Tax Moves to Make Regardless of What Happens in Washington
October 25, 2017
Death and taxes are two sure things in life.
But steps you make before the end of the year can help mitigate the tax bite you’ll face come next April.
That holds despite the debate over tax reform in Washington. House Republicans hope to introduce a tax bill on Nov. 1, sources told CNBC on Wednesday.
Regardless of the outcome, there are moves you should be thinking about now.
Maximize contributions to retirement accounts
Contributing to employer retirement plans like a 401(k) or 403(b) can reduce your taxable income for the year. The limit that employees can put in will increase to $18,500 next year.
Individuals who are self-employed and don’t have access to these accounts can look to individual retirement accounts instead, according to Elaine Lee, wealth management advisor at Summit Place Financial Advisors in Summit, New Jersey. The annual $5,500 contribution limit will remain unchanged next year, according to the IRS.
Those who are 50 and older can also make additional catch-up contributions. That amounts to an extra $6,000 for 401(k) and 403(b) plan participants and another $1,000 for IRAs.
But individuals should review the rules carefully based on their personal situations.
Your tax deductions for money invested in an IRA may be restricted if you or your spouse have an employer retirement plan and your income is above certain thresholds set by the IRS.
This interview with Elaine Lee originally appeared in CNBC. Click here to read the full article.