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What You Need to Know about Tax Planning Strategies


The truth is taxes are your biggest expense. Unfortunately, most people
do not worry about tax planning or tax strategies, because they assume
they can’t change their tax situation. Nothing could be further from the

We can help you with tax-efficient investing, saving money you can use
to invest, put aside for retirement, or improve your current lifestyle.
Our financial advisors and financial representatives offer strategies
designed to reduce your taxable income. The IRS has provisions that
reward tax planning. You just have to know how to take advantage of

Tax Strategies for Retirement

One of the best things you can do to reduce your taxable income is to invest in a tax-deferred retirement account. The IRS encourages you to invest for your future and even rewards you with tax breaks. If you can max out your contribution limits for your 401(k) and IRAs, you’re setting yourself up for future success while reducing your current tax bill.

Of course, you may also want to invest in a Roth retirement account. This type of retirement account uses after-tax income to fund your investments. When you retire and start taking distributions, you will not pay taxes on this income. Using both traditional and Roth retirement accounts can help you be strategic about your income during retirement and lower your overall tax burden, both now and in the future.

Other Examples of Tax Planning

There are several other strategies that can help you reduce your tax burden. For example, if you contribute to any of these accounts listed, you can reduce your taxable income. This lowers your tax bracket and your tax obligations.

  • 529 college savings plan
  • 401(k) or 403(b)
  • IRA
  • Flexible spending account (FSA)
  • Health savings account (HSA)

It is important to know that these plans all have different rules. For example, you probably have to spend the money in your flexible spending account before the year is over, or you will lose the funds. And if your employer doesn’t offer a health savings account, you might be eligible to set up your own.

If you are interested in deferring taxes on IRA withdrawals, you might prefer setting up a Roth IRA. Although you will not be able to deduct your contributions from your current tax return, a Roth IRA allows you to receive tax-free income when you retire contributions to the Roth IRA.

5 Top Questions about Tax Strategies

How Can Saving for Retirement Reduce My Taxes?

When you contribute money to a traditional retirement account, such as a 401(k) or an IRA, you can deduct those contributions from your taxable income. It’s not the same as a tax credit, but deductions lower the income that’s used to calculate how much you have to pay in taxes. If it moves you to a lower tax bracket, the savings can be significant. 

Why Should I Worry about My Tax Bracket?

Your tax bracket determines how much money you can save by contributing to your retirement accounts. When you are retired, we recommend planning your income distributions carefully to avoid ending up  in a higher tax bracket. A Roth account can help you receive additional income without increasing your tax burden when you’re retired.

How Can I Reduce Taxes in Retirement?

Most people assume you will fall into a lower tax bracket when you retire because you will not earn income from a full-time job. You also have control over your distributions. For example, if you receive a distribution at the beginning of January, you will not have to worry about paying taxes until next year April. Using Roth accounts can also reduce your taxable income.

What Is Tax-Efficient Investing?

Tax-efficient investing is using investment vehicles that reduce your tax burden. Traditionally, this is a tax-deferred retirement account, such as a 401(k) or IRA. But when you think of tax-efficient investing, you  also want to consider your other investment accounts.

Talk to Us about Your Tax Planning Needs

We do not think you should pay more in taxes than you need to, which is why we are here to help you create a tax strategy that works for your financial situation. Call us today to schedule an appointment with one of our financial professionals.

Prominent disclosure: Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The information provided is based on our general understanding of the subject matter discussed and is for informational purposes only and not to relied upon for making an investment decision.  2022-143323  Exp 9/22/2024