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End of Year Retirement Tips

Self-Employed End of Year Retirement Tips

Contributing to your retirement account is one of the best ways to reduce your taxable income and increase your potential tax refund. While some retirement accounts have year-end deadlines for contributions and required distributions, others give you extra time to make deposits that will count toward tax year 2021. Check out these end of year moves that will qualify you for tax savings!

For Those Who Work As An Employee 

Make 401(k) contributions 

There may be no better investment than tax-deferred retirement accounts. They can grow to a substantial sum because the interest compounds over time, free of taxes. If you’re able, max out your 401(k) contribution before year-end ($19,500 maximum allowed for 2021, $26,000 if you are age 50 or over = the $19,500 regular limit for the tax year plus the $6,500 catch-up limit for 2021), so that you can lower your taxable income and make the most of your retirement.

Use the time for IRA contributions

In addition to your 401(k), consider contributing to an Individual Retirement Account (IRA), as well. You have until April 18, 2022 to make IRA contributions for 2021 and make an impact on your 2021 taxes. However, the sooner you get your money into the account, the sooner it has the potential to start growing. 

Making tax-deductible contributions also reduces your taxable income for the 2021 tax year. You can contribute a maximum of $6,000 to an IRA for 2021, plus an extra $1,000 if you are 50 or older.

For Those Who Are Self-Employed 

Simplified Employee Pension (SEP) IRA 

If you are self-employed, you can contribute to a Simplified Employee Pension (SEP) IRA as much as the lesser of 25% of your net earnings or up to $58,000 for 2021, and your contributions may be tax-deductible as a business expense if you file and extension by April 18 and contribute before the October 15th extension deadline.

For Those Who Work as an Employee or Self-Employed

Qualify for the Saver’s Credit 

There’s another plus to contributing to your retirement. You may automatically be eligible for the Saver’s Credit worth up to $1,000 ($2,000 married filing jointly) just for contributing to your retirement account. The Savers Credit can be claimed for your contributions to a 401k, 403(b), 457 plan, a Simple IRA or a SEP IRA. Your contributions to a traditional IRA or a Roth IRA are also eligible for the Savers Credit.

We’ve Got You Covered

Don’t worry about knowing these tax rules. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for based on your answers

If you have questions, you can connect live via a one-way video to a TurboTax Live tax expert to get help along the way or get matched to a dedicated tax expert who is experienced in your unique situation and can do your taxes from start to finish with TurboTax Live Full Service. TurboTax Live tax experts are available, year-round in English and Spanish, and can review, sign, and file your tax return or you can just hand your taxes over—all from the comfort of your home. 

If you are Self Employed, you can use QuickBooks Self-Employed to easily track your business income, expenses, mileage, capture your receipts, and seamlessly import the information to TurboTax Self-Employed making tax time a breeze.

Comments (1) Leave your comment

  1. Great blog, I would like to add that In case your employer is not offering you a retirement plan, you can make a contribution to a traditional individual retirement account or a Roth IRA. The former would be offering a tax deduction for the year the contribution is made, but both will offer tax-deferred gains..Thanks again for this timely read

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