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Some strategies that can help alleviate your tax burden at any time of year are as follows:
📌 Deferring income: During high income (high tax) years, consider deferring that money into lower tax or non-working years in the future, such as retirement. This could be done by utilizing a non-qualified deferred compensation plan through your employer, if available.
📌 Accelerating income: When you experience lower income (thus low tax) years, consider picking up additional hours to accelerate income, or sell a business, real estate, investments or do a Roth conversion.
📌 Taking RMDs: Taxes that can ensue with mounting RMDs over time have the potential to push you into a higher tax bracket. Strategies such as Roth conversions, taking RMDs early and gifting RMDs to charity are just a few ways to help mitigate what goes to Uncle Sam.
📌 Tax-loss harvesting: In times of volatility, you can offset capital gains by selling shares of assets that will generate losses. However, you must be apprised of the rules and instances when this strategy is most beneficial.
📌 Bunching: This strategy can be employed to maximize itemized deductions by “bunching” several expenses into one year, which increases your chances of going above the standard deduction amount and accruing more tax savings.
You have the ability to gain more tax control over your hard-earned dollars, despite the many complexities of today’s tax rules. All you need is a forward-focused tax roadmap to help you get there.