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Feeling Like You Paid Too Much in Taxes Last Year?
Pay too much in taxes this year? This article discusses some steps you can take to help you keep more of what you earn.
Consider these suggestions:
•Boost your 401(k) contributions. Your 401(k) contributions are typically made with pretax dollars, so the more you put in, the lower your taxable income.
•Fully fund your IRA. If you have a traditional IRA, your earnings grow tax deferred, and your contributions may be tax deductible, depending on your income level. With a Roth IRA, your contributions are not deductible, but your earnings can grow tax free, provided you don’t start taking withdrawals until you are 59½ and you’ve had your IRA for at least five years.
•Contribute to a college savings plan. Many college savings plans offer some type of tax advantage. For example, if you contribute to a 529 plan, your earnings can grow tax free, provided all withdrawals are only used to help pay qualified higher education expenses.
•Avoid excessive buying and selling. If you are constantly buying and selling investments, you may find yourself getting taxed on short-term capital gains — and the short-term rate is typically much higher than the long-term rate, which you’d receive if you held your investments at least one year. Holding quality investment vehicles for the long term makes sense from a tax standpoint — and it’s also a good way to help you implement a solid investment strategy.
By making the right moves, you can brighten your tax outlook for years to come. Contact Mark Grooters at (616) 281-9026 or visit https://www.edwardjones.com/
Edward Jones: Mark Grooters - Financial Advisor