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From opening stealth retirement accounts to strategic charitable giving, there are plenty of ways you can cut your taxes every year — and they're perfectly legit.
By
Lawrence Sprung, CFP®, CEPA®
published
7 March 2026
in Features
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IRS tax season is upon us, but if the first time you turn your attention toward taxes every year is when you're gathering documents to file, the chances are you're missing out on some loopholes that can help lower your tax obligation.
These tips can help you (legally) reduce what you owe every year.
1. Supercharge your retirement savings with the mega backdoor Roth
Roth IRAs have both income and contribution limits set by the IRS, making direct contributions to Roth IRAs generally unavailable to some high earners.
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Sign upOne workaround for those high earners is the mega backdoor Roth strategy in which after-tax contributions are made to a 401(k) and then converted to a Roth 401(k) or Roth IRA.
Only employer plans allowing after-tax contributions are eligible for this strategy. This option might be worth exploring with your financial adviser if your income is too high to contribute to a Roth IRA, allowing you to increase the tax-free savings in your retirement accounts.
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The author of this article is a participant in Kiplinger's Adviser Intel program, a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.
2. Turn your HSA into a stealth retirement account
Health savings accounts (HSAs) are designed as tax-advantaged accounts to hold funds for medical expenses, but a loophole allows you to stealthily use your HSA as a retirement account of sorts.
Since HSA funds don't expire every year, the funds can continue to grow tax-free. And since contributions to HSA accounts can be tax deductible, your annual taxable income can be reduced by your HSA contributions.
Withdrawals aren't taxed as income as long as the funds are used for medical expenses (those age 65 or older can use the funds for non-medical expenses without penalty but with the funds taxed as ordinary income).
HSAs don't have required minimum distributions, making them incredibly flexible in retirement.
Of course, HSAs can also be valuable as a way for those with high-deductible health insurance plans to pay their medical expenses, but when used as a stealth retirement account by those who qualify for these accounts, HSAs can nicely augment additional retirement funds.
3. The charitable 'bunching' strategy that doubles your deduction
Your generosity to the causes you care about can help lower your tax obligation, but if you're taking the standard deduction every year, there's a chance you're missing out on the opportunity to maximize your deductions.
A donor-advised fund (DAF) allows you to contribute assets (such as cash, stock and real estate) to an established, managed fund. Since the donation goes into the fund, there is some flexibility as to when you can take the deduction.
Even if the assets aren't allocated to a charity immediately, you can still take the deduction right away.
Since DAFs allow flexibility in what you can contribute, the potential for lowering capital gains tax by donating appreciated assets shouldn't be ignored.
Donating appreciated stocks directly into a DAF (instead of selling the stock and donating the proceeds) maximizes your impact while potentially lowering the tax you owe.
4. Family payroll power: Pay your kids and cut your taxes
Hiring your children to work for your business can make a lot of sense from the perspective of positioning them to live productive lives (or perhaps even someday become your successors), but it also makes sense when it comes to reducing your tax obligation.
The wages you pay your children for their work can be deductible as a business expense and, depending on their age and income, might not be taxable to them.
The trick here is that your children must actually work for you (you can't just add them to the payroll), the pay must be appropriate for their role, and you must keep records of their employment just as you would with any other employee.
Consider maximizing the benefits by having your children contribute to a Roth IRA with their wages, making the arrangement a win/win for you and them.
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5. Harvest losses to offset gains (even in good years)
Contrary to what you might have heard, tax-loss harvesting isn't just for down markets. Instead, it's a potentially effective way to reduce what you owe in taxes while also balancing your portfolio.
Losses can offset capital gains, then up to a $3,000 loss can be claimed on your taxes against your ordinary income annually. Any remaining loss can be carried over into subsequent years.
You're not allowed to turn around and repurchase the stocks you sold at a loss (or stocks that are "substantially identical") within 30 days of the sale if you're claiming the loss.
But tax-loss harvesting is one of the simplest legal tools to fine-tune your taxable income and keep your portfolio efficient.
Like any of the other loopholes mentioned above, tax-loss harvesting is a strategy that should be discussed with your financial adviser to ensure it's something for which you qualify and that it's done correctly with proper documentation throughout the process.
Any strategy that reduces your tax bill can theoretically invite additional scrutiny from the IRS.
These strategies are legal methods for reducing your tax bill — they're not covert schemes that will automatically raise red flags and trigger an audit. Use these loopholes correctly and you may just reduce the amount of money you owe to the IRS.
I often speak with the families I serve about seeking joy. What brings about joy during tax season? A lower tax bill, of course.
This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal, and/or tax advice. Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Mitlin Financial is located at 140 Adams Avenue Ste. B-12 Hauppauge, NY 11788
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
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Lawrence Sprung, CFP®, CEPA®Social Links NavigationFounder, Wealth Adviser, Mitlin Financial, Inc.Lawrence "Larry" Sprung, CFP®, CEPA®, is a husband, father, entrepreneur, award-winning adviser, author and mental health advocate. He is reshaping personal finance by fostering JOYful conversations around money. Larry founded Mitlin Financial, Inc., in 2004 with a focus on prioritizing the families they serve. The Mitlin name illustrates their culture as the firm is named in memory of Larry's wife's grandfather, Mitchell, and his mother, Linda.
