4 Financial Tax Planning Tips You Can Implement Today
The end of the year is fast approaching. But there is still time to put your financial house in order and save money.
- Can you max out your retirement accounts? You can put up to $6,000 into an IRA in tax year 2020; $7,000 if you are 50 or older. You’ll have until Tax Day to make a 2020 tax-year contribution. The sooner you contribute, the longer your assets may grow tax deferred.
- Taking an RMD from your IRA. If you are 72 (or turned 70½ before January 1, 2020), you are obligated to take a required minimum distribution from your IRA. Thanks to the CARES Act, the RMD is waived this year. If an RMD has been taken, it can be rolled back into the IRA within 60 days of the distribution.
- If you are over 70 ½, you are eligible to transfer up to $100,000 from your IRA to a charity without paying taxes on the distribution (A QCD or qualified charitable distribution). A QCD satisfies the RMD requirement.
- Consider “harvesting” your tax losses. If stocks, ETFs, or mutual funds have fallen below the purchase price, you may sell by year end and offset up to $3,000 in ordinary income, or offset capital gains. Please beware of the ‘wash sale’ rule and long-term/short-term losses.
Sources: IRS, Charles Schwab, Ameriprise, Investopedia
Created 2020-10-21 14:48:42
