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Tax Deduction Consulting: 401(k) Deductions Peoria AZ

The 401(k) plan is named after a section in the IRS codes. It is a type of retirement plan that is established for employees. It allows them to save a certain portion of their income in a plan that is designed to produce earnings while at the same time deferring a portion of the current tax obligation. The word deferring is used because the tax on the earnings will be paid eventually.

Mr. Jeffrey D. Carter (RFC®), CSA, LUTCF
(623) 933-9500
10451 W. Palmeras Drive
Sun City, AZ
Company
Smart Financial Strategies, Inc.
Qualifications
Years of Experience: 22
Membership
IARFC, SCSA, NAIFA
Services
Invoice, Estate Planning, Trustee Service, Retirement Planning, Medicaid Planning, Tax Planning, Seminars Work, CD Banking, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Charitable Planning, Charitable Foundations, Asset Protection, Compensation Plans

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H&R Block
(623) 334-9866
7549 W CACTUS rd STE 110
PEORIA, AZ

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H&R Block
(623) 825-2871
20255 N LAKE PLEASANT hwy
PEORIA, AZ

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H&R Block
(623) 933-6912
10753 GRAND Ave
SUN CITY, AZ

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H&R Block
(623) 451-0671
28455 N VISTANCIA BLVD
PEORIA, AZ

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Liberty Tax Service
(866) 871-1040
8411 W Thunderbird Rd
Peoria, AZ

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Liberty Tax Service
(866) 871-1040
8940 W Bell Rd # 102
Peoria, AZ

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Liberty Tax Service
(623) 792-1140
8940 W. Bell Rd. Ste B102
Peoria, AZ
 
Beck Tax Works
(623) 566-2213
8247 W. Cielo Grande Ave
Peoria, AZ
 
Sun City Home Tax Svc
(623) 974-6036
14656 N Del Webb Blvd
Sun City, AZ

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Tax Deduction Consulting: 401(k) Deductions

401(K) IRS Deductions

The 401(K) Retirement plan is a method established by the IRS that allows an employee to save for retirement while at the same time deferring his tax obligation to a later date. Where is this deduction taken on your tax forms?

The 401(k) plan is named after a section in the IRS codes. It is a type of retirement plan that is established for employees. It allows them to save a certain portion of their income in a plan that is designed to produce earnings while at the same time deferring a portion of the current tax obligation. The word deferring is used because the tax on the earnings will be paid eventually. The idea behind the 401(K) is that after retirement age, earning will be reduced and deductions higher and this would be a better time to assume the tax obligation than at the current time.

The amount of income that can be deposited to the 401(k) plan in any given year is limited. The limit for the 2007 tax year is $15,500. This might be subject to an additional limit imposed by the company that administers the plan. Most tax experts advise you to max out your contributions whenever possible. This indicates the value of the 401(K) plan in the eyes of most tax experts.

The reason for this is that the amount of the contribution is not taken as a deduction on your tax forms. It does not even appear on your form W-2 as taxable income. For example, if you earn $50,000 in actual earnings for the year, and commit the maximum allowable amount to your 401(k), your W-2 will indicate only $34,500 of taxable earnings. This will result in a substantial reduction in tax obligation even before any other deductions or credits are applied.

The $15,500 will be invested in various ways while in your 401(k) and will produce earnings. These earnings will not be subject to tax either until they are withdrawn after retirement. The 401(k) plan has only a few drawbacks and they mostly involve withdrawing of the funds before retirement age. It is possib...

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