Tax Optimization Strategy?
03 Feb 2017, 1:53 am
It is no secret that the American Tax Code is highly convoluted and virtually incomprehensible.
But, if you understand it well enough to take advantage of it, what should your strategy be?
Should you minimize your tax bill right now, and defer taxes as long as you can?
What about taking advantage of Long Term Capital gains, which are taxed at lower rates?
What about avoiding Tax Cliffs, where you are actually penalized by earning a few bucks more?
For instance, if your AGI ends in 99 versus 50 you have declared 49 bucks more and paid no additional tax!
The Traditional IRA is great tool for low and moderate income earners to juggle their AGI by a few thousand bucks at the last moment every year.
Should it affect your job choice? For instance, a teacher may be able to save a lot of money in a tax deferred account called a 403b.
And what about a lower paying job that isn't so stressful? When you factor in tax credits and such (don't forget the state taxes) you might actually come out ahead even though the gross pay is lower.
Is it worth studying the code to figure out a new wrinkle every year?
