MDNews - Long Island

Annual Financial To-Do List: Now is an excellent time to think about the investing, saving or budgeting methods you could employ toward specific objectives, from building your retirement fund to managing your taxes. Here are a few ideas to consider: Contribute more to your retire- ment plans. In 2021, the contribution limit for a Roth or traditional indi- vidual retirement account (IR A) is expected to remain at $6,000 ($7,000 for those making "catch-up" contributions). Your modified adjusted gross income (MAGI) may affect how much you can put into a Roth IR A. With a traditional IR A, you can contribute if you (or your spouse if filing jointly) have taxable compensation, but income limits are one factor in determining whether the contribution is tax-deductible. 1 Make a charitable gift. You can claim the deduction on your tax return, provided you follow IRS guidelines and itemize your deductions with Schedule A. The paper trail is important here, but consult your tax, legal or accounting professional before modifying your record-keeping approach or your strategy for making charitable gifts. Can you take a home office deduction for your small business? You may be able to write off expenses linked to the portion of your home used to conduct your business. Using your home office as a business expense involves a complex set of tax rules and regulations. Before moving forward, consider working with a professional who is familiar with home-based businesses. 2 Open a n HSA . You a re limited to a $3,600 contribution for 2021 if you are single, $7,200 if you have a spouse or family. Those limits jump by a $1,000 "catch-up" limit for each person in the household over age 55. 3 If you spend your HSA f unds for non-medica l ex penses before age 65, you may be required to pay ordinar y income ta x as well as a 20% pena lt y. A f ter age 65, you may be required to pay ordina r y income ta xes on HSA f unds used for non- medica l expenses. HSA contributions are exempt from federa l income ta x; however, they a re not exempt from state ta xes in cer ta in states. Pay attention to asset location. Tax-efficient asset location is one factor that can be considered when creating an invest- ment strategy. Review your withholding status. It's also an excellent time to consider reviewing the beneficiaries of your retirement accounts and other assets. Are you coming home from active duty? Check on the status of your credit and any tax and legal proceedings that might have been preempted by your orders. Consider the tax impact of any upcoming transactions. Are you planning to sell real estate, start a business, receive com- missions or bonuses in 2021, or anticipate selling an investment that is held outside of a tax-deferred account? If you are retired and in your seventies, remember to take Required Minimum Distributions (RMDs) from retirement accounts. Under the SECURE ACT, in most circumstances, once you reach age 72, you must begin taking RMDs from most types of these accounts. 4 Vow to focus on your overa ll hea lth a nd practice sound financia l habits in 2021. And don't be afraid to ask for help from professionals who understand your individual situation. n Things you can do for your future as the year unfolds Dave B. Rao is the founder of R AO Wealth Partners. He focuses his practice on helping to advise physicians, corporate executives and business owners on their unique financial situations. For more info, visit raowp.com. Our firm does not render legal or tax advice. This article was written for our firm and provided courtesy of MarketingPro. Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK- GUAR ANTEED/MAY LOSE VALUE. Rao Wealth Partners is an independent firm. Securities offered through Cetera Advisor Networks LLC., member FINR A and SIPC. Advisory services are offered through Summit Financial Group, Inc., a registered investment adviser. Client Assets held at First Clearing, LLC (a wholly owned Wells Fargo Subsidiary). Summit and Cetera are affiliated are under separate ownership from any other named entity. Citations 1 . th ef in an ceb uf f.co m , Au gu st 12 , 2 02 0 2. nerdwallet.com, July 31, 2020 3. msn.com, August 19, 2020 4. thestreet.com, December 21, 2019 BY DAVE RAO 1 8❱❱❱❱❱ F I N A N C I A L C H E C K U P

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