Before summer gets away and you begin the fall rush, take some time for a financial check-up. Tightening up your budget and investing in savings will make a long term difference to your net worth.
Here are 4 ways to capture money now:
- Maximize your 401(k) contributions. If you can live with it, putting up to $17,500 (for most workers) of your income into your retirement plan saves on taxes now, and will make life much easier later. If you’re 50 or over, you can take advantage of ‘catch up’ contributions, and put in an additional $5,500 for a total of $23,000 toward retirement savings. Pre-tax contributions can save you thousands of dollars in current income tax.
- Make qualified home improvements. For purchases made through 12/31/2016, you can take a one-time federal tax credit of 30% of the cost of the following energy saving systems: solar panels, solar water heaters, qualifying geothermal heat pumps, small wind turbines, or fuel cells. The credit applies to materials, labor, and installation, with no maximum limit. And, except for fuel cells which are for primary residences only, the other energy-saving systems apply to both primary and secondary homes. Know the details of the tax credit before you purchase by talking with your tax advisor or researching Federal Tax Credits for Energy Efficiency. In addition, adjustments made to your home for medical purposes can be deducted as medical expenses. Examples include: wheelchair ramps, bathroom hand rails, and widening doorways and hallways.
- Reevaluate recurring bills (telephone, cable, car insurance) to make sure you’re getting the best rates. In such a competitive environment, companies are continually offering better pricing for services. Ask for the best plan for your verified usage, and you can likely save money each month going forward.
- Clean out and donate household goods for a charitable deduction. All of us have more than we need, from kitchen gadgets that are never used to sweaters that haven’t been worn since 2005. Even though it may not be a significant amount, pay it forward and take a tax deduction for non-cash contributions to qualified organizations. For more information, see the IRS’ 8 Tips for Deducting Charitable Contributions. Keep in mind that items donated are not worth what you paid for them and they must be in good used condition to qualify.
One of the best things you can do for your overall financial situation is to make a financial plan. Talk with your Salmon Sims Thomas tax advisor about maximizing your current and future financial health.