Have people been telling you that you can maximize your tax returns, but you just brush off the idea because you feel like you don’t know enough about taxes to even try? You don’t need to study for hours on end to be an expert on taxes before you can reap the benefits. Your trusted financial advisors at Maggi Tax want to show you two simple strategies that can help you maximize your taxes!
Become Tax-Free With A Roth Conversion
One of the most common ways to save on taxes is by circumventing the need for them when it comes to your retirement accounts. But aren’t taxes something that just happens when you make an income? 401(k)s are usually the go-to method of collecting retirement funds, but a Roth conversion could be a better option for you.
Learn more > 401(k) vs Roth IRAs Compared
What Is A Roth Conversion?
A Roth conversion simply involves transferring your retirement accounts into a Roth IRA. This applies whether you have a 401(k) or a regular IRA because the basic idea is to take a tax-deferred account, extract all of your funds, and move it into a tax-free Roth IRA. Even if you have to pay a fee or leftover taxes in order to accomplish this, you will still be saving money in the long term by excluding the tax process in the future.
What Happens After?
The way Roth IRAs work is that the contributions that you make are already adjusted to account for taxes. So instead of paying taxes by the time you wish to take out your retirement funds, your Roth IRA will already be set for you to collect without needing to pay taxes. This is especially useful considering that the percentage for taxes will only increase as time moves on, and if you continue to make the same amount of contributions, you could see incredible losses.
An important thing to note about Roth conversions is that you will not be able to access your funds until five years after you’ve made the switch. This is just another reason why it’s better to do this sooner than later! If you need help, you can always contact your reliable financial advisors at Maggi Tax.
Turn Your Losses Into A Win With Tax-Loss Harvesting
Another proven way to maximize your taxes is through tax-loss harvesting. This method may sound risky at first, but it’s worth it once you know how to pull it off.
What Is Tax-Loss Harvesting?
Selling your investments at a loss has probably never even crossed your mind. If the entire purpose of investing is to make a profit, then why would you? That way of thinking is precisely why many individuals feel skeptical about tax-loss harvesting, but it’s the tax aspect that you need to consider.
Normally, you would need to pay taxes at a high rate for short-term capital gains. But if you simultaneously sell your other securities at a loss, that will offset the amount of taxes that you would need to owe.
Do People Really Use This Strategy?
Believe it or not, many investors use tax-loss harvesting to effectively maximize their taxes. And by selling their securities at a loss, they will turn that money around and put it towards a new and better investment. Managing your investments this way looks great on your portfolio by the end of the tax year!
Not Sure Where To Start? Play It Safe And Hire Maggi Tax!
These strategies may work, but they can also feel intimidating if you don’t have a clear direction. In that case, contact Maggi Tax today at (727) 799-1701 for professional financial advice near you! We’ll get you started with a complimentary consultation before discussing the best tax strategies and preparation plans for you.