Do Not Wait Until April 2022 To Start Thinking About Taxes
Don’t wait until April to start thinking about taxes. Now is the time to start planning for your 2022 taxes. There are several things you can do right now to give yourself a better chance to reduce your tax burden. Our founder Casey Marx spoke with WRTV to share investment and tax planning strategies to consider before December 31st
Tax Planning Move #1
Consider converting traditional IRAs and 401ks to tax-free accounts like a Roth IRA. We are currently in a low-tax environment, but we believe taxes are probably going to go up in the future. That’s one of the things that we really can’t control. You need to make moves now.
Right now you should consider converting traditional IRAs and 401ks to tax-free accounts like a Roth IRA. The downside is you are going to pay taxes when you convert these accounts. The huge benefit that outweighs this is that your money is going to be taxed free when you start to take the income in retirement. If you do it later you are going to be paying taxes when you convert that money and any gains.
Trust me… Taxes are a legislative risk and something you need to strategize around. Pay those taxes now when you convert these accounts instead of paying when you take it out in retirement.
Tax Planning Move #2
Another pre-tax move to make is a charitable donation. Those over age of 72 are required to make a minimum distribution so they can tax you.
If you make a qualified charitable donation, it can be a win-win situation. You can take the money out of the IRA and donate it to a nonprofit charity. This allows you to bypass the income taxes you typically incur for taking an income distribution. It saves you on taxes and will enable you to do something charitable with the money.
Now remember that money must go directly from your IRA to the charity to ensure that distribution does not count towards your taxable income for the new year.
Tax Planning Move #3
Get professional advice. The further head you think about your tax situation, the better chance you have at reducing your tax burden. Many tax rules follow the calendar year meaning you want to make any tax-saving moves before December 31st.
We invite you to schedule a complimentary consultation to review your tax planning, investment allocation, estate planning, and healthcare planning. Crown Haven manages all of these financial planning elements serving as your Fiduciary for our clients.
