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Tips for Paying Lower Taxes

Uncle Sam comes calling every year, and if you play your cards right throughout the year, you can lower your taxable income. Always maximize contributions to your 401k or IRA and take advantage of your employer’s flexible savings ac count or health savings account if they offer them. You can deduct mortgage interest and property taxes. Those who make less than $70,000 per year can write off some interest paid on student loans too.

Mortgage Rates Inch Up

Freddie Mac reported the 30-year fixed-rate mortgage averaged 2.90% in 2020, ticking up slightly from mid-September’s all-time low of 2.86%. Compared to a year earlier, mortgage rates have dropped more than 70 basis points, providing borrows significant savings on their monthly payments. For borrowers in the market for 15-year fixed-rate mortgages, they can find average rates as low as 2.40%.

Delaying Social Security Benefits

While you can begin claiming your Social Security benefits at the age of 62, waiting until 70 will increase your benefit by 24%, providing you with significantly more income. Older Americans are also enjoying a longer life expectancy, so waiting can also mean more money to care for your needs as you age. As you plan distributions from tax-deferred accounts, take into account that your Social Security can also be subject to federal income tax.

PPP Loan Update

The Paycheck Protection Program (PPP) doled out $525 billion in loans to 5.2 million borrowers, saving millions of jobs across the nation. Banks, which loaned their own money with the expectation the government would repay them, have been submitting applications for loan forgiveness to the Small Business Administration since August 10, 2020; but as of the end of September, 2020, none of the loans have been forgiven.