8 Tax Tips Investors Should Know
It’s that time of the year again. Everyone is weighing in with tax tips to prepare investors for the tax preparation that follows the new year. I didn’t want to be left out of the fun, so I consulted with John Corn, a certified public accountant and a wealth advisor with Buckingham (with whom I am affiliated). Here are some of the suggestions I have for your year-end tax planning:
1. Maximize your 401(k) contributions. If possible, invest in your company-sponsored retirement plan up to the maximum employer match. If you have the ability to put aside more, you may consider contributing up to the maximum allowable annual amount, which for 2014 is $17,500 (or $23,000 for individuals age 50 or older).
Contributions to a traditional 401(k) plans are pretax, which means it will reduce your taxable income now. However, when you withdraw this money in retirement, those distributions will be taxed at your marginal tax rate at that time. Contributions to a Roth 401(k) plan are made with after-tax dollars. However, qualified distributions from your Roth 401(k) in retirement will be tax-free.
Read the rest of the article at US News.