As April 15 came and went, many people had taxes on their mind, especially those who wrote a check to the IRS instead of receiving a refund.
Not planning ahead or forgetting common deductions can make tax time a painful time, but there are a few strategies you can use in the short-term and long-term, to help you save on your annual income tax return.
For the short-term (five years or less) consider:
Utilizing tax-deferred investments or savings vehicles, as these allow you the opportunity to pay taxes on your money only when you need it.
This type of investment or savings vehicle, such as a fixed-annuity, reduces your annual tax liabilities because you pay only when the money is withdrawn or otherwise distributed.
Saving for retirement has a couple great benefits, not only do you save for your future, but you get some tax deductions as well, since contributions made to 401(k)s or traditional IRAs are tax deductible. Catch-up contributions for 401(k)s and IRAs, which are an option for retirement savers who are 50 years and older, are tax deductible as well and allow those eligible retirement savers to contribute extra money in order to ‘catch-up? on their retirement savings.
The extra amount you’re allowed to contribute depends on what type of plan you have so check with a plan administrator for more information.
For the long-term (more than five years) consider:
Converting to a Roth IRA, now that the income restrictions have been lifted, allows almost anyone (no matter their income) to convert to this tax-free growth retirement savings vehicle.
Roth IRAs are considered a wise tax strategy because when you contribute you are taxed up front and if tax rates go up in the future, as they’re expected to do, paying at a lower rate today might be a significant money saving move.
This strategy works best when you’re further away from retirement and don’t anticipate needing the funds in your retirement account for several years.
Laddering your retirement accounts so the maturity date of tax-deferred savings or investment accounts (other than traditional retirement savings plans) pay out at different times can help you avoid a future tax bomb.
Accounts that are considered tax-deferred, such as fixed-annuities or municipal bonds, and tax-free accounts, such as Roth IRAs, both work to keep your annual taxable income to a minimum in retirement.
While tax time can be a taxing time, there are simple ways to reduce your annual liabilities. Keep track of your deductible items and look and see where reallocation can help reduce income taxes now and in the future.
David Boike owns Retirement Resources tax, mortgage, and financial consulting practice in Clarkston with his sons, D.J. Boike and Jake Boike. Call 877-732-5751.

Estate taxes may not be something you think about often, but lately they have been in the news due to an eleventh hour change of heart by the United States Congress. Trying to make sense of what was proposed to change and what Congress is now proposing in a new estate tax bill is important. The amount of taxes your estate has to pay upon your death could change depending on what politicians decide to do.
The Proposed Change
As of Jan. 1, 2010, estate taxes will be repealed for anyone who dies that year; this will mostly affect taxpayers with an estate worth more than $3.5 million who would have been subjected to estate taxes upon their death in years past.
An estate tax, also known as a death tax, affects the amount of money passed from an individual’s estate to their beneficiaries. If an individual dies in 2010, his heirs will sidestep the estate tax. Under the Economic Recovery Tax Act of 1981, there is no estate tax on property between spouses, and in 2001, according to the Economic Growth and Tax Relief Reconciliation Act, the amount of assets that a person can exclude from federal taxes is completely repealed in 2010.
If the proposed change is passed, estate taxes will be repealed for 2010 however, in 2011 the estate tax law reverts back to 2001 levels and individuals will have to pay up to 55 percent on all but the first $1 million of their estate. Also when estate taxes disappear in 2010 all estates will have to pay a 15 percent capital gains tax that they currently don’t have to pay. Unfortunately, this death tax relief is only beneficial to taxpayers who happen to pass away in 2010.
The New Estate Tax Bill:
On December 3rd, 2009, the House of Representatives passed an estate tax bill that would extend the 2009 estate tax level through 2010 and make the $3.5 million tax level for an individual and $7 million level for couples permanent. A 45 percent maximum tax rate has also been proposed by the Obama administration as part of the bill.
To explain what that means, if Congress does enact the new estate tax bill an individual could exclude the first $3.5 million of an inheritance and couples could exclude the first $7 million; under this bill individuals who receive an inheritance are taxed up to 45 percent on the inheritance if it is more than $3.5 million. This bill is now with the Senate.
If estate taxes are repealed in 2010, or if Congress decided to keep tax rates at their current level, you should consult a financial planner who offers estate planning services so you can determine how to best arrange and distribute your estate, minimizing the tax liabilities on your heirs.
Creating an estate plan can help ensure your heirs receive what you intend to leave them or, in the case estate taxes are not repealed, can help you reduce the amount of taxes your estate owes after your passing.
David Boike owns Retirement Resources tax, mortgage, and financial consulting practice in Clarkston with his sons, D.J. Boike and Jake Boike. Call 877-732-5751.

Too often, investors overlook some very important details when picking an investment vehicle or strategy. Skipping over important details can cost you in the long run, but by paying careful consideration to a few of the most commonly overlooked topics listed below, you can plan a more solid retirement future.
Look to the Past
Most likely, the average investor has looked at an account’s past performance; in fact, this is usually the first and sometimes the only thing many investors review. There seems to be a belief that if an account did well in the past it will do well now and going forward. This strategy does not always work. The Securities and Exchange Commission (SEC) now requires all risk based investment vehicles (‘securities?) to have the following wording included in the account prospectus: ‘Past performance is no guarantee of future results.? Not only should you consider what the investment has done, but the viability of the investment strategy for the future.
True Cost of Investing
More and more investors are starting to look at what costs are involved with a particular investment and are starting to ask better questions such as ‘What are they doing with my money?? and ‘What does this really cost me?? Investors are now doing more research on the ‘true cost? of investing and taking that into consideration, along with an investment’s exposure to risk. Doing your ‘homework? can save you money. Be sure to check out all investment options and the true cost for investing before taking action. You can’t go back once you’ve made a bad investment decision.
Time is a Factor
Consider your timeline toward retirement when choosing an investment. In a recent ‘Wall Street Journal? special report entitled ‘Rebuilding Your Nest Egg,? writer Dave Kansas said, ‘Figuring out how to deal with your retirement portfolio depends upon where you are in life. Time is perhaps the most important element in building or rebuilding a portfolio.? In financial planning terms, we call this ‘Life Stage Planning.? The concept is based on the fact that typically the younger an investor is, the more risk exposure they can handle, because they have more time on their side.
Consider your stage of life when deciding how much risk you can handle. Younger investors have more time on their side and should therefore be able to assume higher levels of risk to try to achieve higher rates of return. If you apply the rule of 100, an investor age 35 could have up to 65 percent of his portfolio invested in riskier vehicles.
By that same strategy, a 70 year-old investor should have no more than 30 percent of their portfolio in risky investments, and the rest preserved in safer money vehicles. The closer one gets to retirement, the lower the amount of risk they should accept. This will help minimize the negative impact of a market downturn
Have you taken time into consideration in your investment decisions? Are your accounts properly allocated to maximize your growth and preservation objectives? If you are not sure, consider talking with a qualified financial advisor who utilizes ‘Life Stage Planning? and keep time on your side!
David Boike owns Retirement Resources tax, mortgage, and financial consulting practice in Clarkston with his sons, D.J. Boike and Jake Boike. Call 877-732-5751.