As the end of the year approaches, many people are looking for ways to make last-minute tax moves to save money on their returns in April. But the simplest way to cut your tax bill is to avoid procrastinating in the first place and getting one smart move done as soon as you possibly can.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about the value of getting money into IRAs, 401(k)s, and other retirement accounts as quickly as possible in 2014. Dan notes that while most people wait until the last minute to set money aside for retirement, putting money into IRAs and 401(k)s at your earliest opportunity avoids tax pitfalls. As Dan points out, one category of potentially high-tax situations involves investing in acquisition targets, and he uses Micron Technology (NASDAQ: MU ) and iRobot (NASDAQ: IRBT ) as examples of how owning shares outside a retirement account can be costly if takeover rumors become reality. Meanwhile, Dan also points to dividend stocks, using the example of Frontier Communications (NASDAQ: FTR ) and its recent acquisition of assets from AT&T (NYSE: T ) , to show the value of having high-yielding dividend stocks safely stowed in tax-deferred retirement accounts. Dan concludes that it makes sense to start as soon as you can when the New Year begins to make the most of your retirement accounts.
Be smart about your taxes for 2014
Knowing the tax advantages of retirement accounts is just one way you can cut your tax bill to Uncle Sam. In our brand-new special report "How You Can Fight Back Against Higher Taxes," The Motley Fool's tax experts run through what to watch out for in doing your tax planning this year. With its concrete advice on how to cut taxes for decades to come, you won't want to miss out. Click here to get your copy today -- it's absolutely free.