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26. Leave a Lasting Legacy

High net worth individuals, looking farther down the road for advanced tax planning, may want to establish a Legacy Trust.

The Legacy Trust combines a Tax-Free Inheritance Trust, Generation-Skipping Dynasty Trust, and an Asset Protection Trust all under one roof.

This proven, irrevocable dynasty trust enhances the benefits of a plain irrevocable trust by minimizing estate taxes and hedging your estate from creditors, judgments, and malpractice suits.

 

27. Review Insurance Options

If you already own an insurance policy or have been thinking about purchasing life insurance, consider having an irrevocable trust purchase and own the death benefit of your cash-rich life insurance policies.

Technically, an irrevocable trust resides "outside" of your estate. Thus, when the death benefit is distributed, the policies within an irrevocable trust will not be subject to estate taxes.

In addition, your heirs will also avoid having to pay income taxes on those death benefits.

 

28. To Roth, or Not to Roth

The Roth IRA opens up an excellent savings opportunity, especially for younger retirement-minded savers.

Unlike traditional IRAs, the Roth IRA has a contribution ceiling of $3,000 annually that is not tax-deductible.

The Roth IRA basically uses non-qualified, after-tax money to fund it. However, when it comes time to draw income from your Roth IRA, the proceeds will be 100% tax-free (provided that you hold the Roth IRA for at least five years and you're over age 59 1/2).

Younger taxpayers, who plan on being in a higher tax bracket later in life, may benefit the most from using this retirement vehicle. Be sure to check with your tax advisor for additional details. And click here for more information on the Roth IRA.

 

29. Splitting Hairs, Splitting Dollars

When it comes to insurance, you can maximize growth while minimizing taxation through Split Dollar Insurance.

A portion of your policy is earmarked for savings, while the remainder provides tax advantages and a guaranteed death benefit.

By purchasing Split Dollar Insurance, you can access the excellent tax advantages of insurance while reducing your out-of-pocket costs.

 

30. The Reverse Split

Another mindful way to reduce taxes is through the use of Reverse Split Dollar Insurance.

By funding your company's pension plan with reverse split dollar insurance, you can build substantial cash values as part of an executive bonus plan. You can also secure a tax-free income, while your corporation maintains rights to the insurance policy's death benefit.

 

31. Title Your Business Properly

Investigate the tax advantages inherent in different forms of ownership. Different forms of business come with different rates of taxation.

For instance, corporate taxes are usually higher than individual tax rates, which would apply to sole proprietorships and partnerships.

Of course, corporations are afforded much more liability protection, and the trade-offs of titling your business should be carefully considered.

 

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Tax Breaks Include

Capital Gains
Mortgage and Equity
Education Tax Breaks
Gifting Options
Sheltering Rental Income
Using Your Unified Credit
Social Security
Tax-Free Munis
Estate Tax Reductions
Life Insurance
IRAs and 401k Plans
And much more
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
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