As we reach the midpoint of the year, it's a great time to revisit your investment strategy, especially when it comes to taxes. At Dreyer Wealth Management, we believe that smart, tax-efficient investing is one of the most effective ways to help you keep more of what you earn.
Here are several timely strategies to consider this summer:
1. Harvest Tax Losses
If you have investments that have declined in value, you may be able to sell them to offset gains elsewhere in your portfolio. This strategy, known as tax-loss harvesting, can help reduce your capital gains tax liability—and may even offset up to $3,000 in ordinary income per year.
2. Maximize Tax-Advantaged Accounts
Make sure you’re taking full advantage of accounts like 401(k)s, IRAs, and HSAs:
Contribute steadily toward the annual limit (and catch-up if you're over 50).
Consider converting a traditional IRA to a Roth IRA if you’re in a lower tax bracket this year.
Fund your Health Savings Account, which offers triple tax benefits.
3. Rebalance with Taxes in Mind
Rebalancing keeps your portfolio aligned with your risk tolerance and goals. Doing this strategically—by selling appreciated assets in tax-advantaged accounts or offsetting gains with losses—can help minimize your tax impact.
4. Review Mutual Fund Distributions
Mutual funds often distribute capital gains later in the year. Reviewing your current holdings now allows you to plan ahead and avoid unnecessary tax exposure. We can help you assess whether to delay purchases or adjust holdings accordingly.
5. Consider Qualified Charitable Distributions (QCDs)
If you're age 70½ or older, a QCD allows you to donate directly from your IRA to a qualified charity—potentially satisfying your Required Minimum Distribution (RMD) and reducing taxable income.
Let’s Put These Ideas to Work
Tax rules can be complex, but taking time now to make smart moves can lead to meaningful savings. If you’d like to review your portfolio for tax opportunities, we’re here to help.
Contact Dreyer Wealth Management today to schedule your mid-year planning session and make sure your investments are working efficiently for you.