If my current posts on the mistake of chasing value stocks or the necessity to make investments big money to make life-changing money don’t resonate, you might need to think about hiring a monetary skilled to handle your portfolio. Offloading the burden of investing frees up your time and power to deal with 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 Ok-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 notice is that Empower presents tax planning as a part of its normal 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 an enormous deal.
The Significance Of Tax Planning For Excessive Revenue Earners
Whenever you’re a excessive earner—assume $250,000+ revenue or the potential to get there—you’ve in all probability obtained loads in your plate: investments, actual property, perhaps a enterprise or two. What you may not be paying sufficient consideration to? Tax planning.
It’s not horny like a moonshot AI inventory, however the compounding impact of good, 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 purchasers, 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 good tax planning can ship. In case you’re looking for a financial professional to handle your wealth, selecting one which integrates tax planning into their service is important, 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 important for prime earners?
Whenever you’re within the prime federal tax brackets—32%, 35%, or 37%—each strategic transfer counts extra. Saving 1% on taxes for somebody making $100K is good. 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 most important beneficial properties come from small, constant, authorized strikes 12 months after 12 months.
It’s like The Shawshank Redemption: strain and time. Maxing out a health savings account, backdoor Roth contributions, charitable “bunching,” and tax-loss harvesting could appear minor in isolation, however over 20 years, they’ll carve a critical tunnel towards monetary freedom.
Right here’s the hazard: by the point you file in April, most alternatives are gone. In case you’re submitting 2025’s taxes in April 2026, your deadline for many methods was December 31, 2025. That’s why Empower’s group 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 modifications?
The State and Native Tax (SALT) deduction cap obtained a brief enhance after the passage of The One Big Beautiful Bill Act on July 4, 2025. It’s $40,000 in 2025 (up from $10,000), rising barely annually till 2029, earlier than reverting in 2030.
Who advantages? Largely taxpayers with AGI underneath $500K in high-tax states. Hit $600K AGI, and the expanded cap phases out utterly.
However even excessive earners over $600K aren’t out of luck—when you personal a pass-through enterprise (S-corp, partnership, LLC taxed as such), you may use the Move-By means of Entity Tax (PTET) workaround. Right here, the enterprise pays state taxes, making them absolutely deductible federally, and also you get a state tax credit score. As of 2025, 35+ states have a PTET choice.
For the appropriate purchasers, SALT modifications + PTET can unlock deductions value tens of hundreds—cash that stays in your portfolio as a substitute of the IRS’s coffers.
3. How does Empower method advanced high-earner conditions?
Let’s say you’re a enterprise proprietor with vital funding revenue, passive rental revenue, 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 obtained three years to amend and declare a refund.) Empower can spot hundreds in neglected 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 circulate wants.
Widespread missed alternatives for self-employed purchasers:
- Not deducting medical health insurance premiums.
- Lacking the Certified Enterprise Revenue (QBI) deduction.
- Ignoring house workplace deductions.
Extra widespread errors Empower may help catch:
- Capital loss carryforwards misplaced when switching preparers/software program
- Incorrect Backdoor Roth processing
- Missed International Tax Credit score
- Improper value foundation for inventory gross sales (ESPP, choices)
- HSA distributions taxed in error
From there, Empower appears ahead—perhaps establishing a solo 401(k), timing revenue, or planning capital beneficial properties. The concept is to create an ongoing tax playbook, not simply repair previous errors.
4. What real-world tax financial savings have purchasers seen?
Missed medical health insurance deductions are surprisingly widespread—and expensive.
- S-Corp proprietor: CPA added medical health insurance premiums to W-2 wages (accurately) however by no means advised the consumer they may deduct these premiums above the road. Amending three years’ returns saved ~$6,000 in federal taxes.
- Sole proprietor: Deducted medical health insurance as a Schedule A itemized deduction, however couldn’t profit resulting from 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 health insurance deductions. Catching this may save $1,000+ per 12 months.
These aren’t flashy hedge-fund-like wins—however they’re assured returns through tax financial savings, usually compounding over years.
Key Methods Empower Makes use of for Excessive Earners
Scott shared just a few proactive strikes that come up many times:
Bunching Charitable Contributions
Customary deduction in 2025: $15,750 (single) / $31,500 (married). By combining two or extra years of donations into one tax 12 months, you possibly can exceed the usual deduction, itemize that 12 months, and take the usual deduction the following—leading to an even bigger complete deduction over time.
Bonus: Donate appreciated belongings or use a Donor-Advised Fund for much more effectivity.
Tax Loss Harvesting
Promoting investments at a loss to offset beneficial properties elsewhere—then reinvesting in related (however not “considerably an identical”) belongings—can decrease your current-year tax invoice whereas maintaining your portfolio allotted. All Empower Private Technique purchasers ($100K+) reduce your tax burden with proactive software of tax-loss harvesting and tax location.
Roth Conversions
Transferring funds from a conventional IRA to a Roth IRA enables you to lock in at present’s tax price when you count on 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
A very good CPA may cost $150–$400/hour only for tax consultations. In the meantime, many don’t supply proactive planning in any respect, focusing as a substitute on compliance and submitting.
Empower builds tax planning into its total wealth administration service for purchasers with $100K+ in investable belongings. Which means:
- One charge, one built-in plan.
- Advisors and tax specialists in the identical room (or Zoom) all 12 months.
- Proactive calls earlier than the deadlines—not “we’ll see you subsequent April.”
The Backside Line
Large funding wins get the headlines, however 12 months after 12 months, quiet, boring, proactive tax strikes might be value simply as a lot, typically extra. For prime earners, ignoring tax planning is like leaving compounding on the desk.
In case you’ve obtained $100K+ in investable belongings, Empower is providing Monetary Samurai readers a free session. Even when you’re assured in your present plan, a second opinion might uncover hundreds in missed alternatives.
For a restricted time solely, book your free, no obligation session here. An Empower skilled will evaluate your investments and web value, and supply some solutions on the place you possibly can optimize, all free of charge.
Disclosure: This assertion is offered by Kansei Included (“Promoter”), which has a referral settlement with Empower Advisory Group, LLC (“EAG”). Be taught extra here.
