Tax season - Do you usually have to pay a lot?

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goldsummer

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Doing taxes now, and looks like I'm gonna have to pay a handsome chunk again. I thought I did enough to lower it this year, but apparently not.

Here's some of what I'm doing:

Maxing out 401K
Maxing out HSA

Other info: I have a house/mortgage, not married, no kids. I do have dividend stocks


Am I doing enough, what else can I do? What are your Tax sheltering strategies?

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Doing taxes now, and looks like I'm gonna have to pay a handsome chunk again. I thought I did enough to lower it this year, but apparently not.

Here's some of what I'm doing:

Maxing out 401K
Maxing out HSA

Other info: I have a house/mortgage, not married, no kids. I do have dividend stocks


Am I doing enough, what else can I do? What are your Tax sheltering strategies?

Are you W2 or 1099? Because that makes a HUGE difference.

If 1099, you may need to make slightly larger quarterly estimated payments to the IRS to avoid the end of year big tax bill. If W2, you should likely adjust your W4 a bit to increase withholdings.

Do you give money to charitable organizations?

Tax loss harvesting can save you about $1000/year in taxes owed.

Just don't spend money you otherwise wouldn't have in an attempt to save on taxes. If you go buy a $100K vehicle just so you can write off some part of its cost, you still have $100K less dollars.
 
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Doing taxes now, and looks like I'm gonna have to pay a handsome chunk again. I thought I did enough to lower it this year, but apparently not.

Here's some of what I'm doing:

Maxing out 401K
Maxing out HSA

Other info: I have a house/mortgage, not married, no kids. I do have dividend stocks


Am I doing enough, what else can I do? What are your Tax sheltering strategies?

Get married to someone making a lot less money than you. (And I am only half joking.)
 
Doing taxes now, and looks like I'm gonna have to pay a handsome chunk again. I thought I did enough to lower it this year, but apparently not.

Here's some of what I'm doing:

Maxing out 401K
Maxing out HSA

Other info: I have a house/mortgage, not married, no kids. I do have dividend stocks


Am I doing enough, what else can I do? What are your Tax sheltering strategies?
Consider it a victory that your stocks are doing so well!
 
Most of things things you can do to save money on taxes require you to spend even more than you'd get back (charity, solar panels/energy efficiency stuff, etc.) All are great things to do, but not for the sole purpose of paying less taxes as you would have less take-home.

Getting married (to someone who doesn't work or doesn't make much) is probably would have the biggest impact on your taxes, if you aren't already married. Otherwise, becoming a sole proprietor/LLC/S-corp is the way to deduct a lot of things--many of which you don't have to pay for if you're an employee. I pay for and deduct my own malpractice insurance, biller fees, professional licensing fees, professional memberships, health insurance, etc. If I worked at a few hospitals I could deduct a lot more of my car/miles, but I mostly work at one hospital which is basically a commute to the IRS, even if I have a home office. Which I used to have and then I decided it wasn't worth it as you can't use it for literally anything other than business. So we turned it into a combined office (non-deductible)/library/LegoLand (Legos have to go somewhere, and it's a great sunny room for them!).

If you are a 1099 contractor, then make sure you're taking advantage of the pass through deduction. And talk to your accountant about having your business prepay your state taxes to workaround the SALT deduction cap, as most states now allows this and the IRS has blessed the workaround. I don't do it myself since CA doesn't let sole proprietors do it, and realistically it wouldn't save enough to make it worth the far greater hassle/complexity of being an s corp.
 
I have to pay back ~1k to the state ~4k to the fed despite having a non working spouse and 2 dependents. First time that I have to pay back money. The only thing that has changed from 2022 to 2023 is that I made 11k profit selling some META stocks in 2023. Income from work and rental properties has not changed much.
 
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I have to pay back ~1k to the state ~4k to the fed despite having a non working spouse and 2 dependents. First time that I have to pay back money. The only thing that has changed from 2022 to 2023 is that I made 11k profit selling some META stocks in 2023. Income from work and rental properties has not changed much.
Maybe you're in the 35% federal marginal tax bracket and you realized a short-term gain on META. Congrats!
 
Doing taxes now, and looks like I'm gonna have to pay a handsome chunk again. I thought I did enough to lower it this year, but apparently not.

Here's some of what I'm doing:

Maxing out 401K
Maxing out HSA

Other info: I have a house/mortgage, not married, no kids. I do have dividend stocks


Am I doing enough, what else can I do? What are your Tax sheltering strategies?
I think you might enjoy this article: 9 Tax Secrets the IRS Doesn't Want You to Know | White Coat Investor

I assume you're asking about lowering your tax bill, not just decreasing the amount you have to write a check for come April. If your concern is the latter, just have your employer withhold more or make bigger quarterly estimated tax payments.
 
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