If my posts on the mistake of chasing worth shares or the necessity to make investments huge cash to make life-changing cash don’t resonate, take into account hiring a monetary skilled to handle your portfolio. You is probably not obsessed sufficient to persistently make investments the quantity wanted to retire comfortably. Offloading the burden of investing frees up your time and vitality 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 nicely.
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 one 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 in all probability obtained rather a lot in your plate: investments, actual property, perhaps a enterprise or two. What you would possibly not be paying sufficient consideration to? Tax planning.
It’s not attractive 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 shoppers, 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. In case you’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 essential for prime 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 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 canine workers…”). The reality: the most important positive aspects 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 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. 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 recurrently to tweak and optimize earlier than the clock runs out.
2. What’s the cope with the SALT deduction modifications?
The State and Native Tax (SALT) deduction cap obtained a brief enhance after the passage of The One Huge 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 would possibly use the Move-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 shoppers, 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 strategy advanced high-earner conditions?
Let’s say you’re a enterprise proprietor with important 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 1000’s in missed 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 shoppers:
- Not deducting medical insurance premiums.
- Lacking the Certified Enterprise Earnings (QBI) deduction.
- Ignoring dwelling workplace deductions.
Extra frequent errors Empower might help catch:
- Capital loss carryforwards misplaced when switching preparers/software program
- Incorrect Backdoor Roth processing
- Missed Overseas Tax Credit score
- Mistaken value foundation for inventory gross sales (ESPP, choices)
- HSA distributions taxed in error
From there, Empower seems to be ahead—perhaps establishing a solo 401(ok), timing earnings, or planning capital positive aspects. The thought is to create an ongoing tax playbook, not simply repair previous errors.
4. What real-world tax financial savings have shoppers seen?
Missed medical insurance deductions are surprisingly frequent—and dear.
- S-Corp proprietor: CPA added medical insurance premiums to W-2 wages (appropriately) however by no means instructed the shopper they may deduct these premiums above the road. Amending three years’ returns saved ~$6,000 in federal taxes.
- Sole proprietor: Deducted medical insurance as a Schedule A itemized deduction, however couldn’t profit as a consequence 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 insurance deductions. Catching this will save $1,000+ per 12 months.
These aren’t flashy hedge-fund-like wins—however they’re assured returns through 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
Normal 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 subsequent—leading to a much 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 aspects elsewhere—then reinvesting in comparable (however not “considerably similar”) property—can decrease your current-year tax invoice whereas holding your portfolio allotted. All Empower Private Technique shoppers ($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 enables you to lock in right now’s tax fee when 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 an alternative on compliance and submitting.
Empower builds tax planning into its total wealth administration service for shoppers with $100K+ in investable property. Meaning:
- One price, 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
Huge funding wins get the headlines, however 12 months after 12 months, quiet, boring, proactive tax strikes may be value simply as a lot, typically extra. For top earners, ignoring tax planning is like leaving compounding on the desk.
In case you’ve obtained $100K+ in investable property, 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, guide your free, no obligation session right here. An Empower skilled will evaluate your investments and internet value, and provide some ideas on the place you possibly can optimize, all without spending a dime.
Empower’s Tax Optimization Providers
Tax optimized investing (tax loss harvesting, tax location, tax effectivity): obtainable to shoppers investing $100K+.
Tax planning steering (evaluation and proposals – determine gaps and alternatives in your tax technique earlier than you file along with your advisor and tax specialist): obtainable to $250K+.
At $1M+, shoppers obtain the above, along with entry to a CPA, at no further value.
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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