With tax season right around the corner, some of you may be a bit nervous. While 2020 has definitely been a different kind of year with some great tax breaks and incentives, paying taxes is still something most of us do not particularly enjoy. However, when you plan for your taxes by making the best possible investment in order to minimize taxes, tax season doesn’t seem all that bad.
Anchor Wealth Management is a financial advisory firm with offices in Lanark and Rockford. We help our clients form comprehensive financial plans in order to meet their short-term and long-term goals, including not out-living your money. Below, we’ll take a brief look at some of the best tax savings investments you can make. Contact our financial advisors to get started today!
BEST TAX SAVINGS INVESTMENTS YOU CAN MAKE
Roth IRA
Roth IRAs may be the best tax savings investment you can make. Even though you pay taxes up front on the money that goes into your Roth IRA, the money you pull out will never be taxed, regardless of your tax income bracket, taxes rates, etc. This is one of the reasons that the federal government limits how much money you can put into a Roth IRA. However, this can be a sizable chunk of cash if you make this investment year after year. For 2020, you can contribute up to $6,000, or if you are over age 50, your yearly contribution can be up to $7,000.
401(k)
401(k)s are also great tax saving investments you can make, especially if your employer offers matching contributions of some sort. The money you put in is pre-tax, which lowers your overall taxable income for the year, and the money your employer puts in is free money (which is quite rare, indeed). Now, some employers are offering Roth 401(k)s, which carry many of the benefits of a Roth IRA.
Health Savings Accounts (HSA)s
A health savings account is a savings account that you can put pre-tax money in to use for medical expenses only, such as your doctor or dentist. An HSA gives you a tax break. The money you put in your HSA is tax-deductible, lowering your overall tax bill at the end of the year. And the money you put in your HSA can continue to accumulate for the lifetime that you have the account. You do not have to use it by the end of the year. If your HSA grows to a sizable amount, you are allowed to use the funds to open an HSA investment account, where you can invest in mutual funds and earn even more money. HSAs are only for those who carry a high-deductible health insurance plan.
CHOOSE ANCHOR WEALTH MANAGEMENT AS YOUR TRUSTED FINANCIAL ADVISOR TODAY
The financial advisors at Anchor Wealth Management are passionate about helping our clients reach their financial goals and dreams. We offer comprehensive financial planning that is tailored to you. We’ll determine where you are at currently with your investments, retirement planning, college planning, and more, and then we’ll help set a course to take you to where you want to go. The best part is, once the course is set, we help navigate you through the calm and the stormy waters of life’s circumstances, ensuring your financial plan is flexible to change course if need be, but strong enough to ensure you survive the storms of life.
We offer free consultations so that you can determine if our financial services meet your needs, from financial and investment advising to life insurance and long-term care. We offer three offices located in Freeport, Lanark, and Rockford, to meet your needs. Give us a call to set your course today!