Let’s talk about some tax planning tips that can save you a bundle. Most high net worth individuals didn’t get wealth by sitting around and hoping to get rich. They have to earn it. That’s one of the biggest differences between just getting by and actually getting rich. And one of the things high net worth individuals are very good at is their taxes. In other words, they know how to protect their assets by keeping their tax bills low.
So what tax-saving tricks do the wealthy use to keep the taxman away from their wealth? Obviously, we’re not talking about any illegal activity. These are legal tax-saving methods that many wealthy individuals use to keep their tax bill lower and hold onto their assets.
Invest in Real Estate – investing in real estate has long been a path to wealth. As long as you qualify as a real estate professional you can also qualify for some excellent tax benefits. You don’t even have to be a licensed Realtor. With this classification you can reduce your tax bill significantly by using all the strategies available to you.
Own a Business – when you own a business and the objective is to turn a profit, you open yourself to many opportunities to lower your taxes. There are numerous tax deductions and credits for business owners, many of which are not available to W2 employees. This is a great way to reduce your tax bill.
Open a Roth 401(k) – the Roth 401(k) is one of the best ways to save on taxes, especially if you’re wealthy. Here’s why. When you open a Roth you do it with after-tax money. In other words, you’ve already paid income tax on those assets. The great thing about a Roth is any money you earn on the investment grows tax-free. So if you put away $100,000 and you earn $20,000 in interest, you can cash out that money tax-free. But Roth 401(k)s also offer several other flexible options that can help you build wealth.
Smart Qualified Plans – another great strategy for business owners is using a tax-deductible retirement plan to their advantage. People in this situation can really pile up tax deductions and put more money away at the same time. This is really a no-brainer, but not everyone takes advantage of it. Using a 401(k) to save on taxes is not a new concept. And anyone can open a 401(k) retirement savings plan. But business owners can get a huge tax savings because they can increase their deduction amount greatly with a 401(k).
Put These Tax Planning Tips Into Action
If you want to become wealthy, you have to be intentional about it. You can’t sit back and “hope” it happens. After you start your wealth plan and your nest egg begins to grow, put these tax planning tips into place so you can protect the wealth you’ve worked so hard to grow.
If you’re sure how to manage your wealth then hire an experienced financial and tax advisor to the dirty work for you. That way you can sit back and enjoy your assets knowing that they’re being taken care of the right way.
We hope you found this article about “Tax Planning Tips that Can Save You a Bundle” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
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