7 Retirement Planning Strategies to Report on Your Taxes

Posted by Madison on April 11, 2011

All year long, we discuss various retirement planning topics that will have an impact on your taxes. Of course, once tax time rolls around, it’s easy to forget why we did something the way we did, or what we were trying to achieve.

Let’s walk through the various retirement tax tips from last year and how you need to handle each one on your taxes.

Retirement Planning Strategies and Taxes

  1. Roth Conversion Strategy to Minimize Taxes. If you used this tax minimizing strategy during 2010, it’s time to revisit each conversion and determine which IRAs to recharacterize.
  2. Roth IRA Conversion Strategy to Avoid Taxes. If you used this strategy to eliminate the pro-rata tax treatment don’t forget to report the basis in your IRA as 100% to get the conversion tax free.
  3. When Should You Pay Taxes on Your 2010 Roth Conversion? Don’t forget, if you did a Roth conversion in 2010, you get to pick if you want to include your entire Roth conversion in your 2010 income or spread it out in 2011 and 2012 depending on when you’ll be in lower tax brackets.
  4. Retirement Saver’s Tax Credit. Claim the extra special bonus for contributing to a retirement plan. It’s worth up to 50% of the first $2,000 you contribute if you qualify.
  5. How to Take a Loss on an IRA. Contrary to popular belief, you actually can claim a loss on an IRA when certain situations align themselves.
  6. File an Extension to Lower Your Tax Bill. You can file an extension to extend the tax deadline to contribute to a Solo 401k if you’ll have extra income in the next few months to contribute.
  7. Unconventional Roth IRA Strategy to Lower Tax Bill. I still use this smoothing strategy each year to optimize the taxes on our retirement accounts. If last year turned out to be a higher tax year than you are planning for this year, you can move some of the money in tax free accounts to tax deferred accounts to soften the overall tax hit.

Did you take advantage of any of these strategies during the year? How did it turn out?



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