![]() If you don’t like what you see, now’s the time to change that dynamic. Then, use one of the many online calculators to see exactly how long it will take you to pay it off. ![]() But if you see that’s not going to happen, then do this:Įstimate your January credit card balance, fully accounting for your anticipated holiday travel-and-gifting splurge. Naturally, I want you to set a holiday spending target you can finance with cash and stick to it. Just a couple months away from peak holiday season is the perfect time to forecast your anticipated holiday spending and make a plan to meet the moment. Your ability to hit those outstanding 2021 money milestones will be influenced by the actions you take between now and December 31. Which goals can you power-fund before the year ends? Are you on track to meet your benchmarks? These may be goals around increasing savings or decreasing debt. Next, review the specific 2021 money goals you set back in January. – Are there investments in your portfolio that, based on your goals, no longer belong there? If they’ll generate a capital loss when sold, you can apply up to $3000 of this loss against your income, resulting in a lower AGI. (Pro tip: You can “recharacterize” your 2021 IRA contributions, switching between Roth and traditional, right up to April 15 th.) In your quest to avoid taxes in your retirement future, have you overlooked the possibility of meaningful tax benefits in the present? Contributions to a traditional IRA will lower your AGI. – If you participate in a Health Savings Account ( HSA), you can top up your account with a lump sum contribution if your regular contributions will leave you below the maximum allowable. So how can you lower your AGI (without lowering your salary, that is)? Other income-limited tax benefits include the healthcare premium tax credit and the Saver’s Credit and Earned Income Tax Credit for low and middle-income households. Both of these credits phase out above a certain income threshold.Īre you paying back student loans? With an AGI below $70,000 ($140,000 if married), you can deduct up to $2500 of student loan interest you paid during the year, even if you do not itemize deductions when preparing your tax return. If you’re a student yourself, the Lifetime Learning Credit may be available to you. Parents of college-age children should carefully consider the American Opportunity Credit. If you missed out on the most recent Recovery Rebate Credit (aka “stimmie”) because your income exceeded $80,000 ($160,000 if married) in 2020, you’ll have another chance to claim it when you complete your tax return next year. The Child Tax Credit, which you may already be receiving as an advance, is a perfect example. Please visit our disclosure page for more info. This page may contain affiliate links, meaning we may receive payment for purchases made through the links below.
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