Smart Money with Keith Springer Saturdays at 1PM and Sundays at 6AM on NewsRadio KFBK 93.1 FM and 1530 AM

Essential Tax Time Tax Tips

Keith_Springer_7_easy_tips_on_how_to_save_money_on_taxesDo you feel that hand in your pocket? No it’s not your kids, they’re still asleep. (Although in my case, Josh is at school in Tucson, but I still feel his hand in there!). You guessed it, It’s Uncle Sam, and he’s looking for more, with a vengeance! With taxes rising and deductions quietly being eliminated, it’s up to us to take advantage of the few tax law benefits we’re still allowed.

To help you with the important information you’ll need for your taxes this year, Here is my updated Key Financial Data and Tax Chart for 2014. This shows IRA and retirement plan contribution and deduction limits, the new tax rates, Social Security and Medicare premiums, and a whole lot more! Save this file, it will prove indispensable.

I have illustrated some of the key retirement plan contribution and eligibility requirements below:

To make IRA and retirement plan contributions, Individuals must meet specific requirements to be eligible.

  • Eligible income required. Contributions must be made from eligible compensation, such as W-2 wages/salary, commissions, self-employment income, nontaxable combat pay, and other amounts earned from working.
  • Special rule for spouses. If an individual does not earn income from working outside the home but is married to someone who does, that person’s IRA contribution can be based on the working spouse’s income. In such cases, the couple must file a joint federal tax return.
  • Contribution limits – See Key Financial Data and Tax Chart for 2014
  • Age limits – Contributions for a traditional IRA must stop the year the individual reaches age 70½ and after. This limitation does not apply to Roth IRA contributions.
  • Roth limits – Contributions cannot be made to Roth IRAs if the individual’s modified adjusted gross income (MAGI) exceeds a certain amount. Roth IRA contribution limits are phased out if the MAGI falls within a certain range. See below:

Keith_Springer_February_27

Deposit deadline. Most retirement plan contributions can be made by the owner’s tax filing due date, which is April 15, or later if you file an extension.

Avoid penalties!

  • 10% early distribution penalty on distributions that occur before the account owner reaches age 59½
  • 6% excise tax on excess contributions that are not corrected by the applicable deadline
  • 50% excess accumulation penalty on required minimum distributions (RMDs) that are not withdrawn by the deadline

 

Be the expert or hire one!
You basically have to be a retirement expert to understand this mess we call the tax code and to make sure you do not run out of money in retirement. We get new clients all the time that have been with their advisor’s for over 20 years, but realize they need a qualified retirement advisor that takes a comprehensive holistic approach to your finances as you enter those golden years. We don’t take unnecessary chances because we know you can’t replace this money.

That’s why it’s so important for retirees and those planning for retirement to graduate to a qualified retirement advisor who can help put a plan in place that incorporates not just your investments but everything: Social Security timing and optimization, Elder care planning so you don’t give away all your money at the end of life, setting up a retirement income stream that cannot outlive as well as bulletproofing your portfolio….and it all starts with a free Retirement Income Analysis…. or just give me us call for a no-cost no-obligation consultation today at (916) 925-8900.

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