We are down to the last few weeks of 2021, but there is still time to take smart year-end tax actions. Your IRA will thank you.
- Charitable Contribution Deductions
Don’t forget charitable contribution deductions. Select the charity of your choice and make a contribution before the end of the month and take the deduction on this year’s tax return, if you itemize. You can even do this with a Self Directed IRA to satisfy an RMD.
- Business Owners
Hire your kids! They can earn up to $12,400 before they need to pay income tax. Remember: every dollar that you pay them is a dollar less that you earn. Hence, your tax bill will be reduced.
If you want to make a big difference in their life, contribute up to $6,000 of their income to a Roth IRA for the minor. Is that a good idea? How much more would you have today if your parents helped to start an IRA when you were 8,10, or 12 years old?
- RMDs
Do you have a Required Minimum Distribution (RMD) you must take from your Traditional IRA?
- Convert it to a Roth account before 12-31-2021. Roths have no RMD.
- Take your RMD by using it to make a qualified charitable contribution.
- This is a win-win. The charity benefits and the distribution does not appear on your tax return. The distribution will not affect your Social Security benefits.
- IRA ContributionsÂ
There is no longer an age limit for making an IRA contribution. Unlike before, as long as you have earned income, you can keep contributing to your IRA.
- If you still have a Traditional IRA you will get a tax deduction this year.
- If you have a Roth IRA you will not get a tax deduction this period, however, all your growth can be income tax-free when you do start to take distributions.
- Check out our “Am I Too Old to Start a Roth IRA?” blog.
Have a Happy and Healthy New Year!
Don’t have a Self Directed IRA? Don’t wait! Take back control of your retirement funds before it is too late. Click here to see our process.
For information about the Self Directed IRA or Solo 401k, call IRA Club at 312-795-0988
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