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Financial Planning / Tax Strategies
|Subject: Re: Tax strategies for high W2 earners?||Date: 3/1/2013 8:14 AM|
|Author: TMFPMarti||Number: 117910 of 121572|
Was wondering if there are any tax strategies that high income earners -whose earnings come primarily through w2 income- can use? Aside from starting one's own business, using a backdoor Roth conversion/contribution, and trying to generate more dividend income, are there any strategies you can reccommend?
Danger, Will Robinson, danger!
What in the world is starting a business doing in that list? Your goal in starting a business is to increase your taxes (by making money), not to reduce them. You show symptoms of taxphobia, which can lead to bad financial consequences.
Maybe you heard stories at Grampa's knee about wonderful things that would generate tax loss deductions without costing you any money. Maybe you've seen things on the Internet that promise you can turn your personal expenses into tax deductions through a business. Always remember what Mother told you: if it sounds too good to be true, it is. Also remember what many here will tell you: if you generate a legitimate dollar of tax deductions you have less money in your pocket after taxes than you would have had without that deduction.
Now for financially sound things you can do.
Maximize 401(k) contributions.
Take full advantage of pre-tax spending plans available at work.
If available consider Health Savings Accounts
If you have children, consider 529 college plans. There's no current Federal tax benefit, but some states give a deduction, and growth is tax-free at all levels if the money is used for qualified expenses.
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