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The Chwast CPA Group, P.C.

Certified Public Accountants


445 Broad Hollow Road Suite CL-43, Melville, NY 11747


Phone: 631-424-5200 



July 2019

Time For A Tax Tune-Up

Time For A Tax Tune-Up

The dog days of summer are a great time to review your finances and make the adjustments needed to ensure a tax-efficient year. Here are some strategies you might consider to minimize taxes:

The IRS classifies many retirement plans as “qualified,” meaning there are certain tax advantages to investing in them. Contributions made to a 401(k), SIMPLE or Simplified Employee Pension (SEP) plan are taken from your check pre-tax, meaning they are tax-deferred. If, for example, you’re in the 32% combined income bracket, you pay $320 of income tax for every $1,000 earned and not contributed to the plan. Same goes for a traditional IRA if you qualify by income. And potential growth is also tax-deferred in all of these retirement plans.

If you have a Health Savings Account and you don’t max contributions, you’re missing a good deal. HSA contributions, potential growth and withdrawals made for qualified medical expenses are tax-free. You can continue to take distributions from this triple-tax-free savings vehicle in retirement, too.

If you are retired and drawing income from multiple sources, you’ll want to do so in the most tax-efficient way. As long as you keep in mind that distributions from qualified plans must begin by age 70 1/2, it often makes sense to first withdraw money from taxable investments and accounts in order to let money in qualified plans continue to potentially build tax-free. Incidentally, a Roth IRA doesn’t require minimum distributions, so you can let that grow as long as you want.

You can’t deduct 529 plan contributions on your federal return, but many states let you deduct them on state returns. On either level, earnings grow tax-deferred and withdrawals made to pay qualified education expenses are tax-free. If you’re considering buying a first home, mortgage interest and real estate taxes are deductible up to certain limits.


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