The beginning of the year is a great time to start thinking about the things you can take advantage of to save money.
In this blog post we are going to help with your New Year's resolution (at least if saving money is part of your list).
Here are 3 things you can start doing now:.
1 -Get yourself a retirement plan
Financial gurus universally agree that a financial retirement plan like an IRA or 401(k) is a great way to save money and lower your tax bill.
Traditional IRAs and 401(k)s serve as a way to save for retirement and lower tax bills now. The savings occur because the money is deducted from your paycheck is considered pre-tax income.
Typically, you fund an IRA directly and then will write the amount off on your tax return. However, it’s important to note you pay income tax when you make a withdrawal after you retire.
A 401(k) allows you to contribute from your paycheck every pay period. Like the IRA, you pay income tax on the withdrawals.
Do not confuse traditional IRAs and 401(k)s with the Roth version of both. With a Roth account, your contributions are made with after-tax dollars and are tax-free upon withdrawal.
You should consult with a financial professional to see what account is best for you.
2 - Flexible spending accounts for healthcare and childcare
You can sign up for a flexible spending account to lower your taxes and pay for qualified healthcare or child expenses.
Here’s how flexible speeding account works:
You contribute the money from your paycheck (up to $2,650 for healthcare FSA and $5,000 for a child care FSA). Your pre-tax dollars can then pay for your health or child care expenses. In effect, you can reduce your income without having to pay taxes on the money you contribute.
However, you have to be careful with FSAs. If you don’t spend the money, you end up losing it in most cases.
3 - Commuter benefits
If your employer doesn’t offer commuter benefits, now is a great time to get them to do it. In January 2019, the maximum commuters can put aside for commuting costs each month is increasing to $265. Are you an employee? Let your employer know you want commuter benefits - click on the page here and we'll take care of the rest!
Commuter benefits allow commuters to save up to 40 percent in commuting costs for commutes on public transit, rideshares (Uber and Lyft) and qualified parking. The amount of money is set aside in your paycheck tax-free.
Commuter benefits is a great benefit for employers to add for employees. It directly impacts employees who are already paying for commutes and helps attract and retain employees. Employers benefit too because payroll taxes decrease with each employee who starts using the benefit.
If you want to learn more about commuter benefits, download our 101 Guide: