Lower Your Taxes
Yes, lowering your taxes is possible. No, this is not the same as dodging them. Make use of every tax-advantaged opportunity that comes your way, such as stashing money in specialized accounts.
You get immediate tax deductions on contributions to 401(k)s and IRAs. This could save up a bit of cash for other priorities even though you will be taxed on withdrawals during retirement. On the flip side, Roth IRAs work in the exact opposite way. Your contributions aren’t deductible but the money will grow tax-free. Withdrawing after 59 ½ will also be tax-free.
A 529 plan can help you with college savings and may have state tax benefits though it doesn’t provide a federal tax deduction. They’re tax-free and can also be used tax-free for education expenses.
Do you have a qualified high-deductible health insurance plan for your family? Then you can deduct up to $7,100 deposited in a health savings account (note that this figure can change over time). Thankfully, the money is tax-exempt when you use it for medical purposes.
It’s a constant juggle, one that might take you years to get used to or even understand, but talking to a financial adviser will help you make sense of all these accounts and all these tax rules, so we think you should definitely consider talking to one.
