When it comes to paying taxes, most people would rather pay less than more. However, despite this fact, a large percentage of people never take the time to learn how to reduce their tax obligations.
Knowing the ins and outs of the tax code and the strategies that you can use to reduce your overall tax burden can be highly beneficial for you. People who are high-net-worth individuals especially need to know how to pay fewer taxes because they stand to lose more money to Uncle Sam by not knowing this information.
In this article, we will break down the top things that you need to know for maximum tax advantages. (Note: I am NOT a certified financial advisor or tax expert.)
Income Tax Deferral Investment Vehicles
Income tax deferral investment vehicles are investment vehicles that shelter your taxes from current taxation and defer the taxation to a later date. There are several reasons why these investment vehicles are beneficial from a tax standpoint. First, they can reduce your current year tax obligations. Second, they can help your returns to compound faster since they reduce current tax obligations and larger amounts of money can stay in the asset to aid compounding.
Popular income tax deferral investment vehicles include:
Cash-Value Life Insurance
With cash-value life insurance, you make contributions with after-tax dollars. The money that you invest can grow tax-free. You are allowed to make withdrawals up to the premium amounts paid without being taxed. These investment vehicles are very popular among high-net-worth individuals because they