Planning a New Year’s Resolution around your finances can be a great way to stay on track for all types of goals. You might be planning ahead for retirement and eager to reach certain milestones. Or maybe you’ve got a fun bucket list and want to finally take a trip overseas. Following some simple tax advice can help point you toward a brighter financial future.
5 Ways to Improve Your Tax Standing This Year
Don’t wait until you’re filing last year’s taxes to start thinking about how to optimize this year! Planning in the first quarter of the year will give you a nice leg up for organizing your tax strategy. Consider each of these steps to put yourself in the best possible position.
1. Fund your FSA or MSA in full
If you have a Flexible Savings Account (FSA) or Medical Savings Account (MSA), it’s arguably the best way to pay for qualified medical care, and even dental and vision care. Of course, it only works out if you fund the account! Check with your employer early in the year to confirm that you’re taking full advantage of this tax benefit.
2. Consider possible tax events this year
Life is full of surprises, but you might still be aware of some big life event changes coming up around the bend in advance. If you’re planning to move, retire, have kids or change jobs, then it’s important to be aware of the tax impact. The same applies if you’re anticipating a marriage or a divorce. Talking with your tax planner in advance has the potential to save you thousands of dollars. Don’t get caught off guard!
3. Plan to fund your retirement accounts
No matter how far away you are from retirement, make it a point to fund your accounts in full, if possible. From a 401(k) to the different versions of IRAs, you have plenty of options to plan for your future, all while lowering your tax obligation.
4. Strategize for any property sales
Selling property can affect your taxes in a big way. From selling a home, to liquidating stocks and bonds or digital currency, it’s crucial to know how your actions this year will impact your tax filing next year. If you’re already planning to sell property, make sure you take a planned approach to know what might be in store.
5. Don’t forget the child tax implications
Having children can definitely be expensive, but there are tax benefits to help offset those challenges. As part of your annual tax planning, don’t forget to consider the tax implications with children. You might want to start funding a 529 program for future college expenses. Or you could look into opening a Roth IRA for older children who have started to earn income.
Knowing which tax benefits are going to expire as your children grow up and making the right steps to be prepared can be huge. That’s why scheduling a tax planning session specific to your family planning is so important. If you need a hand this year, we can help!