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Tips for High Income Earners to Lower Their Taxes in 2015

by Caldwell Trust

Tips_for_High_Income_Earners_to_Lower_Their_Taxes_in_2015As a high income earner, you have worked hard for every penny of your assets. However, come tax time, you may be struggling to hold on to what is rightfully yours. By implementing some creative tips and tricks, your money can stay in your pocket with a thorough tax and investment analysis.

Here are several tips to ensure that your money, regardless of your high income status, stays your money.

Max Out Your Health Savings

This simple trick is one that works for every income bracket. If you are the owner of a health savings account (HSA), do not leave it sitting idle. Instead, max out your contributions. Even if you do not need to use that money now, it will be there (with tax-free withdrawals) as you grow older and your health care demands increase. The current tax code also allows you to apply your HSA funds for past medical expenses as long as it occurred after the HSA was established and it was paid with pre-tax funds.

Pre-Tax Investments and Roth IRAs

As a high income earner, you most likely operate under the assumption that pre-tax contributions are the way to go. In most cases, the pre-tax contribution can greatly improve your 2015 tax outlook by potentially lowering your tax bracket status so far that you qualify for tax breaks. However, you should note that when it is time to withdraw, you will be forced to pay the tax on your contributions and earnings.

Many high income earners who are under the guidance of their accountants and/or financial planners, are turning to Roth IRA accounts to really maximize retirement savings and avoid withdrawing taxes. Most likely, you fall into the bracket that does not qualify for the Roth IRA; however, there are ways around this restriction. Forbes10 Special Financial Tips for High Income Earners” list advises that because Roth IRAs have no income limits on those who convert accounts, investors can simply begin with a traditional IRA and then roll it over to a Roth IRA. It is important to note that your pre-tax investments should also roll over or they will be considered taxable.

Giving and Getting

Putting your money and investments to good use through charitable giving is still one of the best ways to reduce your tax burden. There are several creative ways to donate to charity without touching your savings. For one, you could donate appreciated property, including stock with gains. For these items, you will receive a tax deduction equal to its market value. You can also open a “donor advised fund” which gives you both the ability to control which charities receive your money and the added bonus of an instant tax deduction.

Your money is your money. Therefore, it is important that you do your best to ensure that the bulk of it is not eaten up by state and federal taxes. By working with a highly qualified and experienced investment advisor or tax consultant on making the important decisions that can positively or negatively affect your 2015 tax burden, your high income can remain safe.

About Caldwell Trust Company 

Caldwell Trust Company is an independent trust company with offices in Venice and Sarasota, Florida. Established in 1993, the firm currently manages over $800 million in assets for clients throughout the United States. The company offers a full range of fiduciary services to individuals, including services as trustee, custodian, investment adviser, financial manager and personal representative. Additionally, Caldwell manages 401(k) and 403(b) qualified retirement plans for employers.

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