Top 5 Tax Savings Tips EVERYONE Should Know About

Don't miss out on some tremendously transformative tax tips. We call that an alliteration!

#1 - maxing out all available qualified accounts

What is a Qualified Account?

Any account you can put money into that provides a tax benefit from the government

Here are some of the most common Qualified Accounts

Tax Deduction Now - 401(k), 403(b), Traditional IRA, Simple IRA, SEP IRA, Employee Stock Ownership Plan

Tax Free Growth Later - Roth 401(k), Roth IRA, Mega Roth, Back-door Roth IRA

Tax Deduction or Credit Now AND Tax Free Growth Later - Health Savings Accounts, 529 Education Savings Accounts


Standard Deduction vs Itemized Deductions

IF your itemized deductions are not exceeding the standard deduction everyone gets... you might want to consider bunching your itemized deductions up into one year.

If this doesn't make sense... the video with visuals and an example will help (1:08)


What is a Brokerage Account?

Not a Qualified Account. This means flexibility but it also means no tax deduction, credit or tax fee growth is granted from the government for putting money here. Where is the tax savings?

Tax Loss Harvesting

Selling stocks that have decreased in value to "realize" the losses, to offset any future capital gains. This strategy is even more powerful if you sell, and then turn around and purchase a similar stock or fund, maintaining exposure to market growth (30 day wash sale rule: You are not allowed to buy back the same stock or fund you sold, at a loss, until after 30 days).

Using a Margin Account

A margin account is a way to borrow money against your brokerage account. Money stays invested, you can borrow from yourself and pay back, becoming your own bank. Where's the tax savings?

  1. The interest charged from borrowing is tax deductible against any income your investment portfolio produces. Isn't this just spending money for some tax deductions? Yes, but it allows your money to stay invested, hopefully (and statistically) growing faster than the interest being charged. With this interest being tax deductible, it makes that hurdle even lower.

  2. Tax free "distributions" - Using a margin account allows you to pull money from your brokerage account and put money back, with out realizing any capital gains tax.


What is the right way?

  1. Giving with appreciated stock from a brokerage account. This will avoid the capital gains tax.

  2. Qualified Charitable Distributions (QCDs) - If over the age of 70.5, you can give from a pretax retirement account and NOT pay any taxes on the distribution.



This makes sense right? If you make less money, you pay less in taxes so...

If you actually think this, please stop thinking this.

Have you ever...

  1. Purchased something you didn't need for the tax write off?

  2. Purchased something on sale and told yourself you saved money?

  3. Invested in something SOLELY for the tax deduction (opportunity zones, oil and gas leases, life insurance products)

If you answered yes to any of these... there's still time to change.

On that last rhetorical question, I'm not saying investment opportunities like those are all bad... but some are. Simply put more thought into the actual investment growth and not just the tax benefit you're going to receive.


Sources & Disclosures found in the video link on Youtube