Building Wealth Through Tax Planning Strategies

You have worked hard to accumulate wealth, but if you’re not careful, taxes can eat away at your hard-earned money. That’s why tax planning strategies are an important part of your wealth management plan. Here are some tips to help you address your tax burden and keep more of your money.

• Start with a comprehensive plan: Implementing tax planning strategies is an ongoing process, so it’s essential to have a comprehensive plan that considers your short-term and long-term financial goals. A comprehensive strategy should also consider potential changes in tax laws and regulations that could affect your tax liability.
• Evaluate your retirement contributions: Contributing to your retirement accounts can potentially affect your taxable income. For example, you can contribute up to $22,500 to your 401(k) or 403(b) plan in 2023, and if you’re over 50, you can make an additional catch-up contribution of $7,500. Contributing to a traditional IRA or a Roth IRA is another way to potentially reduce your taxable income.
• Consider tax-efficient investments: Some investments are more tax-efficient than others. For example, municipal bonds are tax-exempt at the federal level, and some are also exempt from state and local taxes. Tax-efficient funds that invest in stocks with low turnover can also reduce your tax liability.
• Take advantage of tax-loss harvesting: Tax-loss harvesting involves selling investments that have lost value to offset gains in other investments. This strategy can help you lower your tax bill and potentially rebalance your portfolio.
• Work with a tax professional: Tax planning can be complex, so it’s a good idea to work with a tax professional who can help you navigate the process. A tax professional can also help you identify opportunities to reduce your tax liability and maximize your wealth.

Incorporating tax planning into your financial plan is critical to evaluate your tax needs over time, potentially reducing your tax burden and keeping more of your hard-earned money. Remember, tax-efficient planning is an ongoing process, so it’s essential to review your plan regularly to ensure that you’re taking advantage of all available tax-saving opportunities.

​The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. Stratos Wealth Partners and LPL Financial do not offer tax advice or services.