If you think that the top 10% earners in the country only get busy counting their money, you are wrong. There are also some things that high earners worry about such as paying taxes.
Of course, if your household earns a high income, you tend to pay a higher tax percentage than an employee who only earns an average income. There might be some exceptions to the rule, but generally, it’s the basic tax principle – he who makes more will pay more. The good news is, there are ways you can reduce the amount of tax you need to pay legally. Here are some strategies for you:
- Max out your retirement contributions
Every dollar you put into your retirement will not be taxed no matter how much it is. Your retirement money will be tax once withdrawn but at a much lower rate.
- Invest in Health savings account
Get a health savings account and max out your savings every year. All the contributions you make are tax-deductible, plus you get to have some money for medical and emergency expenses.
- Sell inherited real estate
If you have inherited a real estate property, sell it. If you keep it, you’ll have to pay property taxes. Sell it and you get some cash and save money on property taxes.
- Roth IRA conversions
These are tax-free retirement accounts that can lower down your income tax. Roth IRA contributions are made from post-tax income, which means that you will pay the tax before you contribute but now when you withdraw. Remember, any income earned on the money in your Roth IRA will not be taxable so it can be beneficial for you.
- Get a CPA
Tax laws are changing all the time. You might know all the tax strategies but it might not help at all if the law changes. With a CPA working for you, you will be sure that you are updated with any tax law changes and will help make sure you are paying just the right income tax.
Contact us at AAT Group, LLC