qualified account from your IRA or other qualified accounts, there’s a stiff penalty. It’s 50% of what it should be. As a side note that requirement was suspended in 2020 but activated for 2021.
If you are a homeowner, you can make an extra mortgage payment on December 31st, you may be able to claim that additional interest paid as a tax deduction in the tax year paid.
At Crown Haven Wealth Advisors we know part of a solid financial plan is proper tax preparation is to review your financial goals. If you want to experience the holistic way we approach financial planning with our RetireSHIELD® plan please feel free to schedule a complimentary appointment online. We can meet in-person or via zoom call.