Personal Finance

5 Last-Minute Moves to Save on Taxes | Personal Finance

The wash-sale rule doesn’t apply to sales for a gain. You can freely buy back shares immediately after selling, and you’ll still record the gain on your taxes.

3. Retirement plan contributions

If you have extra savings you can live on right now, you may consider increasing your 401(k) salary deferral. The contribution limit for 2021 is $19,500 for those under age 50, or $26,000 for those 50 or older.

Contributing more to your 401(k) may be your only opportunity to lower your adjusted gross income before the end of the year. And getting your AGI below certain thresholds can help you qualify for tax credits like the Child Tax Credit or the 2021 stimulus. So not only would you get the tax deduction for your retirement plan contribution, you’d also save money by qualifying for more credits.

If you haven’t contributed to an IRA this year, you have until April 15, 2022 to make that contribution. If you qualify for a deduction for a traditional IRA, that’s another way to lower your AGI and possibly qualify for more tax credits, like the saver’s credit or the ACA credit.

If you make over the income limit to contribute to a Roth IRA or think you might, you may want to do a backdoor Roth IRA before the end of the year. Current legislation in Congress would close the backdoor Roth loophole starting in 2022. So, even though you could make an IRA contribution for 2021 up until the tax deadline, you won’t be able to do the backdoor Roth after Dec. 31 if the legislation doesn’t change before it’s passed.

Source link

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button