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No one wants to receive a high tax bill—and especially not when you’re planning for retirement. That’s why I’m sharing these five tax planning strategies that can help Las Vegas professionals over 50 reduce their taxes and keep more money in their pockets.
ESTATE PLANNING
One of the best steps you can take to minimize your tax liability is estate planning. Married couples have a specific advantage that’s established through estate planning called portability.
This allows spouses to combine their estate tax and gift tax exemptions. Even if one spouse passes away, the other spouse can use their deceased partner’s unused exemptions to shelter their assets from estate and gift taxes.
If you had your estate planning done before 2010 as a married couple, the top priority would be to check on the plan and revise it to include the section 706 portability exemption.
RETIREMENT PLANS
While retirement planning can sometimes fall down the priority list of small business owners, it’s an essential strategy for minimizing taxes. Creating and contributing to a retirement plan can greatly benefit tax efficiency for small business owners by reducing their taxable income.
High-earners can take advantage of a 401(k) plan paired with a cash balance plan. With a tax deferred 401(k), you’ll set aside part of your gross income, which lowers your amount of taxable income at the same time. Many employers also offer to match your 401(k) contributions up to a certain percentage, which could significantly increase your retirement savings.
A cash balance plan grows annually through your contributions as well as through a guaranteed annual interest credit. Using these plans alongside each other allows for enormous retirement contributions that still qualify for tax deductibility.
TAX-LOSS HARVESTING
Strategically selling losing positions in taxable accounts can be very helpful in the quest for tax efficiency. This strategy is also known as tax-loss harvesting and has the benefit of deferring taxes when you purposefully sell an investment at a capital loss. This tax-minimization strategy is complex and typically utilized by investment of financial professionals.
CONTRIBUTING TO A REGULAR IRA
If you don’t own a small business, you can contribute to retirement and still qualify for tax deductibility by contributing to a traditional IRA.
If your income is under the traditional IRA income limits, your contributions are eligible for a tax deduction. The maximum income limit for single filers in 2023 is $83,000. Married joint filers had a 2023 maximum income limit of $136,000. Income that’s above those limits might not qualify for a deduction.
CHARITABLE CONTRIBUTIONS
Contributing to your favorite charity can be helpful with a comprehensive understanding of the IRS rules. Each year, the deductions for charitable contributions change and are based on your filing status. For 2023, the standard deduction for married couples filing jointly is $27,700. Single filers have a standard deduction of $13,850 and heads of households qualify for standard deductions of $20,800.
As a general rule, up to 60% of your gross annual income can be deducted in charitable donations. However, the type of contribution and the organizations you donate to may further limit those deductions down to 20%, 30%, or 50%.
TAX-EFFICIENT INVESTMENT ADVICE
Establishing tax-efficient strategies for your assets and investments can be complicated and time-consuming. As a Registered Investment Advisor, I help clients through Las Vegas, NV, and California analyze their finances to prepare for future tax liabilities and design custom strategies to help you keep more of their wealth through tax planning. To find out if you might be a good fit to work with Y H & C Investments, reach out to us at information@y-hc.com or schedule a meeting here.
About Yale
Yale Bock is the owner and operator of Y H & C Investments, a registered investment advisor (Nevada and California licensed) located in Las Vegas, Nevada. Yale directs all operations, from investment research and portfolio management and asset allocation to trading decisions, trade execution, risk management, and client communication. With experience investing capital personally and on behalf of his clients for 20 years, he aims to maximize investors’ assets—and do so as tax efficiently as possible. Yale has a passion for investing and enjoys the challenge of the markets, and has a proven track record of reliability and good judgment. He thrives on partnering to help people reach their life goals through investing: saving for kids’ and grandkids’ college, personal retirement, and company retirement plans (just to name a few). His clients can experience comfort and confidence that they have someone in their corner they can depend on to help them succeed in a responsible and tax-efficient way.
Yale earned a bachelor’s degree in economics and an MBA from UC Irvine and holds the Chartered Financial Analyst designation. He is married to Jhanine Ilana Aronson and together they have a precious teenage daughter, Diamond Emerald Bock. Outside of work, he enjoys sports (baseball, football, basketball), politics, and reading. To learn more about Yale, connect with him on LinkedIn.
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