Happy New Year friends! I can’t believe it has been a year since we were ringing in 2018 and my little nugget is over 4 months old. I guess time flies when we are having fun. That being said, we do not want our financial and tax life to fly before our eyes too. There are many things we can do to plan for the future, including taxes, retirement, and college savings.
When it comes to your financial life, many decisions are made based on tax strategies. However, many people do not take the time to plan ahead. Did you know that if you have the income and plan accordingly, you might be able to put up to $2.9 million in a defined benefit (pension plan) through your business? With the new tax law, depending on your income, you might also be able to write off about $1 million of new furniture and equipment. The moral of the story here is that you need to be in frequent contact with your accountant to properly keep more of your money.
Proper college and retirement savings are also intertwined with your taxes. A 529 savings plan allows you to put up to 5 times the annual gift tax exclusion ($75,000 for 2019, but then there is no gifting for a total of 5 years) for each child. $10,000 per year (if put in the 529 that year) can be used to reduce your New York taxable income. Keep in mind that 529 plan proceeds need to be used for kindergarten through college expenses or there can be penalties and taxes. Did you know that college can also be funded through the cash value from a whole life insurance policy? If you own your own business or have an employer, you may be able to put some of your retirement funds in a traditional account and some in a Roth account! You might even be able to fund a Roth IRA if you are above the limits.
The fact of the matter is, there are a lot of planning opportunities for people of any income level. Although preparing your taxes and retirement alone may seem less expensive and more efficient, think about all of the opportunities you are missing.
I look forward to answering any of your questions (even if I won’t be doing your taxes). I can be reached via email ([email protected]) or cell phone (973-879-9111). I look forward to answering any of your tax, accounting, and other financial questions and working with you in the future!
Andrew Kabatchnick is a local CPA that focuses on individuals and small to medium sized businesses. Along with assisting with taxes and accounting, Andrew helps with his clients overall financial health and well-being. Andrew lives in White Plains with his wife Leah and daughter Sophie.
