For 2024, the standard deduction for a married couple is $29,200. If you are itemizing deductions, you need to discount the tax advantage by that amount. Hence, your charitable contributions, mortage interest and local taxes may not be reducing your tax burden very much. As Livesoft mentioned, consider bunching your deductions.
For example, look at your etf shares in your taxable account and find those that are at least a year old and have the most appreciation since purchase. Donate 100k of those to a donor advised fund. You have now wiped out future capital gains taxes on those shares and can take 100k in income deduction this year, plus other itemized deductions. You can then direct 20k/year to your chosen charities for the next 5 years. In 2025-2028 take the standard deduction and invest the money you would otherwise donate to charity. Repeat in 5 years. Note, there can possible AMT implications to large charitable contributions that you can check for using your tax software, but this is the general idea.
You can also see if you can pay your 2025 property taxes before the end of the year; some jurisdictions permit this while others don't.
Your Roth 401k strategy is a conscious effort to pay more taxes now, based on your predictions about the future. Either acknowledge the present costs of that approach now or change to maxing out your traditional 401k contributions. Look into the backdoor Roth strategy if you want to save additional money in a Roth account.
Does your employer offer a 457 deferred compensation plan? You may be able to shelter additional income if you want to.
Do you practice tax loss harvesting? If so, you may be able to reduce your income by $3000 per year. Not much, but one big drop in the market can fund this for years, since losses carry over.
You can game out these options for yourself using Taxcaster, or the latest version of whatever tax software you use.
Good luck!
For example, look at your etf shares in your taxable account and find those that are at least a year old and have the most appreciation since purchase. Donate 100k of those to a donor advised fund. You have now wiped out future capital gains taxes on those shares and can take 100k in income deduction this year, plus other itemized deductions. You can then direct 20k/year to your chosen charities for the next 5 years. In 2025-2028 take the standard deduction and invest the money you would otherwise donate to charity. Repeat in 5 years. Note, there can possible AMT implications to large charitable contributions that you can check for using your tax software, but this is the general idea.
You can also see if you can pay your 2025 property taxes before the end of the year; some jurisdictions permit this while others don't.
Your Roth 401k strategy is a conscious effort to pay more taxes now, based on your predictions about the future. Either acknowledge the present costs of that approach now or change to maxing out your traditional 401k contributions. Look into the backdoor Roth strategy if you want to save additional money in a Roth account.
Does your employer offer a 457 deferred compensation plan? You may be able to shelter additional income if you want to.
Do you practice tax loss harvesting? If so, you may be able to reduce your income by $3000 per year. Not much, but one big drop in the market can fund this for years, since losses carry over.
You can game out these options for yourself using Taxcaster, or the latest version of whatever tax software you use.
Good luck!
Statistics: Posted by desiderium — Mon Jan 22, 2024 7:55 am — Replies 5 — Views 233