Mattson Financial Services January 2018

F I N A N C I A L S E R V I C E S , L L C


January 2018

A Year of Tax Relief?

90 — and that includes taking the required minimum distributions starting at age 70 1/2. At age 90, you have a much higher RMD percentage and a much higher account value that will equate to a higher tax burden for the rest of your life. That’s why you now want to consider converting IRA money to Roth IRA even if it’s a little bit each year. As you look toward the year ahead, take this tax season to get your ducks in a row. Think about how your taxes might change for the next tax year and before you file in 2019 for the new tax plan. When you take the time to think about your future and take the time to strategize, you’ll put yourself in the best position possible. You’ll live a thought-out retirement, perhaps the retirement you’ve dreamed about, all while reducing your tax burden. –Gary Mattson

that could later be used for travel or similar expenses. How is this behavior different than how you might behave during a non-tax relief year? If you’re in a higher tax bracket, you may want to harvest losses. Sell securities that performed the worst. Carry tax losses forward. Another thing to consider is moving money from an IRA to a Roth IRA. If you do not have earned income, you cannot contribute to a Roth IRA. However, you can convert money from an IRA to a Roth at any age if you pay the appropriate tax. A Roth IRA will never be taxed for growth. This eliminates any future income tax and capital gains. As an added bonus, you can pass it on, tax-free, to family members when you’re gone. That’s one less thing they have to worry about in the years to come. As you look at your current situation, say your IRA or 401(k) does well. You do not take withdrawals. Later in life, that could be a huge tax burden to you. An IRA with $500,000 at age 60 may become an IRA with $1.1 million at age

As the Republicans and the president finalize their tax relief plan, a lot of folks across the country want to know what it will mean for them. As it stands, it’s a front-loaded plan, meaning you’ll see the biggest benefit — that is to say relief — over the next few years. Then, as time goes on, those benefits will be reduced. This gives you a chance to prepare for the future, at least in terms of taxes. January is a great month to analyze the previous tax year. As you prepare for the new year, use the opportunity to go over 2017 taxes to see where you stand. It can inform you of where you need to go in the years ahead, including the 2018 tax year, which will introduce the new tax landscape. For instance, if you expect significant capital gains, 2018 is the year you want to take advantage of the associated higher tax deductions. Harvest the items that made money. Reinvest or hold these assets for future consumable purposes. This is income

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