3 Strategies for 2023 to Reduce Your Tax Burden

As we approach the halfway point of 2023, it’s the perfect opportunity to evaluate your individual financial planning. Employing the right strategies can reduce your taxes, optimize your cash flow, and enhance your long-term financial success.

In this article, we’ll review three tax strategies for 2023: Roth IRA conversions, tax loss harvesting, and year-round charitable giving. Let’s dive into these strategies and explore how you can create generational wealth.

The Benefits of Roth IRA Conversions for Your Retirement Plan

Roth IRA conversions transform your traditional IRA into tax-free distribution vehicle for your retirement years. You may even potentially save taxes with a lower current tax rate. Even better, consider using this strategy as a future legacy asset for your beneficiaries.

Tax Loss Harvesting

With market volatility, tax loss harvesting captures capital losses. These losses can be used to offset future capital gains, and any remaining losses can be used to offset gains in subsequent years.

Investors who have unrecognized losses in their investment assets may benefit from this approach.

Year-Round Charitable Giving

End-of-year charitable donations have long been a go-to for taxpayers seeking tax deductions. But why wait until year end if now is the time to dispose of an appreciated asset.

For example, if for over a year you own appreciated, but potentially volatile, securities in your name you can use these securities to fulfill their philanthropic goals. Take a fair market value deduction without having to pay taxes on the capital gain. It’s a practical way for the charity to get full value and you to get a full value deduction.

Charitable remainder trusts offer another means of donating to worthwhile causes and taking advantage of tax breaks. Use of these trusts has been increasing as interest rates rise. Plus, you can use appreciated securities as mentioned above. This may be especially useful in a very high-income tax year.

Don’t wait until the end of the year to give back. Consider these charitable giving strategies to boost your philanthropic impact and build a better future.

Actionable Key Takeaways

• Roth IRA conversions may provide a better legacy for you and your beneficiaries. Have Friedman + Huey complete a mid-year review of your retirement accounts and tax projection, to see how you can apply this strategy effectively.
• Tax loss harvesting may effectively offset your capital gains and maximizes tax benefits, particularly in volatile markets. See how you could use this to your advantage.
• Year-round charitable giving offers several current potential tax benefits through donating appreciated securities without capital gain implications and using charitable remainder trusts. With a good tax projection and review of your assets this may be a wonderful strategy for you.

Remember, it’s essential to review your planning regularly, taking advantage of available opportunities and ensuring the deployment of your assets to their best use. Friedman + Huey can help you with these and many other strategies towards your financial and tax goals.