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| Cathy Robinson, CPA Senior Manager |
Recently, AccountingToday & Kiplinger published an article touching on 8 mid-year tax moves that could help people save more money. So what are these recommendations?
1.) Fix Your Withholding
If receive an average refund somewhere around $2,700 this is applicable to you. By adjusting your withholding now, you can boost your take home pay by somewhere around $225 a month for the rest of the year. This also means that since you'll still be able to receive a nice size refund in the spring.
2.) Midyear Adjustment for Obamacare Healthcare Premium
If you've experienced a change in the size of your family or perhaps received a raise at work it's important to know that the size of your subsidy for your healthcare premium could be affected. Should the change affect your subsidy so that it should be bigger, you have the option to pay lower premiums for the rest of the year. However, if the changes in your life means that your subsidy should fall experts recommend paying higher premiums for the rest of the year so as to avoid being surprised next spring with a bill when you file your form 1040.
3.) Reevaluate Your 401 (k) Contributions
Do you know what you're investing into your 401 (k)? Now is the time to evaluate where your money is going and if you can contribute more. It's good rule of thumb to keep in mind that roughly every $100 you place into a traditional 401 (k) your pay only is cut by $75 if you're on the 25% federal tax bracket or less.
4.) Flexible Spending Check
If you divert money into a flexible spending or reimbursement plan it's time to check and see how much money you have diverted into it. Mid-year tracking of reimbursement spending can help you not lose your money later on down the road.
5.) Probe Your Taxable Portfolio
Keeping your investments in mind now can also be helpful. Kiplinger writes, "If you decide it’s time to take some money off the table by realizing profits now, consider whether this is a good time to harvest losses. Never make an investment move solely for tax purposes. But the tax-saving power of dumping a poor performer might be the extra push you need to seek out a better investment."
6.) For the Newly Minted Septuagenarian
For those who turned 70 earlier this year and will be 70 1/2 by the end of the year it means the start of required minimum distributions (RMDs) from IRAs and other retirement plans. Working with your accounting professional to map out your strategy now can help prevent the unexpected.
7.) Let Uncle Sam Help With Your Debt
Check your credit card debt. Would it make sense for you to borrow home equity to pay off your credit cards? Kiplinger lends this advice, " Imagine this: $10,000 of credit card debt at 15% costs you $1,500 a year in carrying charges. The same $10,000 of debt on a 4.5% home-equity line of credit costs $450. And, if you’re in the 25% tax bracket, Uncle Sam effectively picks up $112.50.
8.) Take a Good Look at Yourself
Make sure you have an understand of the options available to you. Did you know there are tax breaks for new college grads, new parents, the recently divorced, and the newly widowed? You don't want to overlook something that could save you money.
The recurring theme with analyzing your financial status mid-year is this, by making sure you're prepared now you could save yourself money in the long run.
It's important to also consult your accounting professional before making any financial moves so as to make sure you have the best strategy working for you and your money.
Have questions? Find us online at www.hwco.com. And to read Kiplingers full article click here.
3.) Reevaluate Your 401 (k) Contributions
Do you know what you're investing into your 401 (k)? Now is the time to evaluate where your money is going and if you can contribute more. It's good rule of thumb to keep in mind that roughly every $100 you place into a traditional 401 (k) your pay only is cut by $75 if you're on the 25% federal tax bracket or less.
4.) Flexible Spending Check
If you divert money into a flexible spending or reimbursement plan it's time to check and see how much money you have diverted into it. Mid-year tracking of reimbursement spending can help you not lose your money later on down the road.
5.) Probe Your Taxable Portfolio
Keeping your investments in mind now can also be helpful. Kiplinger writes, "If you decide it’s time to take some money off the table by realizing profits now, consider whether this is a good time to harvest losses. Never make an investment move solely for tax purposes. But the tax-saving power of dumping a poor performer might be the extra push you need to seek out a better investment."
6.) For the Newly Minted Septuagenarian
For those who turned 70 earlier this year and will be 70 1/2 by the end of the year it means the start of required minimum distributions (RMDs) from IRAs and other retirement plans. Working with your accounting professional to map out your strategy now can help prevent the unexpected.
7.) Let Uncle Sam Help With Your Debt
Check your credit card debt. Would it make sense for you to borrow home equity to pay off your credit cards? Kiplinger lends this advice, " Imagine this: $10,000 of credit card debt at 15% costs you $1,500 a year in carrying charges. The same $10,000 of debt on a 4.5% home-equity line of credit costs $450. And, if you’re in the 25% tax bracket, Uncle Sam effectively picks up $112.50.
8.) Take a Good Look at Yourself
Make sure you have an understand of the options available to you. Did you know there are tax breaks for new college grads, new parents, the recently divorced, and the newly widowed? You don't want to overlook something that could save you money.
The recurring theme with analyzing your financial status mid-year is this, by making sure you're prepared now you could save yourself money in the long run.
It's important to also consult your accounting professional before making any financial moves so as to make sure you have the best strategy working for you and your money.
Have questions? Find us online at www.hwco.com. And to read Kiplingers full article click here.
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