Savvy tips to increase your hard-earned money
Let’s talk about taxes – yes, the very word can send shivers down some spines or, for a few of us, trigger an unexpected enthusiasm for numbers and deadlines. 😀
Here’s a little secret between us…
Despite my deep dive into the world of personal finance and a knack for numbers, I entrust my tax affairs to the experts. 💫
Why?
Because my situation is quite complex as a dual citizen and frankly, it give me PEACE of mind to know they are accurately managing a time-consuming process for me. 🗂👀
However, this does NOT mean we should remain in the dark about our taxes!
🧰 Scroll down for TOP TIPS FOR USA, UK, AND CAN PEEPS!
Because even the most proficient accountants can overlook details accidentally, as happened a couple of years back with the solar panel tax credits for my US home 🏡 —a significant saving that I managed to identify before filing.
This prevented a valuable opportunity from slipping through the cracks…whew!
WHY TAX EFFICIENCY MATTERS:
In every corner of the 🌎 globe, regulators and tax bodies have approved investment vehicles and savings accounts with enticing tax advantages, all designed to promote a culture of saving and investing.
⚒️ These aren’t just perks; they’re powerful tools intended to AMPLIFY your financial well-being.
After all, tax efficiency is about more than just reducing your current or future tax bill—it’s a strategic approach to ensure every dollar you earn works harder for you.
By making informed decisions on where and how to invest or save your 💸 money, you’re not just saving on taxes. You’re setting the stage for a more secure and prosperous future for both you and your family.
HELPFUL REMINDERS:
So, as we inch closer to significant APRIL TAX DEADLINES in the USA (April 15th) and the UK (April 5th), I’ve distilled some essential REMINDERS. 📣
Feel free to JUMP straight to the section most relevant to YOU!
🇺🇸 TOP TIPS FOR US TAXPAYERS:
Remember that the deadline to file your personal federal tax return or requesting an extension is April 15th.
That said, requesting an extension grants additional time ⏰ to submit your return but does NOT extend the deadline for any payments owed. ✅ TOP REMINDER:
MAXIMIZE RETIREMENT CONTRIBUTIONS: There is still time for you to catch up on your 2023 contributions as per below!
💡 🇺🇸 INDIVIDUALS: ROTH & IRAs:
The 2023 contribution deadline for ROTH and Traditional IRAs is April 15th, 2024. You can tuck away up to $6,500 if you’re under 50 or $7,500 if you’re 50 or older.
HSAs:
The 2023 HSA limits range from $3,850 to $8,750, depending on your age and the type of coverage you have. So, you can also tuck this money away before the 15th, if you haven’t done so already.
💡 🇺🇸 SMALL BUSINESS OWNERS: SEP IRA (Simplified Employee Pension):
The 2023 contribution deadline for SEP IRAs is by the employer’s tax filing deadline (including extensions) in 2024.
💵 Contributions can range from 0% to 25% of compensation (adjusted for self-employment tax), with a cap of $66,000. Remember, tax filing and therefore SEP IRA contribution deadlines vary by business structure.
SIMPLE IRAs (Savings Incentive Match Plan for Employees):
In a nutshell these are IRAs that are eligible for BOTH employer and employee contributions, as such they have 2 contribution deadlines:
- Employee deferral contributions must be deposited into the employee’s account as soon as possible, but no later than 30 days after the month the deferral was made. This means for salary deferrals contributing towards the 2023 year, the contributions must be made by the employer into the employee’s SIMPLE IRA as soon as possible but no later than 30 days following the month the deferral was made.
- Employer contributions are due by the employer’s tax return deadline, including extensions. Therefore, for the 2023 year, employers can make their matching or nonelective contributions by their tax filing deadline in 2024. This means by April 15, 2024, or October 15, 2024, if an extension is filed.
💰For 2023, the employee contribution limit is $15,500, with a catch-up limit of $3,500 for those age 50 or older, bringing the total to $19,000 for eligible participants.
SOLO 401(k):
Contributions to your SOLO 401k can be made in two parts: as an employer (20-25% of net earnings from self-employment, depending on your biz structure) & employee contributions (up to 100% of earned income, with a maximum of $22,500 for those under 50, and an additional $7,500 catch-up contribution for those 50 and older in 2023).
💸 Please note that total contributions cannot exceed $66,000 or $73,500 (if 50 +).
The deadline for 2023 contributions to a Solo 401(k) is the business owner’s tax filing deadline in 2024, including extensions. This means contributions can be made until April 15, 2024, or October 15, 2024, if an extension is granted.
MAXIMIZE RETIREMENT CONTRIBUTIONS:
🇬🇧 TOP TIPS FOR UK TAXPAYERS:
There is still time for you to catch up on your 2023/24 TAX YEAR contributions as per below!
💡 🇬🇧 INDIVIDUALS: ISAs:
For the 2023/24 tax year, you can save up to £20,000 in an ISA, with the interest, dividends, and capital gains all tax-free. This is a fantastic way to grow your savings or investment pot without worrying about tax implications on your returns.
PENSIONS:
Contributions to your pension can provide SUPERB tax advantages! The annual allowance is usually £60,000 or 100% of your earnings, whichever is lower. That said, remember that the annual allowance is tapered (reduced) for higher earners. This basically means that your allowance is reduced by £1 for every £2 earned over £260k.
Moreover, the government helps top up your pension contributions through tax relief 💷 , effectively reducing the cost of your contribution. 👀 Additionally, consider making any unused pension contributions from the previous three years before the deadline.
💡🇬🇧 SMALL BUSINESS OWNERS:
The pension contribution rules for small business owners mirror those for individuals, with an added advantage for LIMITED companies. Pension contributions made by the company can be counted as allowable business expenses. Woot, woot!
This not only reduces the corporation tax but also enhances your retirement savings in a tax-efficient manner.
🇨🇦 TO MY CANADIAN FRIENDS:
While I may not be an expert on Canadian tax specifics, I’m aware that among my valued subscribers, there are several from the Great White North. A friendly reminder: your deadline for filing Canadian tax returns is April 30th.
In an effort to provide you with useful resources, I’ve unearthed a fantastic article filled with essential information and timely reminders to navigate this tax season with ease. Feel free to dive into it HERE.
🌟
Hope this email has served as a valuable guide and resource for you!
Remember, if you’re seeking more guidance or wish to explore how we can navigate these opportunities together, simply reach out to book a discovery call.
You can find the scheduling link HERE and/or below.
Cheers to health and wealth, friends! XOXO,
Anna
Ready to step into your financial power?
Explore our website to discover how we can collaborate, or get in touch directly HERE. For additional details, please see the information provided below.
Anna Orenstein-Cardona is a Financial Coach and NFEC-Certified Financial Educator (CFEI) who empowers organizations, small-business owners, and individuals to grow their money knowledge in fun and creative ways. She worked on Wall Street and in the City of London for over two-decades, before launching her financial education and coaching business, Wear Your Money Crown®.
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