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Tax Time Again

We all hate paying too much in taxes, but the strategies below will help minimize the pain and sadness:

Meme of little girl being sad about taxes

Younger Investors (Under 35)

  • As a young investor, especially if you are healthy, you should prioritize investing in a Health Savings Account (HSA). These accounts allow you to defer taxes on your contributions, similar to a 401k, but then withdraw money tax-free, similar to a Roth IRA, as long as the money is used for qualified medical expenses. In summary, you may never have to pay taxes. As an added benefit, your employer may also provide a contribution. The only downside is that you will need to pay for non-preventative medical expenses out-of-pocket, but hopefully these are fairly minimal at this stage of life. The HSA contribution limits for 2024 are $4,150 for individuals and $8,300 for families.

  • Early in your career and potentially in a lower tax bracket, you may want to prioritize contributing to a Roth IRA which will allow you to contribute $7,000 of after-tax income that can later be used tax-free.

Mid Career Investors (Under 50)

  • You are about to enter your peak earnings phase of life, so it’s key to reduce your current tax expense as much as possible. This may include maximizing your employer sponsored retirement plan (e.g., 401k, 403b) as well as your Health Savings Account.

  • Additionally, if you are over the earnings limit to contribute to a Roth IRA, you should consider a backdoor Roth contribution.

Close to Retirement

  • Maximize retirement account catch-up contributions. These special contributions allow those who are age 50 or over to add additional money to retirement accounts, such as $7,500 in 401k catch-up contributions, raising your 401k limit to $30,500 for 2024.

  • Evaluate relocating to take advantage of downsizing, tax-free capital gains, and potentially moving to a no income tax state. For example, an individual may exclude $250,000 of capital gains from the sale of their primary residence, and $500,000 for couples. This could be a great strategy to bolster your retirement savings when combined with moving to a smaller home in a state with no income tax.


  • As a retiree, you need to understand your income levers and how to use them most effectively. These levers may include pensions, social security, part-time work, as well as investment income.

  • Evaluate your social security withdrawal strategy along with your overall portfolio and life expectancy to determine the optimal time to claim your benefits.

  • Be mindful of Required Minimum Distributions (RMDs) and withdraw the required amounts from tax-deferred accounts (e.g., traditional IRA, 401k, 403b) to avoid tax penalties.

If you are looking for a financial planner who can help you to create a tax-friendly financial plan, then schedule a free introductory meeting below. For less than $5/day, Walk You To Wealth is the most affordable way to access professional help.

Disclaimer: The information in this post is provided for your convenience only and is not intended to be treated as financial, investment, tax, or other advice. The information is intended to be educational and is not tailored to the investment needs of any specific individual.  It is also not intended to be relied upon as a forecast and is not an offer or solicitation to buy or sell any securities or to adopt any investment strategy.  The opinions expressed are those of the author.  Reliance upon the guidance and information in this presentation is at the sole discretion of the individual.


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