TLDR:
- Review beneficiaries in retirement accounts and insurance policies
- Fully fund Flexible Savings Accounts and Medical Savings Accounts
- Planfully fund retirement accounts
- Consider any anticipated tax events
- Review withholdings and make adjustments
- Consider the tax benefits associated with children
- Plan for potential tax implications when selling property
It’s a new year, which means it’s time to start thinking about taxes. To help you navigate the tax landscape, here are some key tax tips:
First, review the beneficiaries in all your retirement accounts and insurance policies. This is important to ensure that the correct individuals are designated to receive the funds in the event of your death. It may not have an immediate impact on your taxes, but it could have important consequences for your loved ones.
Next, make sure to fully fund your Flexible Savings Accounts (FSAs) or Medical Savings Accounts (MSAs). These accounts are a great way to pay for qualified medical, dental, and vision care, and the funds you contribute are tax deductible. Make sure to check with your employer to understand the contribution limits and take full advantage of this tax benefit.
When it comes to retirement planning, take the time to planfully fund your retirement accounts. Whether you have a 401(k) or an individual retirement account (IRA), contributing to these accounts can help lower your taxable income and save for your future. Consider consulting with a financial advisor to determine the best strategy for your specific situation.
Life events can have a big impact on your taxes, so it’s important to anticipate any changes and plan accordingly. Whether you’re planning to move, retire, get married or divorced, have children, or change jobs, these events can all affect your tax situation. Understanding the potential tax implications in advance can help you save money.
It’s also essential to review your withholdings and adjust them as needed. Changes in your personal or financial situation can impact your tax liability, so it’s important to review your withholdings periodically to ensure that you’re not overpaying or underpaying your taxes. This can help you optimize your cash flow throughout the year.
When it comes to children, there are several tax benefits associated with having dependents. These include the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Credit, among others. By understanding and taking advantage of these benefits, you can potentially lower your tax bill and save money. Additionally, if you have older children with earned income, you may consider funding a 529 program or opening a Roth IRA for them.
Finally, if you’re planning to sell a home, stocks, bonds, or digital currency, it’s important to consider the potential tax implications. Depending on the type of asset and the length of time you’ve owned it, you may owe capital gains taxes. Planning ahead and seeking advice from a tax professional can help you minimize your tax burden.
These are just a few tax tips to help you start the new year on the right foot. Remember, everyone’s tax situation is unique, so it’s important to consult with a qualified tax professional to ensure that you’re making the best decisions for your specific circumstances.
