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Just wondering, How old are you both?
37 and 40
Well done & Great questions. yes working with a CPA and our financial advisor is nice to plan for retirement and save on taxes. 1) real estate is one strategy we use save 2) we use mutual funds with solid returns and do some stocks as more personal investing but outside of the retirement plan
Thank you!!
Similar situation, there really not much you can do to save on taxes if you are both W2 employees in traditional careers (e.g., non-PE, non-equity partner). Mostly things around the edges. Maybe some savings w a side business or if you want to become a landlord (ugh…)
Run a business and a lot of stuff becomes deductible. But that is not perfect rosy either
Someone suggested real estate. At your HHI, make sure you understand passive loss limitations as they may impede your ability to offset W-2 income with RE losses.
This part. You need to be able to take active losses and that likely requires you to qualify as a real estate professional.
I don’t work with a CPA to save money. I work with a CPA to limit the chance I get audited. Once you’re “on the list” you’re on it for life.
I am a former advisor and now an executive at a wealth management business. In my experience the best options to minimize taxes with a w2 are:
1. Maximize your 401k contribution. If you do, and have the option, the Roth is the better of the two options, since you are effectively putting more money in since its post tax.
2. Maximize all of the benefits you can take out of your paycheck pre tax that you will actually use (commuting benefits, FSA, etc)
3. Maximize your HSA contributions if available (another “pool” of money that does not count towards cap gains tax) - but not at the expense of any emergency fund money etc, since you have to pay penalties for pulling money out for non healthcare expenses
4. If your company allows you to take 83(b) elections, and you believe the stock is likely to grow, take advantage
5. Don’t buy life insurance unless you need life insurance (a bit of an aside but…)
6. Make sure you are taking advantage of any local tax credits you qualify for, they’re not always on your accountants radar (homestead exemptions, electric vehicles, etc).
7. Move to a low tax state :)
Investing is as complicated or uncomplicated as you want it to be. I know people worth 9 figures in cash, etfs and bonds. If you’re worth 7 figures or more it’s worth your money, in my opinion, to have an advisor. It’s a lot of peace of mind.
For #2 just put everything not in your checking/emergency fund into VSMGX and try not to touch it until retirement. One investment for all accounts IRA and otherwise and you have minimal fees with no need to ever worry about rebalancing.
Why VSMGX?
With W2s options are limited. Don’t use a financial advisor for investing just research index funds