Tax moves you can make now!

Time for a 2025 update on Tax Cuts and Jobs Act (TCJA) of 2017. This is the tax code that is set to expire on December 31, 2025. Should Congress do nothing, TCJA will revert back to the previous (higher) tax code. There is no consensus on what will happen in Washington, DC. My guess is Congress will keep a version of TCJA.

Aside from the Health Savings Account (HSA) that we wrote about a couple of weeks ago, the next best tax tool are the ROTH options…

What tax strategies have you looked at to minimize your taxes? I would make the argument that Roth IRAs, Roth 401k’s and Roth conversions should be top of your list.

The general Roth idea is pay taxes now (either as missing out of reducing income taxes now or in the case of a conversion paying income taxes now) in exchange for having your retirement accounts grow tax-free and being able to tax out withdrawals tax-free (rules apply). Pay lower tax rates now (current income and capital gains) and have withdrawals in the future, during potentially higher tax era, be tax-free. Tax-free is one of my favorite phrases. 😊

Contrary to popular belief NOT all Roth accounts have income limits! Roth 401ks and conversions are NOT limited by income. Roth IRAs are. (But there is a way around that: Backdoor Roth IRA)

If you haven’t explored tax planning with the various Roth options, reach out and let’s review your options and partner with your CPA to make your future more tax-free. (There I go again! 😉)

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