Before you turn the page on this unprecedented year of change, consider making some changes that can improve your finances into 2021. Here are four suggestions to get you started.
With tax deductible contributions and tax-free withdrawals for qualified healthcare expenses, HSAs are among the most tax-advantaged accounts available. An HSA can also be used as a retirement savings account since money you don’t need to take can be left until age 65.
Homeowners can get a federal tax credit up to 26% on certain home alternative energy equipment through 2021. This applies to solar panels, solar water heaters, geothermal heat pumps, and small wind turbines. There is also a tax credit up to $500 for a qualified fuel cell.
Contributions to a retirement plan can help lower your tax bill and set you up for a more secure retirement. In 2020, you could set aside as much as $19,500 of your compensation ($26,000 if you are 50 or older) into an employer-sponsored plan. The current limit on IRA contributions is $6,000 ($7,000 if you are 50 or older).
Did you know that you can give up to $15,000 to as many individuals as you wish without paying gift taxes? This could include gifts of cash or property, including investments. You can also give away household goods like furniture to charities and possibly get a tax deduction if you still itemize.
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