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| Save BIG on taxes through retirement. |
Some of the biggest tax advantages come through retirement savings. Yet, millions of people fail to take advantage of these huge tax benefits every year. Here are 6 tricks to help you this tax year: (remember, you can continue to fund your 2014 IRA until April 15th, 2015)
1. The Saver's Credit.
You can get a tax credit of $1000 per person! Most people don't even know this credit exists. However, if your adjusted gross income (AGI) is under $60,000 per year, you can receive a tax credit of up to $1,000 per person for putting into a retirement plan. If you're married filing jointly, you can receive a $2,000 tax credit instantly! More details
here
2. No amount is too little
The maximum contributions to an IRA can be a bit overwhelming. Instead of focusing on the maximums, decide on an amount that you can contribute to your retirement, and portion it out over the year. For example, if you can put away $2,500 per year ($209/mo), your savings would be $1000!(assuming 40% tax rate combined)
Even $50/mo will save you almost $250 in taxes.
3. Invest your new tax savings
Every year, your life changes. This could mean NEW tax breaks. (For example: new children = child tax credit, new single-mom = file as head of household for greater tax break) Take these new tax breaks and put the savings into a retirement plan. It instantly boosts the saved amount.
4. Avoid mistakes
Millions of people make the mistake of taking money out early. DON'T! You get hit with a 10% penalty and taxes. Thats a double penalty! Instead, consider borrowing from your 401K or applying for a second mortgage.
5. Rolling 401K
A lot of people leave their 401K behind when they switch jobs because of how little it in it. However, if you do so, your employer can place it in a Forced IRA, which depletes it. Instead, remember to roll over that 401K into your new job or into an IRA. Don't lose your hard-earned money due to laziness.
6. Create a retirement plan for your kids
If you are self-employed, you can employ your kids and set up an IRA for their income. Also, if you're not self-employed, a gift to a child to their IRA will start their retirement savings, and save you on taxes.
Retirement is a great way to save BIG on your taxes. It is money that you put away for yourself. In other words, the government gives you a tax break for paying yourself! Come April, don't forget to PAY YOURSELF.
