Tax planning should be a year-long event, but it often only receives attention at the end of the year.
One of the most overlooked aspects of financial planning is tax minimization, but it is critically important. After all, it’s not how much you make, but how much you keep that matters. Here are a few tax tips for the end of the year to help you lower your taxes, save money when preparing your tax return, and avoid tax penalties.
The IRS announced late last year and has started mailing two separate information letters that we will need to complete your taxes this year. Some of you have already received these letters and have called our office, so we wanted to let everyone know what these letters are about and what you need to do with them.
Contributions to an IRA are always a good idea for those who are eligible, but there may even be beneficial for tax purposes depending on the type of account. For 2021 and 2022, there is a $6,000 limit on contributions to traditional and Roth IRAs. Those age 50 or older can contribute another $1,000. Contributing to a traditional IRA may also be tax-deductible for those who qualify, which could reduce the amount owed in taxes. Contributions to Roth IRAs are never tax-deductible, and if you make too much money, contributions cannot be made.
