Two things in life are certain: death and taxes. While we cannot do anything about the first, there are strategies to lower your taxes for years ahead.
- Fund your retirement account(s)-by adding to a pre-tax retirement account or 401k, you lower your tax bill now and you are building a solid nest egg for the future. You could qualify to make up to a $5,500 contribution to a traditional tax-deferred IRA, for 2016, plus an additional $1,000 if you are 50 or older. Even more, you can contribute up to $18,000 in your 401k, or up to $24,000 if you are age 50 or older, in addition to receiving any matching contributions from your employer.
- Buy a home-while the Rochester housing market is hot, there are several tax deductions that come with home ownership: mortgage interest, property taxes, etc. If you itemize deductions on your taxes you can write off the interest you pay on your mortgage on a first and second home up to $1 million in original mortgage balances.
- Charitable contributions- giving generously to causes near and dear to your heart allows for itemizers to deduct donations to qualified non-profit organizations and charities. You must document these contributions- donation limits do apply.
While these tips help to decrease your tax bill, aggressively saving and investing for retirement will help ensure your financial security later. I recommend working with a financial advisor to determine how these strategies fit into your financial plan. In addition, our firm has a full time Certified Public Accountant who can help to craft tax-advantaged plans specific for your situation.
Caroline Hill, Financial Advisor
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).