Newsletter | November

At Roth CPA & Associates, we want to help you take advantage of all the tax-saving opportunities offered by the tax laws.  Doing so will make sure we have the ability to minimize your overall tax bill.   

Five top tax-saving strategies we recommend for our clients are:  

1. Contribute as much money as you can into a retirement account such as a 401(k) plan or Individual Retirement Account.  The money you contribute to these accounts won’t be taxed until you withdraw it.  If you choose to invest in a Roth IRA, the dollars you invest now will be taxed now, but they’ll grow tax free and won’t be taxed at all when you withdraw them.  For 2010, there special provisions allowing you to convert a traditional IRA into a Roth IRA.

2. Don’t make the government an interest-free loan!  If you received a tax refund this year for the taxes you paid last year, you probably are having too much money withheld from your paycheck.  We can help you fine tune your withholding so you are having only as much withheld as you will owe. 

3. Contribute to 529 plans for your children or family member’s education. Education savings options are available to parents and other family members.  529 plans are designed to boost college savings; only a state deduction is available for the contributions, but the money grows tax free in the plan, and the money paid from these accounts for qualified education expenses is not taxable.  A Coverdell Education Savings Account can be used to pay for qualified elementary, secondary and higher education expenses.  In addition to utilizing 529 plans, education costs may be offset by taking either the Hope Scholarship Credit or Lifetime Learning Credit.  Tax deductions are also available to qualified taxpayers for up to $2,500 of interest paid on student loans.

4. Go green and reduce your taxes.  Buying an eligible hybrid or other alternative-fuel car or truck may qualify you for a tax credit.

5. Make a gift to your children.  You and your spouse can each contribute up to $12,000 to each of your children without triggering the gift tax law.  Children can report up to $1,800 of unearned income, such as interest from a $12,000 investment in a CD, at their marginal tax rate which is likely to be less than yours.

Of course your individual situation will vary.  If you have any questions about how to best minimize your taxes, please give us a call.