Getting from here to there. Here are 10 ways that you can save more and reduce your taxes. Some of these points may work well for you and others may not. If you walk away with one or two ideas then you’re on the way.
- Save more into a Traditional IRA, 2012 contribution limits are $5,000 and if you’re 50 or older, an additional $1,000.
- A SEP-IRA for small business owners and their employees can help you increase your contribution limits and add an employee benefit. The contributions to both you and your employees will help reduce your taxable income.
- Saving money into a Roth IRA today can help you reduce your taxes in the future. Withdrawals in retirement are tax-free and don’t have the required minimum distributions either. If you don’t need the money, then you can keep it in this tax savings account for the rest of your life.
- Increase your 401(k) savings which will reduce your taxable income on each dollar you save in the year you save it. Save up to $17,000 in 2012.
- Save into a non-deductible IRA if you don’t meet the full income limits of a Roth IRA.
- Municipal Bonds may reduce your taxable income depending on your income and tax bracket.
- Consider dividend paying stocks, which can be taxed lower than your tax bracket.
- Consider value stocks for the long haul. Holding your position longer than 12 months may qualify you for long-term capital gains and reduced taxes.
- Save more into your retirement plan at work – not only can you reduce your income by saving more but you can also be missing out on a company match (If your company matches 3% and you make $100,000 that’s an additional $3,000 towards your retirement).
- Saving into a non-qualified annuity can defer your taxable gains.
Saving more and reducing your taxes is about making small positive changes. You don’t have to tackle every point that applies to you at once. Pick one or two and put them to work.