Author Topic: Looking to hear from high income earners  (Read 5264 times)

scarab007

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Looking to hear from high income earners
« on: January 06, 2014, 09:15:35 PM »
New year and new tax prep to look at. Wanting to hear from high income earners (350k - 520k) income.  Beside the maxing of 401k and investing/saving each month, what other areas are you saving money?  Seems the tax man comes hard around this time of year.  We are W2 on this income, so no personal business expenses to claim. 

Thanks for taking a look and seeing what you do?  Not really interested in buying property, seems you can only claim loss/gains when you sell the properties. 

Mr Mark

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Re: Looking to hear from high income earners
« Reply #1 on: January 06, 2014, 09:34:32 PM »
Get a good tax accountant.  At these levels of income, they'll pay their way.

scarab007

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Re: Looking to hear from high income earners
« Reply #2 on: January 06, 2014, 09:54:28 PM »
Get a good tax accountant.  At these levels of income, they'll pay their way.

Yes, working on that now, had some not so good ones in the past.  Feel there are other tax areas we can take advantage of.  Also living in Cali is a fault to start with HAHA

msilenus

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Re: Looking to hear from high income earners
« Reply #3 on: January 06, 2014, 10:41:00 PM »
I just went back and scanned some of your earlier posts for context.  As the recent purchaser of a Bay Area home pulling down that kind of scratch, it seems implausible that you're staying out of AMT.

You're fucked, sir.

Okay, there are some small things.  Your capital gains rate might be higher than you think it is (depending on what you think it is) because they're chewing up your AMT exemption.  Probably 38% with California added in.  Buy-and-hold becomes better.  Maxing after-tax 401(k)s and doing Roth conversions become better.  Backdoor Roth conversions become better.  529 savings plans become better if you have kids and plan to pay for their college.  Et cetera.   But those are all good things regardless.  You can't deduct property tax on your Federal return, but your landlord can, so being in AMT can make renting more attractive.

There's a point at which your AMT exclusion is completely eaten up, and your Federal marginal rate plummets to the 28% it sort of is supposed to be.  Then after you start earning enough more, you might wind up in the higher normal tax brackets, but there's a weird regressive sweet spot for some people with a lot of excluded deductions.

Get a good tax accountant.  Sketch out a return all by yourself as well.  You really need some hands-on experience with the bizarro world of AMT.  But the bottom line is there isn't a lot you can do.  It's literally designed to solve the problem of high earners able to do things to minimize their liability.  It's not meant for small-fry high earners like you, but it's pretty good at what it does.

scarab007

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Re: Looking to hear from high income earners
« Reply #4 on: January 06, 2014, 10:54:47 PM »
I just went back and scanned some of your earlier posts for context.  As the recent purchaser of a Bay Area home pulling down that kind of scratch, it seems implausible that you're staying out of AMT. Yes, we hit the AMT. Yes, just purchased a home a few years back here in the Bay area.

You're fucked, sir. HAHA..well thank you for the honest response. 

Okay, there are some small things.  Your capital gains rate might be higher than you think it is (depending on what you think it is) because they're chewing up your AMT exemption.  Probably 38% with California added in.  Buy-and-hold becomes better.  Maxing after-tax 401(k)s and doing Roth conversions become better.  Backdoor Roth conversions become better.  529 savings plans become better if you have kids and plan to pay for their college.  Et cetera.   But those are all good things regardless.  You can't deduct property tax on your Federal return, but your landlord can, so being in AMT can make renting more attractive.

There's a point at which your AMT exclusion is completely eaten up, and your Federal marginal rate plummets to the 28% it sort of is supposed to be.  Then after you start earning enough more, you might wind up in the higher normal tax brackets, but there's a weird regressive sweet spot for some people with a lot of excluded deductions.

Get a good tax accountant.  Sketch out a return all by yourself as well.  You really need some hands-on experience with the bizarro world of AMT.  But the bottom line is there isn't a lot you can do.  It's literally designed to solve the problem of high earners able to do things to minimize their liability.  It's not meant for small-fry high earners like you, but it's pretty good at what it does.

Seems will have to wait for my appointment for the tax man.  Yes, AMT is pretty good at what it is meant for, guess the world we live in.

msilenus

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Re: Looking to hear from high income earners
« Reply #5 on: January 06, 2014, 11:54:02 PM »
If you get any good tips, be sure to report back!

money_bunny

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Re: Looking to hear from high income earners
« Reply #6 on: January 12, 2014, 08:25:13 PM »
Delay taking income with a deal with your employer?

SnackDog

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Re: Looking to hear from high income earners
« Reply #7 on: January 13, 2014, 02:38:00 AM »
  • Avoid any unnecessary income or gains: ISOs, stock and asset sales should be deferred unless they are producing a loss.
  • Increase charitable donations.
  • Reduce your number of children!