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Reducing taxable income is important, as either your adjusted gross income or modified adjusted gross income is used to determine Roth IRA eligibility, Medicare part B and D premiums, various tax credits, financial subsidies and aid, and the deductibility of IRA contributions, medical expenses, student loan interest, and so on.
Important to know your tax bracket
5 Tax Strategies
Maximize Tax-deferred Retirement Plans
Pre-tax contributions to employer-sponsored retirement plans reduce your taxable income for the year. For many taxpayers with only regular W-2 income, making annual contributions to a retirement plan is the most meaningful way to lower your tax bill for the year.
for those who are self-employed or business owners is to consider making contributions to a tax-deferred retirement account such as a SEP-IRA, SIMPLE IRA or individual 401(k).
Start a Business
Giving yourself a bonus allows you to increase the usage of your employee retirement contribution, protecting more money
Charitable Donations
Cash OR appreciated securities
Deductions can be rolled forward up to 5 years, donate the most on high-income years
you gain the possibility of tax savings in the present year, but you will also have charitable contributions set aside to recommend as future grants, allowing you to continue supporting charities generously on a fixed income
Health Savings Account
HSAs offer a triple tax advantage: You pay no federal taxes on your contributions, no federal taxes on investment earnings and no taxes on withdrawals as long as the money is used for qualified medical expenses.
After you turn age 65, you can withdraw your HSA money for any purpose at all without penalty, although you’ll still owe ordinary income tax if you spend the money on nonhealth expenses.
Up to $15k, college fund, house down-payment, etc.
People looking to transfer money to heirs can make a loan to a trust now and then, depending on how the election goes, keep the loan in place or forgive it.
Honorable mention:
Rebalance portfolio
Donate most appreciated security (capital gains tax won’t apply)
Tax-loss harvesting - selling a security for a loss, off-set gains
Converting a traditional retirement account to a roth IRA, in combination with another strategy to offset tax on conversion
Not every strategy will apply to your situation or yield benefits that justify the time, risk, or cost. To avoid any unintended consequences, develop your tax planning strategy with your tax and financial advisor. Plan for longevity, not for the election.\
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