Surprised at all these answers that you don’t need to do anything to minimize taxes. If you have a significant non-retirement brokerage account, tax efficiency is absolutely a core consideration. If you buy and hold mutual funds, the trades of underlying assets can be taxable events for you. Tax loss harvesting is absolutely a thing. Add to that any 1099 or other non-W2 income, and you can end up owing a lot, and strategies like donating appreciated shares can be a lifesaver.

Anonymous wrote:Im not sure an advisor is necessary if his wages are standard. A little bit of google should figure this out for you. You just put in the numbers that correspond to your withholding and everything else is automated.

If bonuses are paid in stock options or something like that, then maybe you need guidance.

+1

Also, you need a new financial advisor if they cannot consult on basic tax issues. His income is W2 income any good FA should be able to help with that

Any CPA should be able to help you with the basics of your questions re: tax planning.

But the bottom line is that there aren't really creative ways to lower your taxable income - you should max out pre-tax retirement contributions, take advantage of FSA/HSA if that makes sense, and contribute whatever amount to a 529 yields a deduction, but that's about it.

Anonymous wrote:Thank you! This is all new to us, so apologies for the naive/ignorant questions. Household income is going from roughly 250k to about 600k. I realize that on DCUM, it isn't that crazy, but to us, it's mind-blowing. I have questions about withholding, yes, and also how to invest wisely to lower taxable income. We also have 3 kids that will be in college at the same time, so some of the questions go towards preparing for that in the smartest way.

In terms of wisely investing just figure out two things- your stock bond mix and then how much you want in us vs international stocks. You seen youngish so probably 90/10 or 80/20 stock/bonds and a good US/international split is 60:40. Then just find broad based low cost mutual funds through fidelity, Schwab or vanguard

If you have W2 wages there is no way to hide it

Assuming it’s all w2 income (RSUs are considered earned income) and it’s not your own business there’s nothing you can do. Even the more esoteric stuff you wouldn’t want to do at your tax bracket (37percent doesn’t hit for MFJ until north of 700k). Max out your 401k; look into an HSA; make sure you do a backdoor Roth if you don’t have an existing traditional IRA.

There’s no point in talking to a tax strategist. At best there’s a few strategies around oil and gas and short term rentals with accelerated depreciation that you could do to reduce taxable income. But the oil and gas stuff is generally dumb and probably wouldn’t pencil out until you hit the 37% bracket anyway and short term rentals are another job.

Go out to a nice dinner and figure out what percent of increase you want to save and what percent you want to spend/give away. Realize you’re going to be paying more in taxes than you ever thought possible and while that sucks it’s better than the alternative.

This sounds like you’ve got base salary, RSUs, and a cash bonus. Don’t count on the cash bonus - it’s usually mostly driven by company performance so many times you won’t see 100% of the total value and instead get 50-90%.

RSUs you’ll likely want to sell at vest automatically. We don’t but the general rule is you should and you seemed concerned about taxes so selling automatically means you only get taxed on them once as income vs holding and paying cap gains as well once you sell later. Put the $$ in VOO or whatever your current advisor recommends. Keeps you diversified.

Max out all retirement accounts including mega backdoor roth if the employer allows it.

Just file estimated tax for the bonuses when you get them. Any penalty first time around is small. Then you know your average rate for next year.

Thank you! This is all new to us, so apologies for the naive/ignorant questions. Household income is going from roughly 250k to about 600k. I realize that on DCUM, it isn't that crazy, but to us, it's mind-blowing. I have questions about withholding, yes, and also how to invest wisely to lower taxable income. We also have 3 kids that will be in college at the same time, so some of the questions go towards preparing for that in the smartest way.

Is your concern the estimated taxes?

OP, what income are we talking here? Under $1-2M and the advice is mostly the same and you can Google it yourselves / use your existing advisor. Unfortunately there’s no real tax hacks for W2 income specifically. Welcome to the working rich : )

$2M+ annual income is usually where it makes sense to get specialized advice, as that’s when you’ll maybeee want to be exploring investments to offset part of your income annually (eg investment property depreciation, maybe spouse wants to pivot into real estate FT and leverage that part of the tax code if they aren’t also in a highly paid profession, etc.). Also, many times at that level you have to set up a plan with your employer and an advisor they give you that sells your stock regularly on your behalf to avoid insider trading.

But not sure if that’s applicable here?

For context we went from $200K to $800K in 1 year (similar path - hill staffer to lobbyist) and this is what we were told by multiple firms we reached out to when we thought we needed special help.

Im not sure an advisor is necessary if his wages are standard. A little bit of google should figure this out for you. You just put in the numbers that correspond to your withholding and everything else is automated.

If bonuses are paid in stock options or something like that, then maybe you need guidance.

We switched to Divergent because they could help with both investments and tax strategies. But honestly if your husband earns a salary and bonus in actual money, there is not much you can do to avoid taxes.

He should ask for a rec at his firm.

My husband has a new job that has a base salary and bonuses. This is new reality for us, as previously he was in the federal government. I'd like us to consult with a tax expert to figure out how best to manage our salaries and accounts. We do work with a financial advisor already, but she is not a tax expert. If you work with someone who helps you plan out your income vs taxes, what did you search for? What expertise and characteristics should I find? I have Googled tax advisors, but there are a million and I'd just love a starting point.