Decreasing effective tax liability

-Owning a (legitimate) side business offers greatest tax advantages
-529 for kids
-Max HSA if available
-FSA if available/needed
-Homestead exemption
-Defered income plans
-Brokerage losses can offset some capital gains

Owning a revenue generating business provides greatest quantity and quality of tax mitigation levers

Need details. W-2, K-1, 1099, INT, DIV. What are the income sources? What’s your current rate?

quote:

---

Owning a revenue generating business provides greatest quantity and quality of tax mitigation levers

---

This.

If you're contributing to Roth 401k you could switch to traditional.

You could lie or stop paying altogether.

After the Trump tax cuts, there is not much a W-2 employee can do. Limits on deductions for mortgage interest, state and local taxes were designed to hurt blue states, but they had an impact on us, too. Even charitable donations are not a big tax benefit anymore. The 2017 tax cuts reduced the marginal tax benefit of giving to charity by more than 30 percent, raising the after-tax cost of donating by more than 5 percent. Using part of your home as an office or owning a business and writing tons of things off are items thrown out as ideas, but they are inviting an audit.

Max out 401k for both spouses, HSA, legit business write offs that are documented and do not go to extremes all help, but getting an effective tax rate below 20% for anyone making $250-750k is not easy anymore.

For me, by far the best way to reduce tax liability is by paying a good tax professional to handle my taxes.

quote:

---

Owning a revenue generating business provides greatest quantity and quality of tax mitigation levers

---

As a small business owner I'd love to hear some strategies you suggest.

Sure my truck, my phone, and my insurance are paid by the business because I use them all for business all day every day as a full time job that's regularly out of the office.

But this idea that a small business owner just gets major tax advantages is somewhat absurd. If you are W-2 employee your employer pays 5-7% of your tax burden, as an example. That's a solid advantage of not working for yourself.

Is your effective tax rate? If you are W2 employees, there are limited ways of limiting your tax liability.

quote:

---

you're contributing to Roth 401k you could switch to traditional.

---

At less than 200k of income I believe you have to do the Roth 401k (are not eligible for the Traditional and deduction). The intent there being to prevent upper income people from deferring too much W2 income

The IRA is different. You lose the deduction for the IRA contribution in the 100ks of income but can still contribute to the Traditional. You can not directly contribute to a Roth IRA at that income range but can still do a backdoor Roth conversion provided you don't run afoul of the conversion tax rules (pro rata rules)

Donate to your favorite charities like UNICEF or the DNC.

529s do zilch for federal income tax savings. Depending on the state, it may help with state income taxes.