If my latest posts on the mistake of chasing worth shares or the necessity to make investments massive cash to make life-changing cash 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 getting 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 top earners, I agreed. It’s a subject I do know all too properly.
What I did not notice is that Empower presents tax planning as a part of its normal shopper service. No further invoices, no $300/hour CPA payments. Simply built-in recommendation, included within the administration price. 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 Earnings Earners
While you’re a excessive earner—assume $250,000+ earnings or the potential to get there—you’ve most likely obtained quite a bit 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 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 sensible tax planning can ship. For those who’re trying to find 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 important for top earners?
While 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 most important positive factors 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 seem minor in isolation, however over 20 years, they will carve a severe tunnel towards monetary freedom.
Right here’s the hazard: by the point you file in April, most alternatives are gone. For those who’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 frequently 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 Massive Stunning 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 below $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—in case you personal a pass-through enterprise (S-corp, partnership, LLC taxed as such), you would possibly use the Go-By 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 suitable 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 strategy advanced high-earner conditions?
Let’s say you’re a enterprise proprietor with vital funding earnings, passive rental earnings, and actual property holdings.
With Empower, you principally have a “tax specialist on demand” baked into your price – 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 ignored deductions.
- Holistic planning based mostly in your targets. Tax technique isn’t in a vacuum—it’s tied to your funding plan, property targets, and money circulate wants.
Widespread missed alternatives for self-employed purchasers:
- Not deducting medical health insurance premiums.
- Lacking the Certified Enterprise Earnings (QBI) deduction.
- Ignoring house workplace deductions.
Extra widespread errors Empower can assist catch:
- Capital loss carryforwards misplaced when switching preparers/software program
- Incorrect Backdoor Roth processing
- Missed International Tax Credit score
- Incorrect value foundation for inventory gross sales (ESPP, choices)
- HSA distributions taxed in error
From there, Empower seems ahead—possibly establishing a solo 401(okay), timing earnings, or planning capital positive factors. 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 informed the shopper 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 as a result 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 health insurance deductions. Catching this could save $1,000+ per yr.
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 repeatedly:
Bunching Charitable Contributions
Customary deduction in 2025: $15,750 (single) / $31,500 (married). By combining two or extra years of donations into one tax yr, you possibly can exceed the usual deduction, itemize that yr, and take the usual deduction the subsequent—leading to an even bigger whole deduction over time.
Bonus: Donate appreciated property or use a Donor-Suggested Fund for much more effectivity.
Tax Loss Harvesting
Promoting investments at a loss to offset positive factors elsewhere—then reinvesting in comparable (however not “considerably similar”) property—can decrease your current-year tax invoice whereas protecting 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
Shifting funds from a standard IRA to a Roth IRA permits you to lock in at the moment’s tax fee in case you anticipate to be in the next 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 purchasers with $100K+ in investable property. Which means:
- One price, 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 could be value simply as a lot, generally extra. For prime earners, ignoring tax planning is like leaving compounding on the desk.
For those who’ve obtained $100K+ in investable property, Empower is providing Monetary Samurai readers a free session. Even in case you’re assured in your present plan, a second opinion may uncover hundreds in missed alternatives.
For a restricted time solely, e-book your free, no obligation session right here. An Empower skilled will assessment your investments and internet value, and provide some solutions on the place you possibly can optimize, all without cost.
Disclosure: This assertion is offered by Kansei Integrated (“Promoter”), which has a referral settlement with Empower Advisory Group, LLC (“EAG”). Study extra right here.
