Although few people can raise their hands, Americans regularly pay too much because they don’t get the tax deductions to which they are entitled. Let’s take a look at the five most overlooked opportunities to manage your tax bill.
When your mutual fund pays you a dividend or capital gains distribution, that income is a taxable event (unless the fund is held in a tax-deferred account, like an IRA). If you’re like most fund owners, you reinvest those payments in additional shares of the fund. The tax trap lurks when you sell your mutual fund. Failure to add the reinvested amounts to the cost basis of the investment may result in double taxation of such dividends.
Mutual funds are only sold by prospectus. Please consider the charges, risks, expenses and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before investing or sending money.
Out-of-Pocket Charity: It’s not just cash donations that are deductible. If you donate property or use your personal car for charitable purposes, these are potential tax deductions. Just be sure to get a receipt for any amount over $250.
Did you have any state taxes when you filed your previous year’s tax returns? If so, be sure to include this payment as a tax deduction on your current year’s tax return. The Tax Cuts and Jobs Act of 2017 placed a $10,000 cap on the state and local tax deduction.
Health insurance premiums: If you are self-employed (and not covered by an employer or your spouse’s plan), you may be eligible to deduct premiums paid for Parts B and D Medicare, Medigap insurance and the Medicare Advantage plan. This deduction is available whether or not you itemize the deductions.
Deceased’s income: If you inherited an IRA or pension, you may be able to deduct any estate taxes paid by the owner of the IRA from the taxes owed on withdrawals you make from the legacy account.
Richard H Mootz, CFP® CERTIFIED FINANCIAL PLANNER™ Professional, is a Registered Representative and offers securities through Securities America, Inc., a Registered Dealer/Dealer, Member FINRA/SIPC., Advisory Services Provided by Securities America Advisors, Inc., an SEC-registered investment advisory firm. Mootz Financial Solutions and Securities America Companies are not affiliated.
Richard H Mootz, CFP® CERTIFIED FINANCIAL PLANNER™ Professional can be reached at (530) 877-7007 – email [email protected] or visit the website at www.mootzfinancialsolutions.com. Securities America and its advisors do not provide tax or legal advice. Please consult your tax or legal advisor regarding your personal circumstances. CA insurance number 0C75924
Content is developed from sources believed to provide accurate information. The information contained herein is not intended to constitute tax or legal advice. It cannot be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your personal circumstances. This material has been developed and produced by FMG Suite to provide information on a subject which may be of interest to you. FMG Suite is not affiliated with the named broker, state-registered investment advisory firm, or SEC. Opinions expressed and material provided are for general information only and should not be considered a solicitation to buy or sell securities. Copyright Suite FMG.