[Ian]

Its crazy how far people go to avoid paying taxes. If they spent as much time and energy thinking about how to increase their income as they do avoiding taxes they would be better off financially.

Mostly what people do to avoid taxes is commit tax fraud by opening a business and then having the business buy all of their personal items while also claiming them as business expenses.

Mostly what can be done is deferring taxes rather than avoiding them.

The wealthy find ways to defer taxes for decades, and then they die.
To put it simply, you stop earning money.

Keep all of your wealth invested. Never realize capital gains.

Then, take out loans against your investment portfolio for your own consumption.

Loans are not income, gains are not realized, no taxes.

[Sean]

Are your earnings w2 or self employed? High earning W2 employees don’t have many options to lower tax burden.

[Asia]

Sigh this literally keeps me up at night. From what I’ve learned, we should be doing the following:

contributing to an employee contribution plan such as a 401(k), contributing to a health savings account (HSA) or a flexible spending account (FSA), and contributing to a traditional IRA.

[Steve]

Those videos push you to commit tax fraud, which is punishable by prison. PrisonFI is not one of the good options.

[Bethany]

Offset your W2 earnings with real estate depreciation and losses. Google “cost segregation” and STRs.

[Elena]

If one of you make $300k and the other make $100k, then maybe the 100k w2 earner could quit and be self-employed making about the same and do real estate. That’s one way.

If both are high earners, then not much you could do unless you have legitimate businesses that could help with some business write-off.

Personally not there yet but looked a bit into it haha.

[Bonnie]

In the book Diary of an Early Retiree: How You Can Do It Step by Step it suggests maximizing your fringe benefits with pre -tax money such as child care, health accounts, 401ks, etc.

[Tristan]

Real estate is my personal favorite way, but obviously not for everyone.

Yes, if you have a legitimate business then you have a lot more tax opportunities than a w2 employee, but a lot of people think they can open just anything.

You have to have intent to make an income and be sure if doesn’t end up being delegated as a hobby where you lose the write off capabilities…

for general tax ideas the first place to start to see if there are any is a CPA

[Sriram]

Given your earnings are all W-2, options are limited. The one bit you can check with your employer is they have a deferred compensation plan (DCP).

You are lowering your income and let the deferred income. You’ll pay tax when you withdraw. Something to investigate (in a sense, you fund a pension for yourself).

All that said…taxes are the wrong bar. You pay high taxes because your income is high.

This can be viewed as a good thing…

[Stan]

Get a good tax accountant who doesn’t simply file taxes but has some understanding of tax reduction strategies.

I also engage my FA in that and what I look for in an advisor.

I have a great FA b/c he not only provides insights on investment updates/knowledge but also updates me on tax changes (Secure Act 2.0, for example) so we work to take advantage of every tax advantage strategy we can.

I’m a W-2 employee too.

[Shawn]

You are pretty limited if you just have W2 income. Any business you start needs to have a legitimate business purpose.

Yes, the tax strategies are better for business.

[Author]

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