Wednesday, October 25, 2017

4 Key End-of-Year Tax Prepping Tips

Did you know that smart tax planning through the end of the year can actually help reduce the taxes that you'll owe? April 15 may be far away, but First Bank of the Lake wants you to know there are things you can start thinking about now in order to prepare for Tax Day 2018. Your bank at the Lake of the Ozarks is here to give you 4 tips to consider, that you may not have thought of yet, to help increase your tax breaks and hopefully save you money.

4 End of Year Tax Prepping Tips

1. Make your annual exclusion gifts.

For those of you who may not know, an annual exclusion gift is defined as a gift that qualifies for annual exclusion from taxes. For example, at the end of the year, people may want to make their "end of year estate planning" gifts to their loved ones. This may include cash gifts, stocks, bonds, portions of real estate, etc. You may make an annual exclusion gift of up to $14,000 per spouse, per person to reduce the value of your estate. This can help reduce the taxes you pay and be something your family members can appreciate around the holidays.

2. Give donations back to the community.

While you don’t need a reason to engage in charitable giving, a benefit is that you receive a tax write-off for donations. If you donate clothes, a used car or other things, you are required to itemize your deductions. However, if you send cash by December 31, all you need is to hang on to your canceled check or credit card receipt as proof of your donation. Many organizations also provide tax receipts. 

3. Consider converting your IRA to a Roth IRA.

An IRA is typically funded with pre-tax dollars and grows tax-deferred. When the account holder withdraws money from the account, those withdrawals are fully taxed as regular income. However, a Roth IRA is funded with after-tax dollars so withdrawals are tax-free. If you have many years left before retirement and think your income tax bracket will be the same or higher when you retire than it is today, then converting to a Roth IRA makes sense. 

4. Maximize out your retirement plan contributions.

There is no better investment than tax-deferred retirement accounts. They can grow to a substantial sum because they compound over time free of taxes. Company-sponsored 401(k) plans are an especially good deal if your employer matches contributions. Try to increase your 401(k) contribution so that you are putting in the maximum amount of money allowed or at least ensure that you are maximizing the amount matched by employer contributions. This is basically free money. By maximizing your retirement plan contributions as much as possible by year-end, you not only help get better prepared for retirement but you will help reduce your tax bill.  

First Bank of the Lake Cares About Your Financial Planning

Waiting to the last minute to prepare your taxes can create a lot of unneeded stress on yourself. Don't put yourself through that and plan early. We hope these tips help you to save money and get your taxes in order ahead of time. At First Bank of the Lake, our goal is to find you the right product or service to meet your financial needs. If you are in need of a bank you can trust, give us a call today.

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First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.

Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway

Suite 100
Osage Beach, MO 65065

(573) 348-2265

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