Since You're NOT Paying Too High of Taxes, Now What? - Taxes: Part Two

Since You're NOT Paying Too High of Taxes, Now What? - Taxes: Part Two

October 09, 2020

Welcome to the Weekly SUMmary - 10/09/2020

Last week, we addressed some of the history of taxes. This week, let's address some options for planning for taxes near and long term.

One of the most frequently asked questions to advisors is, "How do I pay less in taxes every year?" The answer may be simple, but it may take some finagling.

  1. Lower your income:
    • If working for an employer, take a pay cut (everyone's ideal answer).
      • Depending on role and status, there may be additional compensation options that require further discussion.
    • If self-employed explore alternate means of taking income from the business.
      • If you're considering starting a business or evaluating structure, this is a much longer conversation, but it revolves around how you file with the state and file taxes each year.
    • Contribute to retirement accounts. Through your employer or if self-employed/business owner, many options.
    • Contribute to educational accounts (variety of options).
    • Contribute to HSA/FSA (if questions, let's talk).
  2. Increase your expenses:
    • This is primarily related to business owners, but depending on what type of expense, #3 may help...
  3. Increase your credits/deductions:
    • Medical expenses
    • Education expenses
    • Have extra kids (everyone's second favorite answer)
    • Take a deduction for taxes paid (primarily business owners, but further conversation is necessary).

This is, by no means, a comprehensive list, or a recommendation. It is meant for educational purposes only.  I recommend consulting a tax professional or having further conversations prior to making final decisions.

Reference for these items is based on education acquired working in the financial industry and advanced education programs.

Photo Credit:

Photo by The New York Public Library on Unsplash