What are some ways to minimize tax liability?

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January 2017
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It is a question we should ask ourselves on a yearly basis. Some of the great suggestions already posted are:

  • Increased pre-tax contributions to your work's retirement plan
  • Charitable contributions
  • Maximize your itemized deductions
  • Increased pre-tax contributions to your own business or side hustle
  • Max out your traditional IRA contributions

Other things to consider:

  • The use of an HSA Plan -- tax-free for healthcare, tax-deferred for retirement after age 65
  • The use of US Savings Bond, I-Bonds if you need inflation protection -- they can be tax-deferred for 30 years
  • The use of 529 Plans -- tax free for most education expenses, tax deferred for those with scholarships (some use for estate planning)
  • Gifting assets -- if you are in that position to do it and in that part of your life (be careful of gift-tax limits)
  • Hold more heavily taxed assets in retirement accounts (bonds, dividend paying assts, or high turnover funds)
  • Max sure your taxable assets are in tax-managed or tax-friendly assets where possible

Many clients will avoid taxes to the detriment of a good long-term plan. Taxes are never good, just make sure you are not avoiding good investments or planning just to avoid them – the tail wagging the dog. One thing that might help is to run your future tax scenarios through planning software. Using a fee-only professional from www.napfa.org is best, but you can look at doing it yourself too. Our website offers free three-month access to our planning software:


Good Luck!

Mark Struthers CFA, CFP®

April 2015
January 2017
January 2017
January 2017