Though the New Year has already begun, you still have until April 15th to make a number of moves that will lower your 2014 tax bill. Here are the three big tax tips to take advantage of.
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Don't Panic, You Still Have Time to Use These Tax Tips for 2014
1. Tax Tips You Still Have Time to Use
(until April 15th)
2. 1) Contribute to Your IRA
โข Although youโre out
of time to contribute
to your workplace
401(k), 403(b), or
457 plan, thereโs still
time to contribute
to your Individual
Retirement Account
(IRA)
3. 1) Contribute to Your IRA
Traditional IRA
โข You can contribute up to
$5,500โor $6,500 if you are
over 50 years old.
โข Any money you put in will help
reduce your taxable income for
2014.
โข When you withdraw the money
in retirement, it will be taxed.
You have two options
Roth IRA
โข Contribution limits are the same
as a Traditional IRA.
โข However, any money you put in is
already taxed, and will not reduce
your 2014 taxable income.
โข Instead, all of that money is
allowed to grow and be
withdrawn, after you are 59 ยฝ,
completely tax free.
4. 2) Contribute to Your HSA
HSA=Health Savings Account
โข Not everyone has an HSA.
You need to have a high-
deductible health insurance
plan that specifically allows
you to open an HSA.
โข For those who can, this is
one of the best vehicles for
reducing your healthcare
costs and saving for
retirement.
5. 2) Contribute to Your HSA
The Basics
โข Annual Contribution Limits
โ Individuals = $3,300 ($4,300 for those over 55)
โ Families = $6,550 ($7,550 for those over 55)
โข Tax Advantages
โ All contributions reduce your taxable income.
โ You can reimburse yourself tax-free for qualified
medical expenses now, or in the future.
โ Most importantly, you can use an HSA as a retirement
account as well. Read more here.
6. 3) Contribute to Your Childโs Coverdell ESA
โข A Coverdell ESA is an
Education Savings Account.
โข Money stored and grown in
an ESA can be used for any
level of education expenses:
elementary, middle, high
school or college.
7. 3) Contribute to Your Childโs Coverdell ESA
The Basics
โข Annual Contribution Limits: $2,000.
โข Tax advantages
โข Contributions do not reduce your taxable income
for 2014.
โข However, any growth in the account, and any
distributions for qualified educational expenses
are completely tax-free!