1545 6th Street Ste 201
Green Bay, WI 54304
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Our Top Tax Tips
Rate Reductions
Accelerate Income - regular income tax rates start at 10 percent, and the top rate is 35 percent.
These are historically low rates. (Deferred compensation is attractive when future top rates will be significantly lower than current rates.)
Seek investments that pay ordinary dividends or distribute long-term capital gains. The maximum tax rate on both is only 15 percent.
Shift income to children and grandchildren to take full advantage of the $1,800 investment income limit.
Health Savings Accounts
Combine a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA).
Contributions to the HSA are tax deductible and withdrawals to pay medical expenses are not taxed.
Many insurance companies and banks offer these plans at competitive rates.
IRA Contributions Limits
Up to $5,000 is permitted for anyone with sufficient earned income, and the limit increases to $6,000
for individuals over age 50 by year-end.
Make your contribution as early as possible each year to provide greater account value at retirement.
Use your IRA account for the fixed income portion of your investment plan.
This way you will be deferring taxes on what would otherwise be taxed as ordinary income.
By contrast, if you fund your IRA account with stocks or equity based mutual funds,
you could be converting long term capital gains which are taxed at low rates into ordinary income taxed at
higher rates when you begin to take IRA distributions.
401(k) Deferral Limits
Defer the maximum allowed by your employers 401(k), 403(b), and 457 plans to recieve the maximum employer matching contribution.
You can contribute up to $15,500 with an extra $5,000 allowed for individuals over age 50 by year-end.
Education Incentives
Plan which education costs to pay from Section 529 plans & Coverdell Accounts
and when to claim the Hope Credit, Lifetime Learning Credit or the Tuition and Fees Deduction.
Tuition and Fees Deduction
- has a maximum benefit of $4,000 if your adjusted gross income does not exceed $80,000 for singles ($160,000 for married filing joint)
- if your adjusted gross income exceeds these limits you may qualify for a $2,000 deduction
- No deduction can be claimed for expenses of a student for whom a Hope or Lifetime Learning credit is also claimed
Coverdell Education Savings Accounts
- Contributions of up to $2,000 per child are allowed each year if your adjusted gross income does not exceed $220,000 for married filing joint
- Tax-free withdrawals are allowed for qualified elementary and secondary education expenses
- If you begin funding early and maximum fund all available programs, you can use the Coverdell account for pre-college costs
and coordinate a Section 529 Plan with the Hope credit and Lifetime Learning credits
Section 529, Qualified Tuition Program (QTP)
- tax-free distributions can pay for many higher education expenses
- QTP distributions can be coordinated with Hope and Lifetime Learning credits as long as each is used to cover different expenses.
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