It’s tax season – sorry, not a fun subject, we know. But we couldn’t resist this tax-themed trivia question that is a sure sign of the times.
What percent of 2021 tax returns were “e-filed” (or filed online, as opposed to on paper)? Click your answer below to find out!
Ready for the answer?
Out of 165,774,000 total tax returns, 152,089,000 were filed online, which means a whopping 92% of 2021 tax returns were e-filed.
Want to learn more about tax planning? Keep on reading!
From Roth conversions to estate planning tricks, there are plenty of moves you can make today to save on taxes and boost your savings.
1. Try Out Roth Conversions
Individuals pay ordinary income tax when converting a traditional IRA to a Roth IRA. Roth IRAs are taxed when you put money into the account, but are tax-free upon withdrawal in retirement.
But remember, the fair market value of the securities or cash becomes income for the year on the day the conversion is recorded. Basically, any money you convert is counted as money you earned that year. Depending on your income and tax bracket, this could help you save money in the long-term.
There is no longer an income limit on conversions, so anyone with IRAs can convert. Because it may push you into a higher income tax bracket, conversions should be discussed with a tax professional before you make any major moves.
Another bonus of Roth conversions? The earlier you convert, the longer the assets have to grow – so don’t wait too long!
(Want to learn more about Roth conversions? We’ve got you covered.)
2. Explore Municipal Bonds
Consider municipal bonds as a tax-free income possibility. Even if you aren’t in high tax brackets, a municipal bond gives you a low-risk option for earning a little more on your investments.
Bond rates are lower than they have been in a long time so this is definitely a strategy to lower taxable income and to diversify your fixed income portfolio. While this may not lead to higher income, it can still result in less overall volatility.