Tax Reduction Strategies for High Income Earners

Tax Reductions Strategies for High Income Earners
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Another tax reduction possibility is income deferral or acceleration, which has the ability to reduce your income, capital gains, and the Medicare 3.8% surtax. While deferral could help you compound savings and investments, current tax rates expire in 2025, which could cause a higher tax rate on deferred income.

When thinking of deferring your income, consider any non-qualified deferred compensation contributions, ask your employer to defer income until 2023, and look into deferring or accelerating any IRA withdrawals upon retirement.

Income tax deferral may be an effective tax strategy for current tax year liability reduction. It can also compound returns quickly, sheltering income from current taxation. Tax-deferred investment vehicles you may want to consider are qualified retirement plans, 529 plans for education, and cash-value life insurance.

Other things to consider when developing your high-income tax strategy are converting IRAs into a ROTH IRA, purchasing tax-emempt bonds, restructuring your business entity, investing HSA contributions, investing in tax-efficient index mutual funds, managing large gains, and bundling 529 plan contributions.

Filing taxes as a high-income earner can be overwhelming and worrisome.

[lunamorris]

Thank you a lot for this video. This is very interesting and informative. Keep posting like those amazing videos, this is awesome.

[ayorkii]

Converting IRAs into a Roth will increase your current taxes, not reduce them.