Evaluate your portfolio’s bottom line through tax-efficient investing. See how year-end planning can lower your tax bill. Should you convert all or a portion of your traditional IRA assets to a Roth account?
Find out how you can potentially improve your portfolio’s bottom line through tax-efficient investing.
As just about every investor knows, it’s not what your investments earn, but what they earn after taxes that counts. After factoring in federal income and capital gains taxes, the alternative minimum tax, and any applicable state and local taxes, your investments’ returns in any given year may be reduced by 40% or more.
For example, if you earned an average 8% rate of return annually on an investment taxed at 28%, your after-tax rate of return would be 5.76%. A $50,000 investment earning 8% annually would be worth $107,946 after 10 years; at 5.76%, it would be worth only $87,536.
Reducing your tax liability is key to building the value of your assets, especially if you are in one of the higher income tax brackets.
Contact Us to learn the five ways to potentially help lower your tax bill1, which include:
- Investing in Tax-Deferred and Tax-Free Accounts
- Considering Government and Municipal Bonds
- Looking for Tax-Efficient Investments
- Putting Losses to Work
- Keeping Good Records
1Example does not include taxes or fees. This information is general in nature and is not meant as tax advice. Always consult a qualified tax advisor for information as to how taxes may affect your particular situation. This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.
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Lower Your Tax Bill With Year-End Planning. By planning ahead and taking advantage of these time-proven tax strategies before year-end, you may be able to lessen your tax bite come April 15.
As the end of the year draws near, the last thing anyone wants to think about is taxes. But if you are looking for ways to minimize your tax bill, there’s no better time for tax planning than before year-end. That’s because there are a number of tax-smart strategies you can implement now that will reduce your tax bill come April 15.
Contact Us to learn more about the following strategies that might help to lower your taxes.
- Put Losses to Work
- Unearned Income Tax
- IRAs: Contribute, Distribute, or Convert
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Investors at any level of income can convert assets from a traditional IRA to a Roth IRA. What are the benefits and tax implications of a conversion?
Should you convert all or a portion of your traditional IRA assets to a Roth account? The answer may depend on the amount of time you plan to leave the assets invested, your estate planning strategies, and your willingness to pay the federal income tax bill that a conversion is likely to trigger.
There are two types of IRAs and each type of IRA has its own specific rules and potential benefits.
Contact Us today and we can provide you with a summarized table showing the differences. We will provide advice on Potential Benefits of a Conversion, as well as Potential Drawbacks, and help you decide which is right for you.
Disclaimer: Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation.
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This information is general in nature and is not meant as tax advice. Always consult a qualified tax advisor for information as to how taxes may affect your particular situation.