It's nearing the end of the year and while tax season is still a few months away, now is your last chance to make some changes to your yearly income. In an interview with NPR, senior editor at Kiplinger's Personal Finance Magazine, Mary Beth Franklin recommends maxing out your 401(k) to store some extra untaxed income.
She breaks down the reasoning:
What you contribute to the plan is excluded from your income, meaning a lower tax bill. It's also a good move in the long run in terms of building up savings.
For 2011, the maximum you can contribute to a 401(k) is $16,500, or up to $22,000 for those 50 or older.
That's not the only trick you can do, she also recommends changing the allowances on your W-4, doing a quick remodel to make your home more energy efficient, donating money to your family, and more. Find the full interview with more tips over on NPR. Photo by _e.t.
Ways to Cut Your Tax Bill Before 2011 Ends | NPR
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