What financial, business, or life priorities should you address for the coming year? Here are a few ideas:
Increase your contributions to retirement plans. In 2020, the limit for a Roth or traditional individual retirement account remains at $6,000 ($7,000 for “catch-up” contributions). Your modified adjusted gross income (MAGI) may affect how much you can put into a Roth IRA: singles and heads of household with MAGI above $139,000 and joint filers with MAGI above $206,000 cannot make 2020 Roth contributions.1
Withdrawals from traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. To qualify for tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½.
Make a charitable gift. Deductions can be tax deductible, provided you itemize deductions. All contributions need to be demonstrated by a bank record, payroll deduction record, credit card statement, or written communication from the charity with the date and amount. The I.R.S. does not equate a pledge with a donation. If you pledge $2,000 to a charity, but end up gifting $500, you ...
