How To Reduce Taxes

[vc_row][vc_column][vc_column_text]Tax planning doesn’t just involve reducing your current year’s tax to minimum amount possible.  Tax planning involves keep your accumulated earnings and wealth in a tax efficient manner.  The US tax code is designed to tax earnings at accelerated rates as income rises.  Our job as tax advisers is to minimize the tax liability on a taxpayer’s earnings so they can accumulated wealth efficiently over their lifetime.  Here are some helpful hints that you may wish to speak with us about:

Switch to a Roth 401(k).

Tax planning for previous generations highly relied upon deferring revenue into the future.  The logic behind this was tax rates would be lower during retirement.  Unfortunately, the calculation of taxable income has drastically changed over 30 years.  Unlike the regular 401(k), you don’t get a tax break when your money goes into a Roth 401(k). On the other hand, money coming out of a Roth 401(k) in retirement will be tax-free.  This will give you an alternate pool of retirement funds you can draw tax free.  Let’s speak about this when you have a moment.

Don’t use cash when making donations.

Consider giving appreciated investments instead of cash when giving to charity. Doing so increases the tax savings of your generosity. Qualifying taxpayers’ charitable deduction is the fair market value of the securities on the date of the gift, not the amount you paid for the investment, and you never have to pay tax on the profit. However, don’t donate investments that lost money.  Call us for more information on this particular issue.

Use a Roth IRA to save for college.

As qualified taxpayers can withdraw contributions tax-free and penalty-free, the account can serve as a tax-deferred college-savings plan if used properly.  Let us show how it is done.[/vc_column_text][/vc_column][/vc_row]