Industry News - Regulatory Updates
November 17, 2011
Experts recommend against waiting for tax time
With little time left in the year, tax-savvy individuals may wish to make sure they take certain steps before the the hectic holidays begin taking up time, certified financial planner Lynn Mayabb recently told FOX Business. Mayabb noted investment account transactions and other financial decisions have a December 31 deadline in order to be considered for 2011 taxes and returns.
Offering accounting tips, Certified Financial Planner Margaret Starner noted charitable gifts drawn from appreciated assets will not be assessed as taxable capital gains, for example. Donors may also create a fund that will pay out the gift over a period of time, but still take the deduction this year.
Funds drawn from an IRA by those over 70 years old may also be tax-free, within limits. As an added benefit, such funds are not counted as income and such a gift may avoid any income jumps that can hike Medicare premiums.
Younger individuals may wish to contribute to their IRA or pension funds, according to Mayabb, because earlier deposits will allow them to formulate a picture of their own finances sooner, rather than waiting until the April deadline is approaching.
Both Starner and Mayabb indicated Roth IRA conversions can be worthwhile, allowing tax-free investment growth over time, which can be a period of decades for early investors. The long-term benefits may be worth the higher immediate taxes, according to Starner.
Another example of a tax benefit requiring prompt action would be contribution to a 529 college savings plan. Adding to plans and creating new ones can earn a tax credit for those who invest the funds before the end of the year.