For those with high HHI ($500K), tax saving strategies
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Anonymous
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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. |
Anonymous
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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. |
Anonymous
Can one of you switch from W2 to 1099? |
Anonymous
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401k
mega back door Roth will avoid taxes over time HSA I bonds Tax efficient investment allocation 529 Flexible spending accounts |
Anonymous
| Start a business? All the magic tricks are for entrepreneurs and those in much higher brackets |
Anonymous
No. I asked and HR won't allow it. |
Anonymous
We do max out backdoor Roth. Max out HSA. Have 529's. Don't have access to FSA. |
Anonymous
Why is reducing someone's tax burden a bad thing all of a sudden? |
Anonymous
| You can have a Schedule C business on the side and if you are on Medicare can apparently deduct some portion of your medicare premium. My accountant tried to do this. I think it's sketchy af for us and said no and gladly paid a couple hundred more in taxes. Ymmv but I felt it was just not what I wanted tomdo. |
Anonymous
This. Our HHI is around $800-1M and $100K or so is 1099. Even that “little” (relatively) amount helps a lot with taxes. Can one of you start consulting on the side, find a paid board seat with a smaller company, etc? Anything you can bring in via 1099 would help open up more possibilities. |
Anonymous
What? Explain this. Being a 1099 employee is generally the opposite of "helps a lot with taxes." |
Anonymous
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Do either of you have access to a deferred comp plan? We put over $60k a year into ours, which reduces taxable income a good deal.
As others said, max your 401k, HSA and FSAs if you have them. |
Anonymous
Under certain circumstances, this is legit; you need to have a Schedule C business that makes money and you need to not have access to insurance as an employee benefit from an employer. The way you said "on the side" when referencing the Schedule C business though ... yeah, it is "sketchy" (or worse) if you have access to an employer subsidized plan. Which makes sense -- the point with the deduction is to subsidize health insurance expenses, and the gov isn't going to do that for people who already have access to subsidized health insurance by way of an employee benefit. -- a tax professional who has made a living going into court and calling out tax strategies that are, as you put it, "sketchy af" |
Anonymous
It isn't. Looking to not pay your fair share, which this PP thinks OP is trying to do (and I agree, certainly smells that way to me as well), is a "bad thing." |
Anonymous
| Buy some rental properties |