Financial Matters: Addressing tax issues

PORTSMOUTH, Va. (WAVY) - Registered Associate with BayPort Financial, Stephanie Bard was on the show to address those tax issues.

Four ways to address tax issues :

• Tax free (Roth, Municipal Bonds)
• Tax deductible (Deductible Traditional IRA, 529 college savings plan)
• Tax deferred (Traditional IRA, annuities)
• Tax efficient (match gain with losses)

Tax Free
1. Roth IRAs
i. Non- deductible contributions
ii. Tax free distributions, if all rules are followed

2. Municipal Bonds
i. Tax-free interest
1. Unless hit alternative minimum tax limit (AMT)
a. Cannot derive 100% of income from muni bonds without being taxed.
Tax Deductible

3. Deductible Traditional IRA
i. Reduces income by contribution

4. 529 College Plan
i. A Virginia resident may deduct contributions of up to $4,000 from state taxable income.
ii. If more than $4,000 is contributed, remainder may be carried forward
Tax Deferred
1. Traditional IRA
i. Taxes are deferred until distribution

2. Annuities
i. IRA or non IRA
ii. IRA: follows rules of Traditional IRA
iii. Non-IRA: taxes are deferred on growth until distribution

Tax Efficient
1. Tax Harvesting
i. Match gains with losses
ii. An efficient way is through a separate managed account

For more information on saving smarter, stop by any of the 14 BayPort Credit Union locations across Hampton Roads or click her e to visit the website.