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Three Tax Strategies Everyone Should Consider

Contribute More to Your Retirement Accounts
A great way to limit tax liability while boosting retirement savings is maximizing annual contributions to pre-tax retirement accounts. Whether the plans are profit-sharing or 401(k), contributions made during the calendar year are tax deductible. Money in retirement savings may grow tax-deferred until you make withdrawals. The IRS dictates the maximum amount you are allowed to contribute annually: this amount occasionally increases to adjust to the cost of living. The 2021 tax year will allow for contributions of up to $19,500 into 401(k) plans. A general total limit on employee contributions of $58,000. If you are over 50 you are allowed to make an additional catch-up payment of $6,500.

Look for Tax-Efficient Investments
Look at after-tax return rates on your investments to ensure they are tax efficient. For example, municipal bonds can potentially minimize taxes, especially in states with high income taxes. Be aware of which investments provide a greater after-tax return, and work to incorporate these into your financial portfolio. Frequently, stocks are tax efficient investments, especially for high income earners.

Be Aware of Tax Consequences when Buying & Selling Stocks
Holding stocks for greater than a year creates a more favorable tax situation than selling them before a year. Frequent trading of stocks can create wash sales. Be aware of tax consequences when buying and selling stocks.

Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.
Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply. If sold prior to maturity, capital gains tax could apply.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Sources
https://www.physicianspractice.com/view/5-critical-tax-planning-strategies-physicians
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