Tax season is just around the corner, which makes it the perfect time for you to shine and help your clients keep more of their hard-earned money. By sharing some practical tips, you can make a big difference in their finances and show just how valuable your guidance is. Here are 7 essential tax-saving strategies you can use to help your clients make the most of their money.
Encourage your clients to put as much as they can into their retirement accounts—like 401(k)s, IRAs, and HSAs. Not only do these contributions reduce taxable income now, but they also set your clients up for a comfortable future. Plus, if they’re over 50, remind them about catch-up contributions—it’s a great way to add even more to their nest egg.
Explain to clients that every dollar they put into these accounts today means not only saving on taxes but also building long-term security. The earlier they contribute, the more they benefit from compound growth, and that’s a win-win.
Tax-loss harvesting is a clever way to help clients reduce their taxable capital gains. By selling underperforming assets to offset gains, your clients can minimize their tax liability while rebalancing their portfolios for the long run.
Walk your clients through how this works and why it matters—it’s a great opportunity to show them how proactive tax strategies can have a direct impact on their bottom line. Just be sure to talk about the “wash-sale” rule so they don’t accidentally lose their tax benefits.
If your clients are having a lower-income year or find themselves in a lower tax bracket, this could be the perfect time to consider a Roth IRA conversion. Converting traditional IRA funds to a Roth means they pay taxes now at a potentially lower rate, which results in future tax-free growth and withdrawals during retirement.
This is an especially good move for clients who expect to be in a higher tax bracket down the road. Roth conversions can be a game-changer, providing flexibility and reducing tax burdens in the long term.
If your clients are feeling generous, they can benefit financially from their charitable giving, too. Donations to qualified charities can lead to valuable tax deductions, which is great news for clients who love giving back.
For those over 70½, Qualified Charitable Distributions (QCDs) from IRAs can be a fantastic option. QCDs count toward their required minimum distributions (RMDs) without adding to their taxable income—meaning they can do good while also doing well financially.
HSAs are a triple threat when it comes to tax savings—contributions are tax-deductible, funds grow tax-free, and withdrawals for medical expenses are also tax-free. Encourage eligible clients to contribute the maximum amount if they have a high-deductible health plan.
Explain to clients how HSAs can be an excellent tool not just for covering medical expenses, but also as a tax-advantaged savings account for retirement. The tax benefits are hard to beat, and the more they contribute now, the more options they’ll have later.
Tax credits can have a big impact on your clients' tax bills. Unlike deductions, which reduce taxable income, tax credits reduce the actual amount owed, which can mean significant savings.
Make sure your clients are aware of available credits like the Child Tax Credit, education credits, or credits for energy-efficient home improvements. These credits can make a big difference, so it’s worth the time to explore all the options they may qualify for.
For clients hovering around the standard deduction threshold, suggest “bunching” itemized deductions into a single year. By combining charitable contributions, medical expenses, and property taxes all in one year, they might be able to surpass the standard deduction and maximize their overall tax savings.
This strategy can help clients get more bang for their buck when it comes to deductions, making their generosity and expenses work harder for them.
Tax planning is one of the most valuable services you can offer your clients, especially as the end of the year approaches. These 7 tips can help your clients save big and show them that you’re always looking out for their best interests. By sharing these strategies, you’re not only helping them save money but also strengthening your relationship and proving your worth as their trusted advisor.
If you’re looking for more tax-saving ideas or ways to add value for your clients, stay tuned to our blog. We’re always here with the latest tips and strategies to keep you and your clients ahead of the game!