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Utilize retirement accounts to reduce taxable income from "summary" of The Tax and Legal Playbook by Mark J. Kohler
One of the most powerful tools for reducing your taxable income is utilizing retirement accounts. By contributing to retirement accounts such as a 401(k) or IRA, you can lower your taxable income while simultaneously saving for retirement. When you contribute to a traditional 401(k) or IRA, the money is taken out of your paycheck before taxes are withheld. This means that your taxable income is reduced by the amount you contribute to your retirement account. For example, if you earn $50,000 per year and contribute $5,000 to your 401(k), you will only pay taxes on $45,000 of income. In addition to lowering your taxable income, contributing to a retirement account can also provide long-term benefits. The money you contribute to a retirement account grows tax-deferred, mea...
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