With tax season nearly upon us, many people are wondering how to make the process simpler, easier, and more rewarding. More and more Americans are feeling stressed about taxes. Concerns about deadlines, an uneasiness about their specific returns, and a perception of unfairness can lead to tax season dread. However, using these three tax planning strategies could lower your future tax liability and make you feel more in control of your money:
1. Educational savings accounts
If you have children, consider opening tax-deferred savings accounts such as Coverdell Education Savings Accounts (ESAs) or 529 plans.
2. Capital Gains and Losses
What are capital gains and losses? Capital gains are money earned by selling an investment for more than you paid for it. Capital losses are money lost by selling an investment for less than you paid for it. Minimizing taxes can be part of your overall investment strategy! While short-term gains are taxed as ordinary income, long-term gains are taxed at a lower rate than ordinary income. Unused offset losses can be carried over year after year with no penalty until they are exhausted.
3. Retirement account contributions
Contributions to a tax-deferred retirement account, like a traditional 401(k), lower the amount of tax you owe now. Instead, you’ll owe taxes on these accounts when you withdraw funds during retirement.
Overall, tax season can be stressful, but there are strategic ways to make it a more enjoyable and rewarding process. Aim to implement these three things, and 2024 could be your year of easy, breezy taxes! Refresh your investment strategies by considering an investment in Share Certificates. Unlike a regular savings account, CDs are a fixed-term, low-risk investment with rates that don’t fluctuate with the market.
Check out our new BALANCE Financial Fitness and Banzai programs, too! Our BALANCE program provides comprehensive financial education and counseling services at no cost to you. Go here to learn more. Banzai is an award-winning, interactive content platform that teaches real-world finance. Used by over 100,000 teachers in over 50% of U.S. schools, Banzai has a wide range of content that covers the fundamentals of personal finance – including saving, spending, borrowing, investing, and more! Go here to learn more.
At Nusenda Credit Union, we’re dedicated to improving our members’ financial well-being and supporting them through affordable products, friendly service, community involvement, and financial education. We'd love to find other ways to help you save money. You can reach us at 505-889-7755 (800-347-2838 outside the Albuquerque area) or make an appointment to meet with us at any of our branch locations.