For those with high HHI ($500K), tax saving strategies

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So let me get this straight. You asked a CPA. You didn't like the correct answer s/he gave you. And so you thought you'd crowd source this?

Maybe count your blessings to be doing so well that you can contribute that level of taxation and be glad you don't live in other places of the world where taxes are higher (because the USA is basically the world's tax haven).

The short answers is the same your CPA gave you. You're salaried employees. Short of increasing exclusions like 401K contributions, there really are no magic tricks here. And thank God for that. Pay your fair share, damnit.

Ditch the attitude!!

It's frustrating to pay so much of your income in taxes. Those making over $178K pay 75-80% of all income taxes at the federal level. So while many of us are happy to do our part, it's frustrating to see so much of our hard earned income go to taxes ALL the time. We see no real breaks, and are not billionaires

That’s a load of horseshit.

72% in 2022! Pretty close to 75-80%

https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2025/

+1000

The 75-80% came from an article after 2022. The people you want paying more are those in the Ultra Ultra UHNW...think worth over $100M+, whose "income" comes from borrowing against their options/stock.

Not the people who have W2/1099INT/DIV income. We pay (and have been) for decades. Everything over about 751K for a married filing jointly couple is taxed at 37%, and so on down the chart.

Yep. Proposed CA wealth tax is surprisingly rational and addresses the problem of unrealized gains. We’ve got to tax portfolio loans for the UHNW too. Such a loophole.

Wealth tax won't work unless we impose it across all states. The Googler founders just moved their interests out of the state to escape it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So let me get this straight. You asked a CPA. You didn't like the correct answer s/he gave you. And so you thought you'd crowd source this?

Maybe count your blessings to be doing so well that you can contribute that level of taxation and be glad you don't live in other places of the world where taxes are higher (because the USA is basically the world's tax haven).

The short answers is the same your CPA gave you. You're salaried employees. Short of increasing exclusions like 401K contributions, there really are no magic tricks here. And thank God for that. Pay your fair share, damnit.

Ditch the attitude!!

It's frustrating to pay so much of your income in taxes. Those making over $178K pay 75-80% of all income taxes at the federal level. So while many of us are happy to do our part, it's frustrating to see so much of our hard earned income go to taxes ALL the time. We see no real breaks, and are not billionaires

That’s a load of horseshit.

72% in 2022! Pretty close to 75-80%

https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2025/

+1000

The 75-80% came from an article after 2022. The people you want paying more are those in the Ultra Ultra UHNW...think worth over $100M+, whose "income" comes from borrowing against their options/stock.

Not the people who have W2/1099INT/DIV income. We pay (and have been) for decades. Everything over about 751K for a married filing jointly couple is taxed at 37%, and so on down the chart.

Yep. Proposed CA wealth tax is surprisingly rational and addresses the problem of unrealized gains. We’ve got to tax portfolio loans for the UHNW too. Such a loophole.

I do not agree with a "wealth tax" on everything. But I do agree, if you are borrowing against capital, you need to pay taxes on that capital.

However, the solution is not just to tax anyone who is worth $5M (insert whatever number) on their net worth. We are UHNW, we don't hide anything. We paid taxes on everything when we earned it (either as regular income or Capital gains). I dont' borrow against my "wealth". So I do not need to and shouldn't have to pay taxes yearly on my "net worth", if it is simply invested wealth.

Lucky for you the CA wealth tax is $1B and above and it’s focused on people like the Google co-founders who take loans against their ownership stake instead of having to sell shares and pay taxes for liquidity. It’s also a one time tax.

LOL. One time taxes are never one time. Also it is projected to gradually cover lower income people. This is why go getters are leaving California.

[Anonymous]

Anonymous wrote:Over the last few years, we have done well with our HHI but cringe at tax time. Together, we pay close to $150+K in federal taxes. I asked our CPA if there are ways to reduce our taxes, he said as W2 employees, we don't really have many options. He didn't really give us any "outside the box" ideas. We max out our retirement accounts, HYSA. CPA said we can't use home office (we work from home sometimes) as a deduction.

I was curious as to how some folks reduce their tax burden legally...Any ideas, please share.

OP, I'd move to Delaware for no state income tax.

[Anonymous]

If you are a high W2 income employee you really need to live in a state with no or moderate income tax.

[Anonymous]

https://www.newsweek.com/former-starbucks-boss-leaving-washington-what-we-know-11657833

Starbucks founder is leaving Washington State. Washington State passed a tax of 10% on anyone earning 1million dollars over and above the existing taxes.

[Anonymous]

Our income tax code is so unfair. I wish we’d repeal the 16th amendment. The founders didn’t envision relying on taxing the productive activities of certain citizens to fund the government. Maybe setting the standard deduction should be 5 million or so could be a compromise, but I wish we’d scrap the federal income tax entirely.

Also, I don’t give a crap if the billionaires leave to avoid paying their fair share under a more fair system. Good riddance.

[Anonymous]

Anonymous wrote:https://www.newsweek.com/former-starbucks-boss-leaving-washington-what-we-know-11657833

Starbucks founder is leaving Washington State. Washington State passed a tax of 10% on anyone earning 1million dollars over and above the existing taxes.

Washington state has no income tax. So 10% on income only over a million is basically nothing.

[Anonymous]

Anonymous wrote:If you are a high W2 income employee you really need to live in a state with no or moderate income tax.

Most high W2 income jobs are located in states with higher income taxes

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you are a high W2 income employee you really need to live in a state with no or moderate income tax.

Most high W2 income jobs are located in states with higher income taxes

This, unfortunately. Most Tier 1 and 2 cities (for COL adjusted pay, this is an actual method used by HR, not trying to start a city war!) are located in states with high state taxes.

Tier 1 pay is SF, LA, NYC, usually Seattle.

DC area is Tier 2 (so 90% ish of what a Tier 1 employee gets for base depending on company and then usually if you’re in tech RSUs are not adjusted for COL).

That’s not a bad deal if you live in VA which basically has a flat state income tax.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you are a high W2 income employee you really need to live in a state with no or moderate income tax.

Most high W2 income jobs are located in states with higher income taxes

This, unfortunately. Most Tier 1 and 2 cities (for COL adjusted pay, this is an actual method used by HR, not trying to start a city war!) are located in states with high state taxes.

Tier 1 pay is SF, LA, NYC, usually Seattle.

DC area is Tier 2 (so 90% ish of what a Tier 1 employee gets for base depending on company and then usually if you’re in tech RSUs are not adjusted for COL).

That’s not a bad deal if you live in VA which basically has a flat state income tax.

There are also some high paying industries that are heavily concentrated in these places. Tech in CA, finance in NYC metro, entertainment in LA, big law in NYC/Chicago/ LA/SF/DC, pharma in CT/NJ/MA. There’s been some dispersal in those industries, but the majority of the jobs are still in the original home bases.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Over the last few years, we have done well with our HHI but cringe at tax time. Together, we pay close to $150+K in federal taxes. I asked our CPA if there are ways to reduce our taxes, he said as W2 employees, we don't really have many options. He didn't really give us any "outside the box" ideas. We max out our retirement accounts, HYSA. CPA said we can't use home office (we work from home sometimes) as a deduction.

I was curious as to how some folks reduce their tax burden legally...Any ideas, please share.

OP, I'd move to Delaware for no state income tax.

Delaware has income tax? It doesn't have sales tax.

[Anonymous]

Anonymous wrote:

Anonymous wrote:401k
mega back door Roth will avoid taxes over time
HSA
I bonds
Tax efficient investment allocation
529
Flexible spending accounts

THis is good advice, and some that you may not get from a CPA because they are not investment experts. I'd also add in tax loss harvestig - -there are automated investment options (we use Wealthfront) that do this automatically.

We have some money with a financial advisor and they aim to reduce taxes now (typically divident payments) but choosing investment vehicles that shield us from that. Better to take such gains down the road when our income is lower (retired) and we'd be in a lower tax bracket.

Are they really going to be in a lower tax bracket though? OP is making over $500K. That tax bracket's floor is $250K. Are they really going to live on half their current income in retirement? That's quite a lifestyle adjustment.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, you need a side business: rental income, landscaping, tutoring, house cleaning, remodeling, etc.

Let’s say they have a side gig doing tutoring and earn a few extra bucks that way. How can that benefit someone earning 500k+ ?

Or you mean it needs to be an actual business where they hire others?

I think they mean a side business that loses money for the tax write off

No that's not what is meant. It would be silly to own a business just to lose money considering the time exerted and liability.
However, what does happen is this from first hand experience. I could make tons more money than i do now. I simply don't have the desire to pay $40,000 in more taxes for every $100,000 earned. It's taken away my desire to spend more time earning that money when such a huge chunk goes to pay others that don't pay tax. Our capitalist economy is already suffering and many of you fools want to tax us more out of nothing but sheer greediness. GOYA's It's not fair that someone sacrifices their time to make twice the income, but after paying tax is closer to the goof that only works 40 hr weeks.

If you are starting a business just to lose money to write off against your W2 income, then it’s not much time exerted (and not sure about the liability).

Start a business as an Amazon reseller and write off your home internet and cell phone and a portion of your utilities…heck, have it resell everyday items and you buy all your normal home products as inventory.

Find some “trade shows” in vacation destinations (where you can usually walk the floor for free) and attend for one day, yet you write off a bunch of your travel expenses. Have your CPA prepare taxes for your family and the business, and write off the entire cost.

The list goes on.

Only problem is you can only lose money for 3 of 5 years, or IRS considers it a hobby and you can no longer take losses. Though you could probably eke out a small profit every 3rd year.

Lose money for 3 years and close the business. Start a new one, rinse and repeat.

It is all tax fraud if you are pretending. You are ultra rich but are going go through all of this to avoid taxes even if you will still be ultrarich after you pay them? You cannot take it with you!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Over the last few years, we have done well with our HHI but cringe at tax time. Together, we pay close to $150+K in federal taxes. I asked our CPA if there are ways to reduce our taxes, he said as W2 employees, we don't really have many options. He didn't really give us any "outside the box" ideas. We max out our retirement accounts, HYSA. CPA said we can't use home office (we work from home sometimes) as a deduction.

I was curious as to how some folks reduce their tax burden legally...Any ideas, please share.

OP, I'd move to Delaware for no state income tax.

Delaware has income tax? It doesn't have sales tax.

Alaska and New Hampshire are the places to move.

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming are the states with no income tax, but generally they make up for it with high property and sales taxes. Except, Alaska and New Hampshire also have no sales tax. New Hampshire also no longer taxes interest and dividends, while Washington taxes capital gains on high income earners.

[Anonymous]

Anonymous wrote:https://www.newsweek.com/former-starbucks-boss-leaving-washington-what-we-know-11657833

Starbucks founder is leaving Washington State. Washington State passed a tax of 10% on anyone earning 1million dollars over and above the existing taxes.

The state has never had a state income tax, and now is only going to tax everybody's income over the first $1 million. Your first million is free of tax -- I'd take that in a heartbeat! White a whiner to move over such a thing.