If my current posts on the mistake of chasing worth shares or the necessity to make investments huge cash to make life-changing cash don’t resonate, you could need to think about hiring a monetary skilled to handle your portfolio. You will not be investing sufficient usually to retire comfortably sooner or later. Offloading the burden of investing frees up your time and vitality to give attention to work, household, and hobbies.
At this second, I’m making ready to do my taxes once more. Yearly I file an extension (Oct 15 deadline) due to delayed Okay-1s from personal fund investments. So when Empower reached out about highlighting tax planning errors for prime earners, I agreed. It’s a subject I do know all too effectively.
What I did not understand is that Empower gives tax planning as a part of its commonplace consumer service. No further invoices, no $300/hour CPA payments. Simply built-in recommendation, included within the administration charge. Contemplating that taxes are sometimes the only largest expense for high-income earners, having proactive technique baked in is a giant deal.
The Significance Of Tax Planning For Excessive Revenue Earners
Once you’re a excessive earner—assume $250,000+ earnings or the potential to get there—you’ve in all probability bought so much in your plate: investments, actual property, possibly a enterprise or two. What you would possibly not be paying sufficient consideration to? Tax planning.
It’s not horny like a moonshot AI inventory, however the compounding impact of sensible, constant tax strikes can rival funding returns over time. As Empower Private Wealth specialist Scott Hipp, CPA, CFP® explains, for high-income, high-net-worth shoppers, tax planning isn’t about chasing one-off loopholes, it’s about proactive, coordinated, year-round technique.
Let’s dive into 4 key questions Scott answered that reveal simply how a lot worth sensible tax planning can ship. In the event you’re looking for a monetary skilled to handle your wealth, selecting one which integrates tax planning into their service is crucial, not an add-on.
Empower has been a long-time affiliate accomplice of Monetary Samurai, and I personally consulted for Private Capital (later acquired by Empower) from 2013 to 2015. I’ve seen firsthand how incorporating tax technique into wealth administration can meaningfully enhance long-term returns.
1. Why is tax planning crucial for prime earners?
Once you’re within the high federal tax brackets—32%, 35%, or 37%—each strategic transfer counts extra. Saving 1% on taxes for somebody making $100K is sweet. Saving 1% for somebody making $800,000? That’s 4 first-class tickets to Hawaii with a pair thousand left over.
Scott says most individuals consider tax planning as a once-a-year scramble or a hunt for magical loopholes (“I heard Uncle Bob pays zero taxes as a result of he made his canines staff…”). The reality: the largest positive aspects come from small, constant, authorized strikes yr after yr.
It’s like The Shawshank Redemption: stress and time. Maxing out a well being financial savings account, backdoor Roth contributions, charitable “bunching,” and tax-loss harvesting could appear minor in isolation, however over 20 years, they will carve a critical tunnel towards monetary freedom.
Right here’s the hazard: by the point you file in April, most alternatives are gone. In the event you’re submitting 2025’s taxes in April 2026, your deadline for many methods was December 31, 2025. That’s why Empower’s crew works year-round—advisors and tax specialists meet usually to tweak and optimize earlier than the clock runs out.
2. What’s the take care of the SALT deduction adjustments?
The State and Native Tax (SALT) deduction cap bought a short lived enhance after the passage of The One Massive Lovely Invoice Act on July 4, 2025. It’s $40,000 in 2025 (up from $10,000), rising barely every year till 2029, earlier than reverting in 2030.
Who advantages? Principally taxpayers with AGI underneath $500K in high-tax states. Hit $600K AGI, and the expanded cap phases out fully.
However even excessive earners over $600K aren’t out of luck—if you happen to personal a pass-through enterprise (S-corp, partnership, LLC taxed as such), you would possibly use the Cross-By means of Entity Tax (PTET) workaround. Right here, the enterprise pays state taxes, making them totally deductible federally, and also you get a state tax credit score. As of 2025, 35+ states have a PTET possibility.
For the proper shoppers, SALT adjustments + PTET can unlock deductions value tens of 1000’s—cash that stays in your portfolio as a substitute of the IRS’s coffers.
3. How does Empower strategy advanced high-earner conditions?
Let’s say you’re a enterprise proprietor with important funding earnings, passive rental earnings, and actual property holdings.
With Empower, you mainly have a “tax specialist on demand” baked into your charge – no shock payments. The method begins with:
- Reviewing the previous three years of returns for missed alternatives. (You’ve bought three years to amend and declare a refund.) Empower can spot 1000’s in ignored deductions.
- Holistic planning primarily based in your objectives. Tax technique isn’t in a vacuum—it’s tied to your funding plan, property objectives, and money movement wants.
Widespread missed alternatives for self-employed shoppers:
- Not deducting medical insurance premiums.
- Lacking the Certified Enterprise Revenue (QBI) deduction.
- Ignoring dwelling workplace deductions.
Extra frequent errors Empower may help catch:
- Capital loss carryforwards misplaced when switching preparers/software program
- Incorrect Backdoor Roth processing
- Missed Overseas Tax Credit score
- Mistaken value foundation for inventory gross sales (ESPP, choices)
- HSA distributions taxed in error
From there, Empower seems ahead—possibly organising a solo 401(ok), timing earnings, or planning capital positive aspects. The thought is to create an ongoing tax playbook, not simply repair previous errors.
4. What real-world tax financial savings have shoppers seen?
Missed medical insurance deductions are surprisingly frequent—and expensive.
- S-Corp proprietor: CPA added medical insurance premiums to W-2 wages (appropriately) however by no means instructed the consumer they may deduct these premiums above the road. Amending three years’ returns saved ~$6,000 in federal taxes.
- Sole proprietor: Deducted medical insurance as a Schedule A itemized deduction, however couldn’t profit on account of medical expense thresholds and never itemizing in any respect. Amending saved ~$7,500.
- Medicare premiums: Many don’t know they qualify as self-employed medical insurance deductions. Catching this will save $1,000+ per yr.
These aren’t flashy hedge-fund-like wins—however they’re assured returns by way of tax financial savings, usually compounding over years.
Key Methods Empower Makes use of for Excessive Earners
Scott shared a number of proactive strikes that come up time and again:
Bunching Charitable Contributions
Normal deduction in 2025: $15,750 (single) / $31,500 (married). By combining two or extra years of donations into one tax yr, you’ll be able to exceed the usual deduction, itemize that yr, and take the usual deduction the subsequent—leading to a much bigger complete deduction over time.
Bonus: Donate appreciated belongings or use a Donor-Suggested Fund for much more effectivity.
Tax Loss Harvesting
Promoting investments at a loss to offset positive aspects elsewhere—then reinvesting in comparable (however not “considerably similar”) belongings—can decrease your current-year tax invoice whereas maintaining your portfolio allotted. All Empower Private Technique shoppers ($100K+) reduce your tax burden with proactive software of tax-loss harvesting and tax location.
Roth Conversions
Transferring funds from a standard IRA to a Roth IRA allows you to lock in at present’s tax fee if you happen to anticipate to be in a better bracket later. Future withdrawals? Tax-free. That is particularly highly effective in lower-income years earlier than RMDs kick in.
Saving Cash On A Good CPA
An excellent CPA would possibly cost $150–$400/hour only for tax consultations. In the meantime, many don’t provide proactive planning in any respect, focusing as a substitute on compliance and submitting.
Empower builds tax planning into its total wealth administration service for shoppers with $100K+ in investable belongings. Which means:
- One charge, one built-in plan.
- Advisors and tax specialists in the identical room (or Zoom) all yr.
- Proactive calls earlier than the deadlines—not “we’ll see you subsequent April.”
The Backside Line
Massive funding wins get the headlines, however yr after yr, quiet, boring, proactive tax strikes may be value simply as a lot, generally extra. For top earners, ignoring tax planning is like leaving compounding on the desk.
In the event you’ve bought $100K+ in investable belongings, Empower is providing Monetary Samurai readers a free session. Even if you happen to’re assured in your present plan, a second opinion may uncover 1000’s in missed alternatives.
For a restricted time solely, ebook your free, no obligation session right here. An Empower skilled will evaluation your investments and internet value, and provide some solutions on the place you’ll be able to optimize, all at no cost.
Disclosure: This assertion is offered by Kansei Integrated (“Promoter”), which has a referral settlement with Empower Advisory Group, LLC (“EAG”). Be taught extra right here.
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