All of you self employed high income earners will love this one. A defined benefit plan is a type of retirement account that gives you HUGE tax deductions in the year you make contributions.
The contribution amount is as high as $300,000 depending on your income (rules apply), which means you can deduct as much as $300,000 on your tax return. That's huge!
Here's an example:
You have income of $400,000 for the year. You contribute $200,000 into your defined benefit plan. On your tax return, your total taxable income will now be reduced by $200,000 making your total taxable income $200k instead of $400k meaning your tax bill is significantly smaller. Long story short, you will pay way less in tax! On top of having a much smaller tax bill, you also have $200k invested in appreciating assets. Win win situation for you!
This is the kind of stuff we look at with you for your year end tax planning. We use strategies like this to help you save thousands on your taxes.
Want to lower your tax bill? Schedule a call with us today to start your year end tax planning!