Many taxpayers put off their tax preparation until the very last moment. Why wait for crunch time to prepare and review your information? Visit with your financial professional several months before the year-end to discuss your situation and review your recordkeeping. If your tax records are systematically organized and all of your receipts are coordinated, you will save a lot of time when it comes to preparing and filing your return. The IRS literature suggests that you review your income, deductions and tax items from the prior year’s return as a potential way to make sure you have not missed anything for this year’s return. If you spend a little time up front preparing and thinking about tax planning, you can be confident that you maximize your opportunities and minimize your tax bill.
One of the areas that is frequently overlooked is when we, as workers, do not maximize our Retirement Plan Contributions. Whether it is a 401(k) plan, SEP plan or individual IRA, all taxpayers should consider the advantages of using any tax deferred savings vehicle available to them for tax reduction strategies. Remember however, not all retirement contributions are deductible. For example, there is no immediate tax benefit for a contribution to a Roth IRA. However, your investment will grow tax-free and your earnings and contribution withdrawals can be accessed tax free if you've had the account for at least five years and the distribution is made after you've reached age 59½. This can be a very strong strategy that should be considered by all taxpayers.
A good financial planner can help with this process. Like with many other things, knowledge, strong organization and proper planning can help you comply with the tax laws and at the same time take advantage of tax saving options.
Email questions to [email protected] or call us at 541-574-6464. Julia Carlson is a registered Principal with, and securities are offered through, LPL Financial. Member FINRA/SIPC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.