These 4 mid-year tax strategies can trim next year’s bill from the IRS

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1. Review tax withholdings

When starting a new job, you fill out Form W-4, covering how much your employer withholds from your paychecks for federal taxes. 

But you need to revisit those withholdings, especially for major life changes such as marriage, having children or starting a side business.

Top reasons to adjust your withholding:

1. Tax law changes

2. Lifestyle changes like marriage, divorce or children

3. New jobs, side gigs or unemployment

4. Tax deductions and credits shifts

You can use the IRS Tax Withholding Estimator to see if you’re on track, or run projections with an advisor for more complex situations. 

And if you’re expecting a shortfall, there’s ample time to adjust your tax withholding or make estimated payments for the third or fourth quarters, Guarino said.

2. Boost 401(k) contributions

3. Weigh Roth IRA conversions

However, a down market may be a great time to pay taxes on the assets you want to convert, Lyman said.

For example, let’s say you invested $100,000 in a pretax IRA and now it’s worth $75,000. You can save on taxes since you’ll convert $75,000 rather than the original $100,000.

Of course, you’ll need a plan to cover those levies, and increasing income may have other tax consequences, like higher future Medicare Part B premiums. 

4. Consider tax-loss harvesting

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