The Importance of Tax Shelters

Posted on: April 2nd, 2010 by

Rockville CPA - IRSWith the economy in the state that it is in and Americans seeing a sea of red figures on their investment portfolios, we tend to put our tax management issues on the back burner and focus on the here and now.  That may seem like the best option, but any good CPA will tell you that tax shelters aren’t as important as they were before, they are more important.  The reasons are quite simple:

1) They are sheltered from creditors as well as taxes. Avoiding bankruptcy is always favorable, and having money in shelters will help strengthen your hand if you have to negotiate with lenders at any point.

2) Taxes are likely to rise. Rising taxes will make these shelters much more valuable.

3) Money in tax shelters like IRAs or 401(k)s doesn’t count against you in the federal formula when your children are applying for financial aid for college.  Parents are expected to contribute a certain percentage of their assets to their child’s education, but money in retirement accounts is ultimately invisible to the formula.

With these three things in mind, you should consider speaking to a financial planner about how to invest your income and protect what little you may have left even if you don’t have a lot of extra cash lying around.  Tax shelters will protect your money in the long run.



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