Forbes has published an article, “7 Tax-Planning Moves To Make By End Of 2021,” which discusses the proactive steps business owners and individuals can make to reduce the impact of the end-of-year taxes. The article begins as follows:
Wow! 2021 has been yet another wild and crazy year. Many people have seen their incomes jump in 2021, while others have been out of work and have seen their incomes plummet. Either way, year’s end is the time to do some proactive tax planning to help reduce your 2021 income taxes. Why pay more in taxes than is necessary?
When your income shrinks or grows, what qualifies as an allowable tax deduction may also change, along with the federal and state tax brackets this income falls into. Each year, proactive tax planning is imperative for high-income self-employed and small business owners.
Yes, there are a few ways to minimize your taxes after New Year’s Eve, but most of your tax-planning tools will be limited once we reach 2022. When and how much you can contribute to your retirement will vary between types of plans and types of contributions. The good news for those using a Roth IRA, or traditional IRA, is these retirement accounts can be opened and funded all the way until April 15, 2022, for the tax year 2021. The bad news is you can only contribute $6,000 per year. (Those 50+ can also make a $1,000 catch-up contribution. That will likely not be enough to fund a secure retirement for anyone earning an average income or more. Rule of thumb, you should be contributing at least 10% of your income into retirement accounts, more if you are starting late or want to retire early.
Click here to see the full article: “7 Tax-Planning Moves To Make By End Of 2021.”
Posted by Bennett Mansour, Associate Editor, Wealth Strategies Journal.