9 Strategies for Minimizing Taxes

by | Dec 15, 2017 | Blog |

Taxes can be tricky for high-income earners who often don’t qualify for different deductions, various credits, and tax-advantaged accounts. Even though some deductions are not available, high-income earners can still use the following strategies to minimize their tax bills:

  1. Maximize your 401(K) – you can shield up to $18,000 ($24,000 if you are over 50) in annual income.
  2. Open an IRA account – you may be eligible to open, contribute, and deduct up to $5,500 ($,6,500 if you are over 50) through contributions to a traditional IRA.
  3. Consider opening a Roth IRA account; and consider a Roth IRA conversion.
  4. Don’t be afraid of Health Savings Accounts (HSA) – individuals can shield up to $3,400 in annual income through an HSA ($4,400 if you are over 55), and families can shield up to $6,750 ($7,750 if you are over 55). The contributions are generally tax-deductible, and you pay no tax on withdrawals for qualified medical expenses.
  5. Minimize required minimum distributions (RMDs) – RMDs kick in at age 70½. The larger your portfolio, the larger your RMDs which might kick you into a higher tax bracket. If you start withdrawing money at 59½, you can reduce the size of your portfolio and the size of your RMDs when you get to 70½.
  6. Own real estate if you can afford it.
  7. Donate things in addition to cash.
  8. Evaluate your stock.
  9. Look at your estate and consider employing estate-tax strategies.

If you have any additional questions, please don’t hesitate to call us at 408.412.3373 or email us at info@keystonetaxes.com.