With tax season in full swing, there are a few investment strategies to consider, which potentially could reduce your overall tax liability. We recommend reviewing the following tax considerations with your tax professional to determine if any of these items apply to your specific situation. Keep in mind this list is not all-encompassing; it is only meant for educational purposes and is not intended as tax advice.
Retirement Accounts Contributions
Contributing to an IRA can help you progress toward your retirement goals and generally reduces your taxes (now and/or in the future). The IRA contribution limit for 2020 is $6,000 ($7,000 for those age 50 and older) per individual, subject to certain income requirements. Starting in 2020, individuals can contribute to a traditional IRA past age 70½, so you may be eligible to contribute in 2020 even if you have not been eligible in previous years. You can make IRA contributions for 2020 up to the tax-filing deadline, which is April 15 this year.
Contributions to 529 plans may be eligible for state tax deductions. 529 plan assets benefit from tax-deferred growth, and funds can be withdrawn from a 529 plan tax-free when used for qualified education purposes. Additionally, 529 plans have advantageous gifting rules, allowing the contributor to spread the gift equally over five taxable years.
Long-Term Care Insurance
If you paid premiums on a tax-qualified, long-term care insurance policy for yourself, your spouse or tax dependents, you may be eligible to deduct these premiums if you itemize your deductions.
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