There are several ways to legally lower your tax liability. A couple of ideas to lower your taxes would be to shift your taxable investment earnings to tax free or tax deferred investment vehicles. This can be accomplished by buying state municipal bonds from the state that you live in or through a mutual fund, purchase US government bonds, or invest into a tax deferred annuity. You can also utilize a tax deferred IRA or similar qualified retirement plan to shift the earnings until the year you take the distributions back out of the retirement plan.
If you are looking for a tax free account also consider a Roth or a whole life insurance policy. You will receive no deduction when investing into a Roth IRA but the earnings will be tax free if you meet certain criteria. There is no tax deduction for premium payments into a whole life insurance policy, but if it’s structured correctly then you can borrow against the earnings in a future year tax free.
These are just a couple of ideas to reduce your annual tax liability. Call us for more planning ideas.