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Well, you know, it’s interesting. You can prepay some of those taxes like state, like property taxes where you can pay it this year and you get a deduction for this year even though it’s paid in part for next year. So you might want to prepay up to a year’s worth of taxes this year. Here’s something that’s really interesting I bet a lot of people missed. Charitable contributions. Now if you make local charitable contributions to your local church or synagogue or mosque or whatever it is you do. How about doing it by credit card? This way you get deduction. This year even though you don’t make the payment on the credit card. Till next year. Not to mention, the fact that you get some points.
One of the biggest things [also] are pensions and IRAs. There’s a special deal that came in this year . Where, if you convert your IRA, 401k, pension, SEP…. to a Roth IRA, all of that money out of that IRA is tax free for the rest of your life. You’ve got the government off your back.
Now there’s a disadvantage. When you convert you’ve got to pay taxes on the money and you might say, “Well why Sandy, why do I want to pay all these taxes?” Well the answer is tax rates are going up. And they’re going way up with a $14 trillion dollar deficit. Taxes may very well be on sale, so by converting you pay taxes now, but you avoid paying taxes at the higher rates for the rest of your life. And that’s known as a Roth IRA Conversion. Now I do want to emphasize one thing. There are some side effects here. Now it’s not like drug companies where they tell you side effects are blindness, or hearing or death, that’s my favorite side effect.
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