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, it’s possible you’ll need to contemplate hiring a monetary skilled to handle your portfolio. You will not be investing sufficient often to retire comfortably sooner or later. Offloading the burden of investing frees up your time and power 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 top 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 commonplace shopper service. No additional invoices, no $300/hour CPA payments. Simply built-in recommendation, included within the administration charge. Contemplating that taxes are sometimes the one largest expense for high-income earners, having proactive technique baked in is an enormous deal.
The Significance Of Tax Planning For Excessive Revenue Earners
While you’re a excessive earner—assume $250,000+ revenue or the potential to get there—you’ve most likely acquired rather a lot in your plate: investments, actual property, possibly 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 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. If you happen to’re trying to find a monetary skilled 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 increase long-term returns.
1. Why is tax planning crucial for top earners?
While 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 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 canine staff…”). The reality: the most important features come from small, constant, authorized strikes 12 months after 12 months.
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’ll carve a severe tunnel towards monetary freedom.
Right here’s the hazard: by the point you file in April, most alternatives are gone. If you happen to’re submitting 2025’s taxes in April 2026, your deadline for many methods was December 31, 2025. That’s why Empower’s staff works year-round—advisors and tax specialists meet often 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 acquired a short lived increase after the passage of The One Large Stunning Invoice 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? 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—when you personal a pass-through enterprise (S-corp, partnership, LLC taxed as such), you may use the Cross-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 proper purchasers, SALT modifications + PTET can unlock deductions value tens of 1000’s—cash that stays in your portfolio as an alternative of the IRS’s coffers.
3. How does Empower method complicated high-earner conditions?
Let’s say you’re a enterprise proprietor with important funding revenue, passive rental revenue, and actual property holdings.
With Empower, you principally 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 acquired three years to amend and declare a refund.) Empower can spot 1000’s in neglected deductions.
- Holistic planning primarily based in your targets. Tax technique isn’t in a vacuum—it’s tied to your funding plan, property targets, and money movement wants.
Widespread missed alternatives for self-employed purchasers:
- Not deducting medical health insurance premiums.
- Lacking the Certified Enterprise Revenue (QBI) deduction.
- Ignoring dwelling workplace deductions.
Extra frequent errors Empower will help catch:
- Capital loss carryforwards misplaced when switching preparers/software program
- Incorrect Backdoor Roth processing
- Missed International Tax Credit score
- Flawed price foundation for inventory gross sales (ESPP, choices)
- HSA distributions taxed in error
From there, Empower seems to be ahead—possibly establishing a solo 401(ok), timing revenue, or planning capital features. 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 frequent—and expensive.
- S-Corp proprietor: CPA added medical health insurance premiums to W-2 wages (accurately) however by no means advised the shopper they might 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 because 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 may save $1,000+ per 12 months.
These aren’t flashy hedge-fund-like wins—however they’re assured returns by way of tax financial savings, typically 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’ll be able to exceed the usual deduction, itemize that 12 months, and take the usual deduction the subsequent—leading to an even 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 features elsewhere—then reinvesting in comparable (however not “considerably an identical”) belongings—can decrease your current-year tax invoice whereas maintaining your portfolio allotted. All Empower Private Technique purchasers ($100K+) decrease your tax burden with proactive utility of tax-loss harvesting and tax location.
Roth Conversions
Transferring funds from a standard IRA to a Roth IRA enables you to lock in as we speak’s tax charge when you 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
A great CPA may cost $150–$400/hour only for tax consultations. In the meantime, many don’t supply proactive planning in any respect, focusing as an alternative on compliance and submitting.
Empower builds tax planning into its general wealth administration service for purchasers with $100K+ in investable belongings. Meaning:
- 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 could be value simply as a lot, typically extra. For prime earners, ignoring tax planning is like leaving compounding on the desk.
If you happen to’ve acquired $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 may uncover 1000’s in missed alternatives.
For a restricted time solely, e-book your free, no obligation session right here. An Empower skilled will evaluation your investments and web value, and supply 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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