Income Planning Strategies Under the Latest Tax Code

Tax checklist for those of you making $200K - $600K/year of 1099 income 1 - LLC taxed as an S corp. By electing S corp, most save $5K - $30K/year. Every. Single. Year. Helps with self-employment taxes, QBI deduction, and a PTET election for those in high-tax states. Example: Med devices person making $600K in California filing single. No S corp = $42,134 in self-employment taxes and $0 QBI deduction. S corp = $28,678 in payroll taxes and then an $80K QBI deduction. $80K deduction at 35% federal rates = $28K tax savings. Plus a PTET election to get a $40K federal deduction for paying state taxes through his entity vs. $10K SALT cap that is reduced from $40K because of phase-outs. There's a lot in here but it all begins with LLC taxed as an S corp. 2 - Accountable plan to make sure reimbursements are made for home office, vehicle mileage, and health insurance. I'm putting this near the top because I see this missed so often. 3 - Solo 401K (not a SEP IRA). If somebody has a SEP IRA, it is a dead giveaway that they are missing an opportunity to do great, proactive planning. Example: LLC owner with an $80K reasonable salary can only get $20K into a SEP IRA but if they use a solo 401k they can get $72K into a plan plus do a backdoor Roth between employee, employer, and mega backdoor Roth contributions. One small change, multiple six to seven-figure differences. 4 - Backdoor Roth. An easy one that takes 5 mins a year and lowers future capital gains taxes. 5 - HSA. Another easy one for those of you with relatively low health expenses. 6 - 529 plans. Depends but usually one where somebody will hit the $35K # that can be rolled to a Roth IRA. 7 - Hire kids when possible. Don't be stupid with this. Must be real and legit and keep great documentation. Example: Pay $15K to kids, which shifts income out of 35% tax brackets to 0% and then they can max out a Roth IRA since they have earned income. 8 - Trump accounts. Not for the free $1K but to backdoor $ into Roth IRAs when they are an adult. Just have to plan around the kiddie tax. 9 - Direct indexing. I have a webinar recording that goes into detail but a great one for those of you with large taxable accounts in high tax states. Helps with capital gains taxes while still owning the S&P500/any other index. 10 - Asset location. Put high upside positions in tax-free Roth accounts so that the potential gains are tax-free. 11 - Cash balance plan. Not common for most people I work with but great for those making $1m+ a year consistently. 12 - Add spouse to payroll and then add them as a participant to the solo 401k plan. Household max now doubles from up to $72K to up to $144K. Just have to make sure the added payroll taxes are worth it and usually $600K+ of income is where the benefit can begin to make sense A few other things here and there hopefully this gives a good little brain dump at what's possible for those of you with 1099 income in this income range

You’re losing money if your salary isn’t structured smartly. As a CA and finance consultant, I’ve reviewed salary structures for hundreds of professionals. And I see the same pattern every time: decent income, poor planning, and benefits left on the table. If you’re salaried and want to build real wealth, here’s what you need to start paying attention to: ✅ Choose the right tax regime - New Regime: Offers a ₹75,000 standard deduction and simplified slabs, with tax-free income up to ₹12 lakh. - Old Regime: Better if you leverage HRA, LTA, or deductions like 80C and 80CCD(1B). Use a tax calculator to pick the winner. ✅ Tap into Tax-Free Allowances - If you rent, use HRA to significantly lower your taxable income (old regime). - Use LTA to cover two domestic trips every four years (old regime). - Meal Vouchers up to ₹50 per meal for two meals/day is tax-free (old regime). ✅ Maximize deductions smartly - Section 80C: Invest up to ₹1.5 lakh in EPF, PPF, ELSS, or insurance (old regime). - NPS: Add ₹50,000 under 80CCD(1B), plus employer contributions (10–14% of salary, both regimes). - Health Insurance: Claim ₹25,000–₹75,000 under 80D for premiums (old regime). ✅ Watch your standard deduction ₹75,000 in the new regime, ₹50,000 in the old. Check your Form 16 to ensure it’s applied. ✅ Bonus isn’t for splurging Treat it as capital. Invest at least half in ELSS, mutual funds, or your emergency corpus. Your salary is more than a paycheck, it’s a system for financial growth. Optimize it to keep more of what you earn. What’s one tax-saving move you’ve made that actually worked?

Let’s be clear. This isn’t just another tax tweak. This is a full-blown shakeup of how high earners build wealth. But here’s the unfiltered version: It’s a tax overhaul that could quietly reshape how you earn, save, and invest for years. QBI Deduction: Made permanent at  20% . A win for business owners if you know how to qualify. SALT Cap: Up from $10K to $40K. But don’t celebrate too fast. If you make over $500K, it phases right back down. New Tax Brackets: Some income thresholds are moving higher. Some are compressing. Estate & Gift Tax Exemption Increased to $15 million per individual and $30 million per married couple. A significant opportunity to transfer more wealth tax-free if you plan ahead. Permanent 100% Bonus Depreciation Eligible business property acquired after January 19, 2025, qualifies for 100% immediate expensing. This is a major tax planning lever for businesses investing in equipment, improvements, or qualified assets. Clean Energy Credits Gone. The $7,500 EV credit and solar incentives vanish after 2025. Overtime & Tip Exclusions Temporary tax breaks for tips and overtime. What’s the real takeaway? The rules of the game just changed. And most people won’t realize it until they file in 2026 and see a bigger bill. If you’re serious about staying ahead, now is the time to ask: Does your current plan align with this new reality? Are you optimizing deductions before they expire or phase out? Are you using 100% bonus depreciation to reduce taxable income? Do you know how these changes impact your income stacking, estate strategy, entity structure, and investments? The difference between proactive and reactive tax planning is the difference between keeping more and overpaying again.

Let’s discuss a 𝐫𝐞𝐚𝐥 𝐥𝐢𝐟𝐞 example of how a small tax planning tweak saved a client 𝐥𝐚𝐤𝐡𝐬 𝐢𝐧 𝐭𝐚𝐱𝐞𝐬 on his 𝐫𝐞𝐭𝐢𝐫𝐞𝐦𝐞𝐧𝐭 money. The client was 69 years old and had around $𝟓𝟎𝟎,𝟎𝟎𝟎 in his 𝐈𝐑𝐀. He wanted to retire and he planned to 𝐰𝐢𝐭𝐡𝐝𝐫𝐚𝐰 the 𝐟𝐮𝐥𝐥 𝐚𝐦𝐨𝐮𝐧𝐭 from his 𝐈𝐑𝐀 and invest it into an 𝐚𝐧𝐧𝐮𝐢𝐭𝐲 to get guaranteed monthly income for life. For instance, he considered putting the $500,000 with an insurance company under a Straight Life Annuity plan. This plan promised a 5% return, and considering Mr. A’s life expectancy was around 20 years, he would get about $𝟒𝟎,𝟏𝟎𝟎 𝐩𝐞𝐫 𝐲𝐞𝐚𝐫, which is roughly $𝟑,𝟑𝟒𝟎 𝐩𝐞𝐫 𝐦𝐨𝐧𝐭𝐡 for the next 20 years. At first glance, the plan looked good. But here’s the 𝐜𝐚𝐭𝐜𝐡. Withdrawing money from one retirement account, even if the intention is to reinvest it into another retirement plan, is considered a 𝐭𝐚𝐱𝐚𝐛𝐥𝐞 𝐞𝐯𝐞𝐧𝐭. That means withdrawing the full $500,000 from his IRA in a single year would make the 𝐞𝐧𝐭𝐢𝐫𝐞 𝐚𝐦𝐨𝐮𝐧𝐭 𝐭𝐚𝐱𝐚𝐛𝐥𝐞 in that year itself. Based on his other income, this withdrawal would push him into the highest federal tax bracket of 37%, resulting in about $𝟏𝟖𝟓,𝟎𝟎𝟎 𝐢𝐧 𝐭𝐚𝐱𝐞𝐬, excluding any state taxes. After paying the taxes, he would be left with only around $𝟑𝟏𝟓,𝟎𝟎𝟎 to 𝐢𝐧𝐯𝐞𝐬𝐭. Using the same annuity example, his guaranteed income would now drop to roughly $𝟐𝟓,𝟑𝟎𝟎 𝐩𝐞𝐫 𝐲𝐞𝐚𝐫, or about $𝟐,𝟏𝟎𝟎 𝐩𝐞𝐫 𝐦𝐨𝐧𝐭𝐡 for the next 20 years. 𝐖𝐡𝐚𝐭 𝐜𝐨𝐮𝐥𝐝 𝐡𝐚𝐯𝐞 𝐛𝐞𝐞𝐧 𝐝𝐨𝐧𝐞 𝐝𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐭𝐥𝐲? Instead of withdrawing the money, the client could have 𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐞𝐝 𝐚 𝐪𝐮𝐚𝐥𝐢𝐟𝐢𝐞𝐝 𝐚𝐧𝐧𝐮𝐢𝐭𝐲 𝐝𝐢𝐫𝐞𝐜𝐭𝐥𝐲 𝐰𝐢𝐭𝐡𝐢𝐧 𝐡𝐢𝐬 𝐈𝐑𝐀. By doing so, the entire $500,000 would stay within the IRA, and 𝐧𝐨 𝐭𝐚𝐱 would apply. The 𝐦𝐚𝐢𝐧 𝐩𝐨𝐢𝐧𝐭 to note is that the monthly payments from the annuity would still be taxed as 𝐨𝐫𝐝𝐢𝐧𝐚𝐫𝐲 𝐢𝐧𝐜𝐨𝐦𝐞, but only the amount received each year, not the full $500,000 at once. For example, if he received $40,100 per year as income, that amount would be added to his taxable income, and he would pay taxes on just that portion annually. Based on estimates, his tax bill on that income would be roughly $𝟐,𝟖𝟐𝟖 𝐩𝐞𝐫 𝐲𝐞𝐚𝐫, which is significantly lower compared to paying $𝟏𝟖𝟓,𝟎𝟎𝟎 𝐮𝐩𝐟𝐫𝐨𝐧𝐭 in one go. This simple change in approach saved him a huge amount in taxes and ensured steady income during retirement. #cpa #cpafirm #ustax #irs #ustaxation #learning #taxstrategy #retirement #ira #annuity

Most people try to build wealth by earning more. Smart investors build wealth by keeping more. 𝗧𝗵𝗲 𝗱𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝗶𝘀 𝘁𝗮𝘅 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆. Without a plan, taxes quietly take a large share of your growth. With the right strategy, that same money keeps compounding. Here are 7 ways smart tax planning helps build long-term wealth: 1. Maximize tax-advantaged accounts ↳ Reduce taxable income while investments grow. ↳ Contribute yearly limits, use retirement accounts, and never ignore employer matching. 2. Use business expense deductions ↳ Legitimate expenses lower overall taxable income. ↳ Track mileage, travel, equipment, and keep clean records for documentation. 3. Invest in tax-efficient assets ↳ Lower taxes mean more money compounding. ↳ Favor long-term investing, tax-efficient funds, and holding assets longer. 4. Harvest tax losses strategically ↳ Losses can offset gains and reduce taxes owed. ↳ Sell underperforming assets carefully and reinvest with proper timing. 5. Structure income through businesses ↳ Business income opens the door to more deductions. ↳ Separate expenses, plan salary distributions, and use the right structure. 6. Plan charitable contributions wisely ↳ Giving can reduce taxable income legally. ↳ Donate appreciated assets, bundle donations, and document everything. 7. Time income and expenses carefully ↳ When you earn and spend affects how much tax you pay. ↳ Delay income, accelerate deductions, and review timing before deadlines. 8. Work with a tax professional ↳ Expert planning prevents expensive mistakes. ↳ Review strategies yearly and plan ahead before big decisions. The goal isn’t to avoid taxes. It’s to pay what’s required, and not more. Wealth isn’t only built by how much you make. It’s built by how much you keep and compound. Smart tax strategy turns income into lasting wealth. Follow me Marc Henn for more. We want to help you Retire Early, Supercharge Your Cash Flow, and Minimize Taxes. Marc Henn is a licensed Investment Adviser with Harvest Financial Advisors, a registered entity with the U. S. Securities and Exchange Commission.

With the capital gains inclusion rate increasing from 1/2 to 2/3 on June 25th, many taxpayers are considering recognizing capital gains early. This decision will often involve triggering the Alternative Minimum Tax (AMT), which commonly applies to scenarios with significant capital gains. Effective tax planning requires determining the income needed to utilize the AMT in the current year or the next seven years. This calculation is complex, as it depends on various factors, including the taxpayer's other income, deductions, and credits for the year, as well as the type of income that could be generated to utilize the AMT carryforward. Typically, AMT carryforwards can be offset more quickly with employment income compared to eligible dividends. For instance, let's consider a Canadian resident in Ontario with no other income who recognizes $1,000,000 of capital gains before June 25th. This scenario would generate a Federal AMT of $29,839 and an Ontario AMT of $15,763. To offset this AMT in 2024 using employment income would require $243,647 of employment income. Offsetting it with eligible dividends would require $691,865 of eligible dividends. If the AMT were carried forward to 2025, offsetting it using employment income would require approximately $163,596, while eligible dividends would require approximately $456,256. When AMT applies, considering the taxpayer's existing income and potential future income can lead to significant tax savings. All these calculations were made simple with TTI's Goal Seek feature ( https://lnkd.in/gj3dHcsY) in TTI's Personal Tax Scenario worksheet (https://lnkd.in/gbv6EZxX). This tool quickly answers practical questions such as how much income is needed to target a specific amount of net cash, how much to withdraw before OAS is clawed back, or how much dividend income is needed to utilize an AMT carryforward.

Most tech leaders leave serious money on the table with their tax strategy. The irony? Taxes are likely your biggest expense each year. Yet we spend more time optimizing smaller costs. We recently hosted a Supra learning talk with tax advisors who specialize in working with tech employees. They shared 5 tax moves that high earners often miss: 1/ Get strategic with charitable giving Don't just donate randomly throughout the year. Instead: ↳ Pool multiple years of donations into a Donor Advised Fund ↳ Donate appreciated stocks directly (avoid capital gains + get the deduction) ↳ Time it right to exceed the standard deduction threshold This simple shift can save you thousands. 2/ Maximize equity compensation Most people obsess about salary vs equity splits. The real game-changer? Early exercise + 83(b) election. Why it matters: ↳ Start long-term capital gains clock early ↳ Potentially save 15-20% on taxes when you exit But be careful: Only do this if you can afford to lose the exercise cost. 3/ Real estate isn't just about appreciation Smart property investing can create powerful tax benefits: ↳ Depreciation often wipes out rental income tax ↳ Interest and property tax deductions ↳ Short-term rentals (<7 days) can offset W2 income The key? Structure it right from day one. 4/ Think beyond the 401k High earners have more options: ↳ Cash Balance Plans for higher contribution limits ↳ Municipal bonds for tax-free income ↳ Strategic life insurance policies for tax-deferred growth 5/ State planning matters Moving states? Watch out for the "convenience of employer" rule. If your company is based in NY/CA: ↳ Remote work doesn't automatically save state taxes ↳ Equity grants can be taxed by multiple states ↳ Timing your move matters more than most realize The most expensive mistake? Most tech leaders treat their accountant like a tax preparer instead of a strategic advisor. They send over their documents in March. Get their returns filed in April. And never think about taxes again until next year. This passive approach costs them hundreds of thousands. The reality? Tax strategy is a year-round game. Work with advisors who can help you plan proactively. Small moves today can mean six-figure differences tomorrow. What other tax strategies have worked for you? ---- This post is for informational purposes only and should not be considered tax advice. Always consult with your tax advisor before implementing any tax strategies.

Three years of debate. Countless what-ifs, endless scenarios. Today, we finally pulled the trigger. My client is converting their S-Corp to a C-Corp, and the move is set to save them over $10 million. Why even bother switching? Here's the secret weapon: Section 1202 of the tax code. It lets owners of certain C-Corps sell their business almost tax free. How's that possible? Let's break it down. First, you need to run a qualifying business. Check. Second, you have to hold onto the stock for a while: - 3 years: 50% tax free - 4 years: 75% tax free - 5 years: 100% tax free Sounds simple, right? Not quite. There's a catch: the "built-in gain." Picture this, the business is worth $15 million today. When they exit, that $15 million will be taxed with an additional 3.8%. But here's where it gets exciting. Section 1202 lets them exclude up to 10x that $15 million in future capital gains. So if they grow and sell for $200 million after 5 years, the tax breaks down like this: - The first $15 million gets hit at 33.8% - The next $150 million? Zero percent tax - Anything above that, regular rates apply Do the math: $16.9 million in tax on $200 million in proceeds. Without planning, that tax bill would have been closer to $60 million. And with $200 million in cash, there are even more strategies we can use to chip away at the rest. The best part? This isn't a once-in-a-lifetime fluke. It's a roadmap available to many entrepreneurs who are willing to plan ahead. If you know someone thinking about selling their business, tag them or share this post. Let's see if this strategy could change their future.

Tax planning does not mean saving money. It basically means optimizing your finances for a safer future while aligning with the government's rules. With the latest amendments in the Finance (No. 2) Act 2024, it’s a great time to revisit your tax strategies for the Financial Year (FY) 2024-25 (Assessment Year 2025-26). Here’s how you can make the most of the new tax provisions and minimize liabilities effectively:  → Strategically sell securities at a loss to offset capital gains and reduce your taxable income. The long-term capital gains exemption limit has increased from ₹1L to ₹1.25L. Book annual profits within this limit to balance your portfolio and save on taxes over time.  → Under section 80 C, you can deduct up to ₹1.5 lakh by investing in PPF, ELSS, ULIPs and more and claim an additional ₹50,000 under Section 80CCD(1B). Every rupee invested in these reduces your taxable income and builds a safety net.  → With increased deductions in the new tax regime, salaried taxpayers can gain a lot. The standard deduction has been raised to ₹75,000 and employer NPS contributions u/s 80CCD(2) have been increased to 14% of the basic salary.  If there is a marriage, a new addition to the family, or retirement, then they can affect your finances. So reassess your tax strategies to align with changing priorities.  Do you have a strategy to tally your taxes and avoid penalties? #tax #strategy

A bigger CTC doesn’t mean a bigger take-home. As income grows, the tax share grows with it. Cross ₹50L and nearly 3 out of every ₹10 earned goes to taxes. Instead of only chasing increments, structure smarter. Rework salary structure → Use HRA, LTA and reimbursements wisely → Add employer NPS under 80CCD(2) Maximise deductions → 80C ₹1.5L + extra ₹50K NPS → 24(b) ₹2L home loan interest → 80D health insurance benefits Plan investments efficiently → Hold equity long-term for better LTCG treatment → Avoid unnecessary churning → Use tax-loss harvesting when needed Higher salary increases tax. Smarter planning increases take-home.