Can you believe it's almost tax time? In the blink of an eye, we are already finding at the introductory deadline for filing our 2009 income taxes. For those of you who have been proactive in terms of tax planning, this is when it all pays off. You have already been in touch with your tax advisors and have gone through and implemented all the thorough operation steps to minimize your 2009 tax liability. For others who have not been proactive in planning ahead, now is the time to stop procrastinating. With April 15th knocking at the door, now is your last occasion to take some time and work on ways to minimize your tax bill for the 2009 year.
If you are reading this article, then think this as your first step in your last-minute tax saving strategy. Most of you may be familiar with the fact that you can still make contributions to your individual relinquishment catalogue (Ira) now and take a deduction on your 2009 tax return. For example, you can still contribute ,000 to your Ira catalogue and as long as you prescribe that to be 2009 contributions, you may be able to save ,250 in taxes on April 15th assuming you are in the 25% tax bracket. The benefit of this strategy is that in addition to saving ,250 in taxes (versus paying it to the Irs); you now also have an additional ,000 in your relinquishment catalogue that can spend tax free until distribution time in the future.
2010 Tax Brackets
Now let's take this thought to another level and talk about the Sep. The Sep, also known as Simplified worker Pension plan, is what I like to refer to as an Ira on steroids. It has both the current tax savings and the tax deferral benefits of the Ira except it is exponentially more powerful. With a Sep, the manager can contribute up to ,000, or 25% of the employee's salary, on profit of an worker per year. Accordingly, the Sep plan is a great alternative to an Ira for a self-employed person or a small enterprise owner. The best part of the Sep is that you have until the extended due date of the tax return to set-up and fund the Sep and still be able to take a deduction for the 2009 year. Here is an example of how this works: Tyler, who owns a sign company, just realized that he is finding at paying a hefty tax bill to the Irs because of all the money he made in his enterprise in 2009. This is the first time he is in the 35% tax bracket and he truly wants to decrease his tax bill. Tyler meets with his tax consultant and determines that he can set up a Sep plan in his business. Before Tyler files his 2009 tax return on October 15, 2010, his sign enterprise makes a gift of ,000 on his profit into the Sep. Tyler's enterprise then takes a ,000 corresponding deduction and results in ,150 of tax savings for 2009. Here are the benefits that were achieved in this strategy: 1) Tyler was able to save ,150 immediately that would otherwise be lost to taxes, 2) Tyler was able to potentially decrease his allinclusive taxes if the Sep gift deduction lowered him to another income tax bracket, and 3) Tyler now has ,000 in his Sep catalogue that can spend in tax sufficient assets because he pays no taxes on income or gain from those investments until he withdraws them at retirement.
A Sep is easy to set-up, cost sufficient to maintain, and can be utilized to spend in both primary and alternative assets. As you can see, the Sep is a grand tax and relinquishment planning tool that can still be implemented to save tax dollars for the 2009 year. So what are you waiting for? Speak to a grand tax consultant to start saving some requisite taxes and take control of your wealth building!
There is Still Time to Save essential Taxes For 2009 With an Sep
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