TAXES, RETIREMENT SAVINGS
Most people have to pay taxes, but no one should pay more than their fair share of taxes. If you are not happy with the amount of taxes that you paid for last year, now is a good time to ask why and look into potential strategies that will help you this year. Here are a few considerations:
- Make maximum contributions to your IRAs, ROTH IRA or 401K to lower your taxable income. The rules are complex and can vary with your age, income, and employment. You may be able to contribute more than you think. Some strategies can only be payroll deducted, so the sooner you do this, the better.
- Should you use a SEP, a SIMPLE, an Individual 401K or something else? I visit with many small business owners who are not aware of the best retirement vehicles for their situation. They are missing out on valuable opportunities to mitigate taxes and save for their future.
- Take a multi-year approach. Look at your income and deductions over time and ask yourself if it is best to take deductions this year, or next?
- When is the best time to sell an asset for tax purposes? Holding an asset for more than a year allows you to take advantage of lower long-term capital gains tax rates. Selling an asset at a loss may protect up to $3K of ordinary income. This can be a tricky discussion and the investment strategy also needs careful consideration.
- Are you thinking about buying a home? Rents in San Diego are very high. Interest rates are still at an all-time low and the ability to get a loan is not as onerous as it used to be. It may not be a bad idea to explore the feasibility of buying.
Some of the strategies may take time. We may also see new tax legislation this year. Don’t procrastinate! If this is an area you want to visit, please book an appointment and let’s talk about your taxes. Summer is also a slow time for tax preparers and we may wish to include them in the discussion.
I hope to see you soon!
Disclaimer: *Sage Path Solutions does not provide individual tax or legal advice. Clients should review tax and legal questions with their own tax and legal advisors. For more information, please refer to Laurel Wealth Advisors, LLC most recent Form ADV Part 2A which may be found at www.adviserinfo.sec.gov.