When you legally reduce what you owe to the IRS, you’ll be able to utilize more income for achieving your financial goals. Saving money for education, medical expenses, or even retirement can provide much-needed tax breaks.
Watch the video to learn more about Tax Planning, then test your knowledge at the end of the lesson.
Out of the following, what type of retirement savings plan offers tax-free withdrawals?
A. Roth IRA
B. Traditional IRA
C. 401(k)
D. 403(b)
With a 529 savings plan, contributions are tax-deductible and withdrawals are tax-free if used for qualifying expenses.
A. True
B. False
Medical savings accounts can lower your tax liability. One type of medical savings account is:
A. Escrow Holding Account
B. Certificate of Deposit
C. Flexible Spending Account
D. Coverdell ESA