Earning a high income is a great start to building wealth, but it’s only part of the equation. Smart, forward-looking tax planning helps you uncover hidden “tax leaks” so you can keep more of what you make.
Watch our short video to learn how high earners can use strategic tax planning to grow their wealth.
Transcript:
High Earners Need Forward-Looking Tax Planning to Build Wealth
Benefits and equity compensation aren’t aligned. I’m Rory O’Hara with Ausperity Private Wealth in Moorestown, New Jersey. Today I’ll show you how high earners in their 30s, 40s, and 50s can use smart tax planning to build wealth. If you’re a high earner, the goal isn’t just to make more—it’s to keep more.
CPAs tend to be backward-looking in the sense that they’re focused primarily on filing and compliance after the tax year. If you want to build wealth, forward-looking tax planning decisions are essential.
Common Tax Planning Mistakes High Earners Make
Start looking proactively for tax leaks like failing to optimize Roth versus pre-tax retirement accounts, investing in ways that create avoidable short-term capital gains tax, and holding concentrated in employer stock with no plan.
Ausperity focuses on the intersection of planning, investments, and tax strategy so all these pieces work together.
How Tax Deferral Helps High Earners Build Wealth
Deferring taxes can be a great way to build wealth. You should max out contributions to tax-deferred retirement plans like 401(k)s whenever possible.
Strategic Roth Conversions (When They Make Sense)
Selective conversions may help you save. If your marginal tax rate dips temporarily because of a career change or a sabbatical, it might be worth considering strategic Roth conversions. Controlling timing is really the key here.
A sudden bonus or capital gain could easily spike your income—and your taxes. The biggest mistake happens when your income spikes and you don’t have a plan in place.
Equity Compensation and Concentration Risk
Equity compensation can accelerate wealth, but it can also increase your risk exposure and your taxes if you aren’t careful. If you have significant equity compensation, your portfolio might be suffering from concentration risk.
You don’t want to have your salary, bonuses, benefits, and stock all tied to one company. Creating and implementing a sell-and-diversify policy can help safeguard your portfolio.
After-Tax Performance Matters More Than Pre-Tax Returns
Pre-tax performance is what the market gives you. After-tax performance is what your strategy earns.
Asset location matters. Putting an asset in a tax-deferred versus tax-free account can have a major effect on your finances.
Harvesting your tax losses can help you avoid needlessly paying capital gains taxes.
Tax-Efficient Investing Strategies for Qualifying High Earners
For those high earners who qualify, we sometimes incorporate specialized hedge funds designed not just for your return, but for tax efficiency.
Here’s how it works: these funds can strategically realize capital losses, and in some cases they even generate ordinary losses. That means you can offset ordinary income, not just capital gains. This reduces your adjusted gross income and, more importantly, your federal tax bill.
It’s a powerful strategy, but it must be done with precision, due diligence, and the right structure.
Charitable Giving Strategies That Can Lower Your Tax Bill
Making charitable gifts intentionally (not randomly) means you can lower your tax liability while supporting the causes you love.
Free Tax Planning Checklist + How to Contact Ausperity Private Wealth
Even if you’re a high earner and you think you’re doing everything right but you’re not sure your tax strategy is integrated, we can help. Reach out to our team and I’ll share a quick tax planning checklist you can use to see that you’re taking the right steps.
To schedule a meeting, call 856-252-0102 or email me at [email protected], or you can book online.
Thanks for watching! I look forward to speaking with you soon.