For many people who have reached the age of 55, terms like “retirement planning” and “reduced tax burden” take on a far greater meaning than they did at the age of 25. They might be anxious about having enough money to live on in the future, whether they retire at the traditional age of 65, or the preferable age of 70. The good news is that there are numerous ways to save money in our later years, and one way is through wise choices regarding our taxes.
Here is a list of 10 ways to reduce the amount that you will owe in taxes, so that more money stays in your pocket for retirement. There are specific conditions and limitations for each tax-saving tip listed here, so you will not qualify for all of them, but it would be good to research the possibilities.
Only a well-trained or certified tax professional can determine which of these Top 10 Tax-Saving Tips would benefit you, so be sure to consult with them as soon as possible. April 15, 2014 will be here before you know it!
- Make a Contribution to a Traditional IRA – As late as April 15th
- Itemize Rather Than Take the Standard Deduction – For business, home, volunteering for charity, and medical expenses
- Pay Certain Upcoming Bills in December – Such as your mortgage, property tax, and business expenses
- Open a Health Savings Account (HSA) – Through a trustee like a bank, insurance company, IRA or Archer MSA trustee
- Convert a Traditional IRA to a Roth IRA – If the tax rate on the transaction will go up the following year
- Deduct State Tax That You Paid Last Spring – Don’t forget this or state taxes already paid during the year
- Credits for Lower Income and Disabled Individuals – Make sure your tax preparer checks every credit available through the IRS
- Include Reinvested Dividends in Your Cost Basis – This amount is deducted from the proceeds of a stock sale.
- Set Up a Private Pension Plan – A little-known Non-MEC insurance policy with multiple tax benefits
- Avoid Late Fees: File and Pay On Time – Request an extension and pay an estimated amount if you’re not ready.