- If you aren't currently fully funding your 401(k) account, consider increasing your contributions in 2011. The maximum contribution allowed in 2011 is $16,500 plus $5,500 for those 50 and older. Beyond the benefits of decreasing your taxable income, many employers are beginning to reinstate 401(k) matching programs which were suspended during the recession.
- Similarly, if you qualify to make an IRA contribution, you may max out your contribution to your Roth or Traditional IRA. Unlike a 401(k) contribution, this money may be contributed any time before April 15, 2011 and still be claimed on your 2010 tax return. The maximum you can contribute for both 2010 an 2011 is $5,000 with an additional $1,000 allowed for those 50 and over. This contribution can be made on behalf of yourself as well as any non-working spouse. If you have any questions regarding your eligibility to make this contribution, please contact our office prior to making any contributions.
- Lastly, many employers allow employees to contribution to flexible spending accounts on a pretax basis. These accounts may be offered for health care, transportation, or child care expenses and the maximum allowed varies by employer. Open enrollment is typically the only time to make changes to your plan and that is usually in November. However, you may be able to make changes if you have experienced a "qualifying life event," such as a marriage or divorce, a new child, a change in your employment or you go on family medical leave. These plans can help to lower your taxable income and are a great way to lower your tax liability.
All information presented above is generic, if you would like to know how this may be applied to your specific situation please give us a call at 303-792-3020 or reply directly to this email. Additional resources are always available at our website, www.ywmcpa.com.
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