E.40 Tax reduction/management techniques Flashcards

A strategy that postpones the payment of taxes on income or investments until a later date, typically during retirement when the tax rate may be lower.

Investments that generate income exempt from federal, and sometimes state, income tax, such as municipal bonds and Roth IRAs.

A strategy that involves selling investments at a loss to offset taxable capital gains and reduce overall tax liability.

Dividends that meet IRS requirements for lower long-term capital gains tax rates, rather than being taxed as ordinary income.

Donations to qualified charitable organizations that can be deducted from taxable income if itemized.

A strategy that involves spreading income across multiple years or adjusting deductions to avoid moving into a higher tax bracket.

The process of transferring funds from a traditional IRA to a Roth IRA, paying taxes upfront to benefit from tax-free withdrawals in the future.

Contributions to an HSA are tax-deductible, grow tax-free, and can be withdrawn tax-free when used for qualified medical expenses.