5 tax mistakes to avoid in 2020: Tax Strategy Scan
Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
5 tax mistakes to avoid in 2020
Failure to adjust their withholding amount, not keeping accurate records of business-related expenses and not paying taxes for earnings from side gigs should be avoided to prevent experiencing a tax burden and having problems with the IRS this year, according to this article in Motley Fool. Clients are also advised to invest in tax-advantaged savings plans such as traditional IRAs and HSAs, and to seek the help of a tax professional in advance.
Leverage these 5 retirement tax diversification strategies
Contributing to a Roth IRA is the among tax diversification strategies that a client can take on in order to mitigate their tax burdens in retirement, according to Kiplinger. There is no one-size-fits all approach to diversification. Clients are advised to consider varitions of the following strategies: contribute to taxable accounts, convert traditional IRA savings to a Roth IRA, contribute to a non-deductible IRA and begin taking smaller distributions by age 60, according to the article.
Ways to grow retirement and enjoy a latte, too
Clients who aspire to increase their retirement savings are advised to save in tax-advantaged accounts to reduce their taxable income, according to NerdWallet. They can choose from opening an IRA with a brokerage company or a workplace retirement account such as a 403(b) or 401(k), according to the article. A side hustle can also be considered, however clients must keep in mind that majority of these jobs will require clients to report income for tax purposes.
How clients can avoid paying half their retirement income to the IRS
Retirees must determine the type of retirement accounts that have RMDs and the amount of money they need to withdraw to avoid the IRS penalty, according to Yahoo Finance. Along with other decisions, these tips would help clients in retirement planning and spending, according to the article.
Military pensions are creating a generation of millionaires
Many military service members are unaware of the value of their pensions, which could amount to millions and their inadequate financial education during their service hinders them in protecting their unexpected wealth in retirement, according to this article in Forbes. Veterans who are healthy enough should avail civilian life insurance to maximize income. These clients should also consider getting a thrift savings plan that invests contributions in Treasurys and doesn’t impede traditional or Roth IRA contributions.