TIPS FOR TAX SEASON Writer / Jill Griffith Photography Provided
Pursue tax-efficient investing. Investing should be focused on meeting your goals, not just on reducing taxes. But in some cases the two dovetail nicely. For example, interest (which may be subject to the federal alternative minimum tax, and state or local taxes) from municipal bonds is generally exempt from federal and state income tax if you are a resident of the state the bond is issued in. You could also sell underperforming stocks to offset realized gains.
Tax filing season is underway, and many working Hoosiers are already receiving their refunds. If you’ve found yourself instead with a tax bill and want to lower your taxes for 2020, now is the time to start planning. Jill Griffith, financial advisor and accredited asset management specialist with McAdams & Griffith Investment Management of Raymond James in Greenwood, suggests Make a generous charitable gift. If you won’t have sufficient discussing these potential money-saving options with your financial itemized deductions to exceed the increased standard deduction, and tax advisors. you may wish to bunch deductions by making a large charitable gift, equal to the total donations you would make over several Put pretax dollars to work. Flexible spending and health savings future years. This could help you take advantage of the ability to accounts, available during your employer’s open enrollment period, itemize this year, while in other years you would take the standard allow you to use pretax dollars to pay for qualified expenses. You deduction. can also use pretax retirement contributions to reduce your taxable income. April 15, 2020, is the last day to contribute to traditional Maximize education savings. Taxpayers in Indiana who and Roth IRAs for 2019. contribute to an Indiana 529 savings plan can get a credit of 20 percent of their contribution, or up to $1,000, as a tax credit. Fill in the blanks. Work with your financial advisor to make sure Investments in these accounts grow tax-free and withdrawals used all your cost-basis information is complete and accurate before for qualified educational expenses are also exempt from federal calculating losses and gains for tax-loss harvesting purposes. income tax. 18 / GREENWOOD MAGAZINE / MARCH 2020 / atGreenwood.com
