Core Insights - Tax planning is essential for middle-class taxpayers, as even small decisions can lead to significant financial losses each year [1] Group 1: Retirement Account Opportunities - Middle-class entrepreneurs often miss out on retirement account opportunities, which can result in substantial tax benefits; for instance, an individual earning $120,000 can contribute up to $23,000 into a Solo 401(k) and over $50,000 across all tax-advantaged accounts [2] - It is recommended to maintain separate business accounts, allocate 30% of income for taxes, collaborate with a knowledgeable CPA, and open retirement accounts promptly [2] Group 2: Roth IRA Misunderstandings - Many middle-class taxpayers fail to utilize Roth IRA opportunities effectively, which are crucial for building tax-free wealth in retirement; contributions are made with after-tax dollars, allowing investments to grow tax-free [4] - Common misconceptions about Roth IRAs include misunderstanding contribution limits, income thresholds, and withdrawal rules [4] - Taxpayers often treat Roth IRAs as savings accounts rather than investment accounts, which can hinder long-term gains; appropriate investment choices are vital for maximizing tax-free compounding benefits [5][6] Group 3: Common Tax Return Errors - Common errors reported by the IRS on individual tax returns include mathematical mistakes, incorrect or missing social security numbers, and missing signatures on tax forms [6]

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If you can save, you might wonder how your balance compares with others your age. Savings vary by age, financial situation, and goals, and generally rise over time. Federal Reserve data from 2022 shows median bank balances of $5,400 for people under 35 and $13,400 for those 65-74.With the $5,400 in the bank, these amounts total $39,200. Additionally, this age group has a median retirement account balance of $18,880. Regardless of these numbers, it’s important to note that there’s no universally correct amou ...

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