Learn How to Save Tax Efficiently

Learn How to Save Tax Efficiently

Nobody likes to pay hefty taxes on their income or capital gains. Fortunately, you can adopt many innovative strategies to save taxes.


And it’s always recommended to hire the services of a tax professional since their knowledge about the tax system and possible loopholes are up-to-date.


In this blog, we’ll look at some efficient ways to save on tax.

Invest in tax-efficient funds

When you choose investments for the portfolio, there are various factors to consider. Two of the most important factors Include tax efficiency and investment return.


One major goal of investment is to maximize your after-tax returns. By choosing investments that have built-in tax efficiencies like index funds, such as ETFs and mutual funds, you can greatly reduce taxes paid on gains.

Divide your assets among your accounts

Another way to avoid taxes is to choose the correct types of accounts for your investments. Divide your investments wisely among non-taxable and taxable accounts.


You should put your investments that are not tax-efficient in those accounts which allow you to defer your taxes. Similarly, you should hold tax-efficient investments in accounts that are taxable.


Taxable accounts must hold your tax-efficient assets such as:


Your non-taxable accounts must contain your less tax-efficient assets, such as:

  • Taxable bonds
  • Mutual funds that are actively managed

Try to offset your gains with losses

If you’re an investor, you’ll only be taxed on your net gains on capital. So, any losses that are realized can help you reduce your total tax bill by offsetting the gains. For this reason, if you are going to make realized gains, you should look for some ways to realize other losses to offset your gains.

person working on laptop

For example, if you own shares of stocks that have lost their value since the time you purchased them, you may sell them to offset the loss against your gains.

Reduce taxes by donating

When you make donations, you can itemize your cash donations to take benefit of relevant tax deductions. Similarly, some securities like ETFs and mutual funds are considered gift-appreciated securities which help you reduce tax bills.


If you’re looking for a professional tax preparation service, look no further. Nidhi Jain CPA offers tax planning services in San Francisco. Their certified public accountants help you with business tax filing, back tax solutions, bookkeeping, and much more.


Call or email them now to learn more about their accounting services.



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