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Tax Planning for Americans

Tax-advantaged investing

Without proper planning, investment earnings can make your tax burden even heavier. For investors in the top marginal tax bracket, taxes can reduce an 8% annual return to as low as 4.5%. Over time, the lower return may lower the chance of achieving your financial goals

Tax-advantaged compounding

Investment earnings within IRAs, Roth IRAs, 401(k)s, annuities and 529 education accounts are not subject to current year taxes. Depending on the account, taxes are either deferred until qualified withdrawals begin or eliminated altogether.

Strategies for cutting taxes

Offset taxable gains with losses

Consider realizing investment losses before year-end to reduce capital gains taxes.

Donate and deduct

When donating an investment to charity, you can generally take a tax deduction for the full market value, meaning you avoid capital gains taxes on any appreciation.

Consider tax-free municipal bond funds

Interest income from municipal bonds is not typically taxed by the federal government or state in which a bond is issued.

Invest for dividends

While interest income is taxed at rates as high as 40.8% (37% tax rate plus 3.8% Medicare surtax), taxes on qualified dividends top out at just 23.8% (20% maximum rate plus 3.8% surtax).

Maximize tax-advantaged accounts

Contribute as much as possible to tax-advantaged accounts for retirement or education. If you're 50 or older, you can make additional catch-up contributions to IRAs.

Invest for the long term

Investments sold at a profit after more than one year qualify for favorable tax rates as long-term capital gains.

Consult a CFP professional

A CFP professional will create a financial plan and show you how tax planning can make a difference.



This material is intended for educational and informational purposes only. It is not intended to provide specific advice or recommendations for any individual. Additionally, you should consult with your Financial Advisor, Tax Advisor, or Attorney on your specific situation.  The views expressed in the material are that of the author and do not necessarily reflect those of any market, regulatory body, State or Federal Agency, or Association.  All efforts have been made to report or share true and accurate information.  However, the information may become materially outdated or otherwise rendered incorrect due to subsequent new research or other changes, without notice. The author nor the firm are able to always verify the content from third party sources. For additional information about the firm, please visit the MAS Website at https://www.mas.gov.sg/  and the SEC Website at www.adviserinfo.sec.gov.  For a copy of the firm's ADV Part 2 Brochure, please contact us at info@avriowealth.com