Written by Quianna Lewis; Collaboration with Susan Cassano, SMC Accounting & Tax Services, LLC
Effective tax planning is about using the right tools to minimize your tax burden and make your money work for you. Here’s a quick look at strategies to help you save more, from education savings to retirement and business planning.
Tax-Advantaged Accounts: Maximize Your Savings
529 Plans: Save for education with tax-free growth and withdrawals. In 2024, surplus funds can roll into a Roth IRA.
Roth IRAs: Enjoy tax-free growth and withdrawals in retirement. Use strategies like Roth conversions for tax savings.
HSAs: Contribute for triple tax benefits—deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.
Investment Strategies: Reduce Taxes on Your Portfolio
Income Shifting: Shift income to family members in lower tax brackets to lower your overall tax bill.
Tax-Loss Harvesting: Offset gains by selling investments at a loss, reducing taxable income.
Tax-Efficient Investing: Hold long-term investments in taxable accounts and place tax-inefficient assets in tax-advantaged accounts.
Retirement Strategies: Plan for the Future
Roth IRA Conversions: Gradually convert to Roth IRAs to reduce future taxes.
Roth IRA Ladder: Build a ladder for penalty-free withdrawals in early retirement.
Catch-Up Contributions: If 50 or older, catch up on retirement account contributions.
Charitable and Estate Planning: Save on Taxes While Giving
Donor-Advised Funds: Donate efficiently and get an immediate tax deduction.
Gift Assets: Gift up to $19,000 per year to reduce your estate taxes.
Trusts: Protect your assets and reduce estate taxes with trusts.
Real Estate and Business Taxes: Keep More from Your Investments
1031 Exchanges: Defer real estate gains by reinvesting proceeds into another property.
Business Deductions: Deduct home office, travel, and other business expenses. Consider SEP IRAs or Solo 401(k)s for greater retirement contributions.
Ongoing Review: Stay Proactive
Annual Review: Regularly adjust your tax strategies to stay aligned with your goals.
Track Income and Expenses: Use software or a professional to track deductions.
Stay Informed: Keep up with tax law changes to maximize savings.
How Does This Impact Your Estate Planning?
Tax planning isn’t just about lowering your current tax bill—it’s also about protecting your legacy for future generations. By using strategies like gifting, tax-efficient investing, and trusts, you can minimize estate taxes and ensure more of your wealth is passed on to loved ones. Ready to ensure your estate plan is tax-efficient and aligned with your goals? Contact us today to get started on a plan that works for your future.
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