It is that time of the year again, its tax time. Fortunately, we have a break for our federal returns. However, if you are not in one of the 35 states that updated their 2020 tax filing deadlines, by the time this video comes out, I hope you’ve filed or extended. If not, YOU ARE LATE!!!
Related to the subject of taxes and personal finances, If you’re thinking about taxes, now may be the time of year when you are also taking a hard look at your financial picture and developing a plan for the year.
Before you start, check the all-important Internal Revenue Service (IRS) contribution limits for 2021.
For individuals contributing to a 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan, the contribution limits stay at $19,500. For those over the age of 50, the catch-up contribution stays at $6,500.
The maximum contribution limits for individual retirement accounts (IRAs) will be $6,000 — the same as 2020 — and those over 50 may stash away an extra $1,000 in their traditional IRAs and Roth IRAs. The income phase-out range for taxpayers making contributions to a Roth IRA increased. It will be $125,000 to $140,000 for singles and heads of household, and for married couples filing jointly, the income phase-out range is $198,000 to $208,000. Don’t forget, you may be able to do a backdoor Roth IRA. As always consult with your CPA.
Before making any significant money moves, it’s smart to talk to your accountant and financial advisor to determine the investment strategy that will best fit your goals.
Thanks for reading and in the words of the late Indian politician, Indira Gandhi, “Have a bias towards action – let’s see something happen now. You can break that big plan into small steps and take the first step right away.” I’ll see you next week!
For more details, visit the IRS site at https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-contributions.
