Posted by Franklin said that taxes and death are two major things that cannot escape in life.The huge cost at the end of the year is also a key point for provincial taxes. We have compiled a few tips for you to use tax policies to legally save taxes!
Tip XNUMX: Delay income
It is the end of the year, and everyone has an estimate of all the income.
The first step we need to do is to calculate this year's personal income, including stock income, capital gains, and so on.
The tax bracket in the United States in 2017 is divided into 7 levels according to the income that should be taxed (as shown below), which are: 10%, 15%, 25%, 28%, 33%, 35%, 39.6%.
For singles, the key demarcation points for personal income tax rates are: $9,325, $37,950, $91,900, $191,650, $416,700, $418,400 and more than $418,400.
If the couple file tax returns together, the key cutoff points for tax rates are: $18,650, $75,900, $153,100, $233,350, $416,700, $470,700 and more than $470,700.
If the income of you and your partner happens to be near the cutoff point, tax planning is particularly important for your family.
If your income at the end of the next year will push you to a higher tax rate range, you can consider deferring your income to next year instead of showing it on this year's tax form.For example, if you intend to sell your personal assets or real estate at the end of the year, the profit will push you into a higher tax rate range. You may as well wait until the beginning of 2018 before you sell.Similarly, if there are profitable stocks, if you think the market is not bad, you might as well wait until 2018 to sell them.So the capital gain is 2018.
Specific operation:
- Individual business people, recharge their advertising accounts in advance or pay in advance
- Sales practitioners spend in advance to increase inventory for the next year
- For long-term planning, please refer to Tip Three
of course,The premise of deferring income is that you think your tax rate next year will be lower than this year.
Tip XNUMX: Make full use of capital losses and minimize capital gains
By the same token, another important tactic for tax planning at the end of the year is "loss harvesting".
If you lose money by buying stocks this year, you can make full use of this loss to minimize the total amount of capital gains.Selling a loss-making investment, the loss can be used for tax deduction, thereby helping to reduce your tax burden.If your loss is more than your profit, you can have up to 3000 yuan to deduct other income.If your loss exceeds the profit by more than 3000 yuan, you can continue to use it next year.This part of the loss can be used year after year as long as you are alive.Please be sure to check the personal investment account information to understand the investment status.
Tip XNUMX: Increase investment in retirement accounts and reduce taxable income
Another common way to save taxes is throughSave money in a retirement account to reduce taxable income.
Depositing $5000 in the retirement account is equivalent to a reduction of $5000 in personal taxable income.Common retirement accounts includeTraditional IRA, 401(K)and so on.The advantage of this type of account is not only the amount deposited can be deducted, but also the interest, dividends and investment income from the deposit in the account can be deferred for taxation., Only when you receive it at the prescribed age, the account funds are considered income and you need to declare personal income tax.
But please note that there is a maximum limit for the amount of money deposited into the account. In 2017, the traditional 401(k) quota is $18,000, and the traditional IRA quota is$ 5,500.On the other hand, if you intend to convert a traditional IRA to a Roth IRA and you happen to have less income and a low tax rate in 2017, you can use this opportunity to complete the conversion before the end of the year. When you file your tax return on April 4 of the following year, the part of the conversion will be required. Included in the 15 income tax return.There is no income limit for converting traditional IRA to Roth IRA, and there is no limit on how much you can convert. You can convert 2017 or 10.But it should be understood that there are stricter conditions for opening a Roth IRA.If your AGI in 5 is between 2017 thousand and 18 thousand (joint tax declaration by husband and wife), there are many restrictions on opening a Roth IRA, and you cannot open a Roth IRA if it exceeds 6 thousand.Roth IRA conversion is very suitable for people with high tax rates in the future.
If you convert a 10 IRA into a Roth IRA, assuming a 25% tax rate, you will have to pay $25,000 in tax, but in return you will never have to pay tax in the future.Assuming an annual growth rate of 6%, 40 will become 10 million in 102 years. This 102 million does not need to pay a penny of income tax. The price you pay is only $25,000 in tax today.And Roth IRA does not have a requirement to start withdrawing money at the age of 70 and a half.Regarding 401 and IRA, if you want to know more, you can communicate by leaving a message in this article.
Tip XNUMX: Charitable gifts
Many enthusiastic people will donate to churches, hospitals, schools and other charities at the end of the year. According to IRS regulations, charitable gifts can be tax deductible, and the tax deduction of cash and in-kind gifts can reach 50% of AGI, and stocks, funds and other securities can be deducted. The tax amount is 30% of AGI. If your gift in that year exceeds the AGI tax deduction limit, it can be deferred for 5 years.You can donate stocks and real estate that have risen in price, so that the market value of the rising stocks or real estate can be calculated without paying the capital gains of these assets.
Tip XNUMX: Tax-free gift
Tax-free gifts can maximize personal tax benefits while providing financial support to family members. In 2017,The tax exemption limit for personal gifts is $14,000, and if the couples donate jointly, it is $28,000.If the amount is less than or equal to this amount, there is no need to declare or pay gift tax. If the amount is greater than this amount, you need to fill in Form 709 to declare and pay gift tax.If you did not pay the gift tax that year, it will be deducted from the lifetime gift of $549 million per person in the future.If your annual gift amount is less than the annual gift exemption amount, it will not occupy a lifetime gift amount of 549 million.
It should be noted that this refers specifically to citizens and green card holders.Whether the gift is taxable depends on four factors:
- The identity of the donor
- The identity of the recipient
- Type of property
- Where the property is located, if the donor is a non-resident foreigner, the annual tax allowance for the gift will be different.
It should be noted that the gift tax is paid by the person who gives the money, and the person who receives the money does not have to pay it.If you receive a gift from abroad, if the amount is greater than US$10, you need to declare it, but you do not need to pay taxes.The United States has basically no restrictions on the in and out of funds, and foreign funds are more welcome to flow into the United States. However, after 911/XNUMX, to prevent the inflow of overseas money or the money going overseas for terrorist activities, money laundering, and tax evasion, funds exceeding a certain amount are treated. Mobility requires parties to declare, but declarations do not necessarily have to pay taxes.
There are two main ways to use the annual gift exemption:
One, is to open a guardian account for the child
The second is to buy life insurance for yourself, appoint your children as beneficiaries, or pay to buy life insurance for your children.
To sum up, allocating expenses in advance, allocating investment and retirement accounts, allocating assets and buying life insurance is an effective plan that conforms to the long-term interests of investors.
