Consider These 5 Tax Planning Resolutions for the New Year in Monroe, LA
Tax season is less than six months away. If you haven’t paid much attention or any attention to your upcoming tax burden, be proactive by planning for tax season with the assistance of Niswanger law’s Monroe, LA tax planning specialists. Let’s take a quick look at a couple of tax planning resolutions every Monroe, LA resident can implement at or before the start of the new year.
Organize Your Tax Paperwork
It is a mistake to wait until March or April to start organizing your tax-related paperwork. Your pay stubs, receipts, capital gains, and other information related to taxes will be that much easier to sort through for the timely and accurate payment of taxes if you proactively organize it now. Gather all of this information, manage it appropriately, and you will be fully prepared for a meeting with your tax planning attorney.
Be Honest When Communicating With Your Monroe, LA Tax Specialist
As tax season approaches, your tax planning attorney needs to know the truth about your income, capital gains, and potential deductions. Commit to telling the entirety of the truth about your tax situation, including details about your annual earnings, and your Monroe, LA tax planning specialist, will have the information necessary to reduce your tax burden as much as possible while remaining within the confines of the law. Complete honesty also reduces the chances of subsequent IRS scrutiny that leads to a time-consuming and potentially expensive audit.
Max out Retirement Contributions
It is in your financial interest to contribute the maximum amount of money permitted to all tax-advantaged accounts to set the stage for delightful golden years. Max out contributions to your 401(k) plan as well as your IRA, and this money will compound as time progresses. The best part about maxing out money added to a tax-advantaged account for retirement is the money deposited is pre-tax, making them that much more of a lucrative investment in your financial future.
Reach the cap on the contributions to your tax-advantaged accounts, and these contributions will reduce your taxable income all the more. The maximum contribution to a 401(k) is $19,500 for individuals up to 49. The maximum 401(k) contribution for individuals age 50 on up is $26,000. However, a $6,500 catch-up contribution is also permitted. The maximum contribution to your IRA is $6,000 if you are 49-years-old or younger. The maximum contribution to an IRA is $7,000 for individuals age 50 and older.
Offset Investment Gains by Harvesting Losses
Sell your taxable investments such as mutual funds, bonds, and stocks at a loss, and your tax liability will be reduced. Known as tax-loss harvesting, this strategy applies the lost money to capital gains made in another portfolio component, ultimately decreasing the capital gains taxes owed for the year. The IRS permits upwards of $3,000 in losses against income in any year when a taxpayer’s capital losses are more significant than the gains. The losses that remain can even be carried over to offset income in the years ahead.
Make Charitable Contributions
The holidays are the season of giving. You can put your altruistic spirit on display while reducing your tax burden at the same time. Donate to a Monroe, LA charitable organization or cause, document the contribution with a receipt along with a formal written acknowledgment from your selected charity, and you will be able to deduct $250 or more from your year-end tax bill.
Schedule a Consultation With Niswanger Law
Our Monroe, LA tax planning attorney is here to help you prepare for tax season and fulfill your tax obligations without paying a penny more than necessary. Call us today at 318.953.0071 to schedule a tax consultation with Niswanger Law in Monroe, LA.