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taxes Archives - Sharkey, Howes & Javer

Tax Smarts

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As we settle into the new year and resolutions roll around once again, there’s a good chance that “figure out my finances” makes its way back to the top of the list. Something that you could consider doing differently this year is proactive tax planning instead of reactive tax planning. Here are four ways you could get ahead of your taxes in 2017:

1. Take the Surprise Out of Taxes
If you have a close estimate of the income you will receive in 2017, print a two-page 1040 form and start working through a very basic tax calculation. You can print other forms as needed depending on the complexity of your tax return. Estimate income and deductions to the best of your ability. Compare the estimated Federal tax liability with your current Federal withholding to determine if you are over- or under-withholding, and make proactive adjustments at the beginning of the year. We suggest the same exercise with your state tax forms. Note: Although the 2017 1040 is not yet available, the 2016 1040 will give you a useable guideline.

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Should I Consider a Partial Roth Conversion?

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In a world filled with IRAs, 401(k)s, and brokerage accounts, what is the appeal of a Roth IRA? Unlike a traditional IRA, when funds are withdrawn from a Roth IRA account they are tax free because taxes have already been paid on the money at the time contributions were made. With the traditional IRA, funds are contributed pre-tax so when money is withdrawn from the account it is taxable at ordinary income rates. So the question becomes, pay tax now or later?

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A Look at Tax Rates By State: Where Does Colorado Rank?

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With tax day quickly approaching, it’s interesting to look at where Colorado tax rates fall in comparison to the rest of the United States. WalletHub* recently performed an interesting analysis of each state’s tax rates.

They found that Colorado falls into the bottom 25% of all fifty states with a median tax rate of 9.41%, compared to the highest taxed state, Illinois, with a 14.54% tax rate. According to their findings, living in Colorado could save the average family $700 a year in taxes.

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How to Responsibly Handle Your Tax Refund

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It’s tax season and for almost 80% of Americans, (source) a refund check may be in the mail. It’s easy to view a tax refund as free or easy money, but remember you worked hard to earn that money. Using your tax refund responsibly now can assist in reaching your financial goals in the future.

Here are 8 suggestions for using your tax refund responsibly:

Top Off Your Emergency Fund

An emergency fund is an important part of any smart budget. If your emergency fund has been depleted recently, think about using your tax refund to top it off. Depending on the circumstances, we typically recommend having an emergency fund that covers three to six months of basic living expenses.

Build Your Investment Portfolio

Consider using your tax refund to add to your investment portfolio. Talk to your Certified Financial Planner® about how to allocate your tax refund dollars amongst your investments.

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