Jeanette A. Tucker | 11/2/2004 10:14:32 PM
"Although the end of the year 2004 is rapidly approaching, you still have time to take advantage of some great tax breaks and let your employer pick up the tab for expenses," says LSU AgCenter family economics professor Dr. Jeanette Tucker.
Tax-saving strategies include:
• Check the balance of your flexible spending accounts (FSA) at work. These voluntary accounts, provided by many employers, allow workers to set aside pre-tax dollars to pay for health care expenses not covered by your health insurance plan. In some cases, they also can be applied to child care or dependent care expenses.
Any money not spent at the end of the plan’s year is lost, so be sure to use it. Check to see if your plan’s year ends on December 31 or at another time. If you have questions about your flexible spending account, check with your benefits coordinator for details.
• Make doctor and dental appointments for you and your family to use up FSA money or to obtain maximum insurance reimbursements (if you have met your medical deductible this year and may not do so next year). Now may be time for new eyeglasses, your annual mammogram or a physical.
• Max out your 401(k) retirement savings. Always plan to contribute at least enough to your plan to take full advantage of any employer match. If your regular contributions have not been enough to obtain a full match, contact your payroll office to increase your contributions between now and year’s end.
• Open a Roth or a traditional IRA as soon as possible. Traditional IRAs allow individuals to save for retirement on a tax-deferred basis. Earnings on Roth IRAs grow tax deferred, and withdrawals may be tax free. In 2005, individuals may save for retirement by contributing up to $3,000 per year in individual accounts. In addition, people age 50 and older can contribute an additional $500 per year catch-up amount.
• If you are self-employed, consider opening a Keogh tax-deferred retirement savings plan. Self-employed persons may contribute as much as 100 percent of their net self-employment income, up to a maximum of $40,000 per year. These accounts are often used as a catch-up strategy by older business owners who have put off setting up a retirement plan. They must be opened by December 31, although they can be funded later.
For information on related family and consumer topics in family, housing and nutrition, visit the FCS Web site at http://www.lsuagcenter.com/Inst/Extension/Departments/fcs/. For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.