If you are seeking to save more, here are a few ways to save.
Individual retirement accounts
An individual retirement account (IRA) is a way to save for retirement. IRAs can be funded with various options – to include stocks, bonds, funds, cash and more. For traditional IRAs, individuals may obtain a tax deduction on their tax returns and the money grows tax-deferred. For Roth IRAs, while individuals are unable to obtain a tax deduction, the money grows tax-free. For the 2019 tax year, you are able to stash $5,500 into both a traditional and Roth IRA. This amount increases if you are over the age of 50 years of age. For those who are older than 50, a contribution of $6,000 can be made into an individual retirement account. Keep in mind, you have until 4/15 to fund a traditional IRA for the tax year 2019. So there is still time to save!
A SEP IRA allows small business owners a way to save towards retirement. Contributions can be made at higher amounts than traditional IRAs. For the 2019 tax year, an employer can contribute 25% of compensation or up to $56,000 towards retirement. You also have until 4/15 to fund a SEP IRA.
The retirement credit is available to those who qualify. Individuals who save into a 401k plan or individual retirement account may be eligible for a credit from 10% to 50% of the amount saved. The amount can be taken on the tax return even if you take a deduction for the individual retirement account. The amount that qualifies for the credit is up to $4,000 (married filing jointly) or $2,000. However, the maximum credit amount is $2,000 (married filing jointly) or $1,000.
The Able account allows individuals with disabilities to save money into a tax-free account. While the money saved is not tax-deductible, some states will allow you to take as a state tax deduction. Individuals are able to use the account to pay for qualified disability expenses to include education, transportation, and more. Many people with disabilities may participate in benefit programs that prohibit these individuals from having large saving account balances and/or assets. The great thing about the Able account, the first $100,000 does not count against these limits.
School Expense Deduction
As you get a handle on your taxes, do not forget you can SAVE more money by taking the School Expense Deduction for the State of Louisiana. This is a deduction made available to parents/guardians who pay for tuition, fees, textbooks, and other fees throughout the year. For more information, you can follow me at @kemcents or visit washcpallc.com for more info!