Forbes has published an article, “Worried About Taxes Going Up? 9 Ways To Reduce Tax”, which discusses nine methods to reduce your tax bill. The article begins as follows:
While there likely isn’t a magic bullet to wipe out your tax bill, there are ways to layer tax-efficiency into your plan. If you’re concerned about the possibility of tax rates going up or just looking to reduce your taxable income in 2021, consider these tax planning techniques.
But first: paying less tax doesn’t always mean saving money
Before diving into tax planning strategies, it’s important to remember that reducing your tax bill doesn’t always mean you’re actually saving money.
Here’s a simplified example. Assume you’re in the 37% tax bracket and donate $100 cash to charity. Your good deed shaves $37 off your tax bill. But if your only objective is tax savings, you just spent $100 to save $37. Ouch.
Posted by Anthony Tran, Associate Editor, Wealth Strategies Journal