(TAMPA, FL) – As the end of the year quickly approaches, there are some things one can do to take advantage of tax-saving strategies.
- Donate to a charity : There are so many great options out there. These donations must be made before the end of the year. In addition to non profit organizations, one can also make donations to churches or other religious organizations, and veterans groups. You can also donate household items to Goodwill or Salvation Army for the “fair market value” (Turbo Tax has many other strategies here)
- Make a contribution to your IRA or health savings account : Fidelity says, ” pretax contributions to a traditional 401(k), 403(b), or similar workplace retirement plan could reduce your taxes by the amount of your total contribution for the year, times your marginal tax rate. If you’re in the 28% tax bracket, for example, you could save $280 in current-year taxes for every additional $1,000 you contribute up to the 2016 limit of $18,000. You have only until December 30, 2016 to make the contribution count for this year, so now is the time to contact your employer to bump up your contributions for this year (or as soon as they allow changes for next year). The maximum you can contribute to a 401(k) for 2016 is $18,000. If you’re age 50 or older, you can contribute an extra $6,000, for a maximum contribution of $24,000.(Fidelity has lots of information on making these contributions)
- If you are over the age of 701/2, make sure you have withdrawn enough The Motely Fool website says, “After you reach 70-1/2 years of age, you have to start taking required minimum distributions (RMDs) from your pre-tax retirement accounts, including traditional IRAs and most 401(k) and similar retirement accounts.The amount you need to withdraw each year depends on your account balance at the end of the previous calendar year, as well as your and your spouse’s ages.
- Get your Paperwork together early. Planning is key. It’s much better than waiting until April 14 next year!