Being tax efficient

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krishnam
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Being tax efficient

Post by krishnam » Fri Jul 20, 2018 3:00 pm

401K (18.5K in 2018) is a pre-tax investment and reduces the taxable income by that amount. Are there other opportunities for reducing taxable income per financial year?

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triceratop
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Re: Being tax efficient

Post by triceratop » Fri Jul 20, 2018 3:07 pm

Are you familiar with deductible IRAs, HSA?

You could also try searching using the keyword “deductible”.
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livesoft
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Re: Being tax efficient

Post by livesoft » Fri Jul 20, 2018 3:08 pm

Yes, there are many. If you look at your Form 1040 and find the line with Taxable Income and work backwards you can see how it all works.

I will give one example, but there are many others:

Give a lot of your money away to charity.
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krishnam
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Re: Being tax efficient

Post by krishnam » Fri Jul 20, 2018 3:41 pm

triceratop wrote:
Fri Jul 20, 2018 3:07 pm
Are you familiar with deductible IRAs, HSA?
Aren't the unused HSA funds cleared at the end of the year?

MotoTrojan
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Re: Being tax efficient

Post by MotoTrojan » Fri Jul 20, 2018 3:43 pm

krishnam wrote:
Fri Jul 20, 2018 3:41 pm
triceratop wrote:
Fri Jul 20, 2018 3:07 pm
Are you familiar with deductible IRAs, HSA?
Aren't the unused HSA funds cleared at the end of the year?
No that is an FSA. HSA is the most tax-efficient of any vehicle, when used for health related expenses. Tax-free contribution, growth AND withdrawal. Roth or tIRA/401k only give you 2 of those 3.

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