14 Ways to Show Your Finances Some Love - Part 1
This week, we're delving into seven effective tax planning tips that not only secure your financial future but also spread goodwill and prosperity to those closest to your heart. Stay tuned for more financial insights next week!
1 | Opt for a Qualified Charitable Distribution (QCD)
Consider making a Qualified Charitable Distribution directly from your retirement account to a charity if you have required minimum distributions you don’t need. This not only fulfills your RMDs but also excludes the distributed amount from your taxable income. By supporting causes you care about, you can make a meaningful impact while reducing your tax burden—a win-win scenario.
2 | Maximize Your 401(k) Contributions Early
Front-load your contributions to your 401(k) early in the year rather than spreading them evenly over 12 months. By reaching the 2024 contribution limits of $23,000 sooner, your investments have more time to grow, potentially boosting your retirement savings significantly. It's a proactive step toward securing financial stability for yourself and your family in the long term.
3 | Establish an IRA for a Child
Instill financial responsibility in the next generation by setting up and contributing to an IRA for a child who has earned income. Whether from part-time jobs or tasks within your business, every dollar invested grows tax-free, laying a strong foundation for their financial future and teaching valuable financial skills early on.
4 | Donate During Spring Cleaning
Turn spring cleaning into an opportunity to give back. As you declutter, consider donating items in good condition—such as household goods, clothing, and books—to charities. You can claim a charitable deduction on your 2024 tax return for these donations, making your act of generosity also a smart tax-saving strategy.
5 | Gift Appreciated Stock Shares
Enhance family bonds while supporting charitable causes by donating appreciated stock shares directly to a charity favored by your loved ones. This allows you to avoid recognizing the gain as personal income, maximizing the impact of your charitable giving while minimizing your tax liability—a beneficial choice for both your family and your community.
6 | Open a 529 College Savings Plan
Invest in the educational future of your loved ones by setting up a 529 plan. Contributions grow tax-free and withdrawals are also tax-free when used for qualified education expenses like tuition and books. Whether for children, grandchildren, nieces, nephews, or other family members, a 529 plan is a gift that supports their future educational needs.
7 | Consider a Roth Conversion
If your traditional IRA has declined in value, consider converting it to a Roth IRA. This strategic move can lower your future income tax liability and potentially allow tax-free withdrawals in retirement, optimizing your retirement income while minimizing taxes.
Let Us Guide Your Financial Journey
Incorporating these tax planning strategies into your financial plan can pave the way for a more secure future for you and your loved ones. Unsure where to start? We're here to assist you every step of the way, from assessing your financial situation to implementing practical steps that align with your life goals and aspirations.
Not sure where to start? We’re here to guide you through every step of your planning journey, from taking inventory of what you have and what’s important to you, to the practical steps of how to plan for the life and legacy you dream of.
Schedule a complimentary 15-minute call with our office today to learn more.
This article is a service of Zarda Law, S.C. We do not just draft documents; we ensure you make informed decisions about life and death, for yourself and the people you love. That's why we offer a Legacy Planning Session, during which you will get financially organized and make all the best choices for the people you love. You can begin by scheduling a Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.
