$88K in year one value: what one CPA missed for a $300K W-2 earner

This case study comes from one YouTube video. In it, Preston walks through the plan his team built for one client. The client is not named and does not speak in the video. Every number below is one Preston says on camera.

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Who the client is and where he started

He is a professional with $300,000 in W-2 income. He owns two properties with about $2 million in equity. He has about $150,000 in retirement accounts, strong credit, and no debt besides his mortgages.

He thought he was doing everything right. He had a CPA, and he maxed out his 401(k). But between federal tax, North Carolina state tax and FICA, he paid about $101,000 a year. His effective tax rate was about 33%.

Preston's point is that the CPA did nothing wrong. The returns were accurate. But filing taxes correctly and planning ahead to lower them are two different jobs.

What he and Preston's team did

After 60 days of working together, the team had a 12-month plan. It has three parts: set up the business side, find real deductions, and put the money saved to work.

1. He put his unused LLC to work

He already had an LLC, but it was just sitting there. The team set up a business checking account, a business credit card, bookkeeping, and folders for receipts and records. Preston says this is where most people fail. They form the LLC, then cannot back up their deductions.

2. He timed equipment he needed anyway

He needed about $20,000 of equipment, like a new laptop, monitors and office furniture. Buying it through the business and putting it in use before December 31 gave a $20,000 deduction. Preston puts the tax benefit at about $7,500.

3. He took the home office deduction the long way

The simple method caps the deduction at $1,500. The team used the actual expense method instead. His office was about 150 square feet, which made it 8.3% of the home. That gave a $2,500 deduction. They took photos and measured everything. Here is how the home office deduction works.

4. He rented his home to his business for meetings

The tax code lets you rent your home to your business for up to 14 days a year. You need a written agenda before each meeting, minutes after, and a fair market rent. The plan used $350 per meeting. Twelve meetings comes to $4,200. This is often called the Augusta rule.

5. He added an accountable plan and changed his W-4

An accountable plan is a written policy. It lets the LLC pay him back, tax free, for the business share of his phone, internet, mileage and other costs. For him, Preston puts that at $7,200 to $9,600 a year. With lower expected taxes, his W-4 was changed to withhold about $800 less each month. That frees $9,600 a year in cash flow, instead of waiting for a refund. You can test your own numbers with the payroll withholding estimator.

6. He lined up his retirement accounts

The plan covers maxing out his 401(k), a backdoor Roth IRA, a mega backdoor Roth if his work plan allows it, and a solo 401(k) once the LLC makes a profit. His $150,000 in retirement accounts was moved from index funds into funds that own income-producing real estate.

The numbers

These are plan numbers for year one, not results after a full year. The time shows the part of the video where each number comes up.

The numbers do not line up, so read them with care. At the start, Preston calls $88,000 "a conservative number." At the end, his year one breakdown adds up to $44,300 to $66,000 for the base plan. He says a more aggressive plan could reach $75,000 to $147,000. The video does not explain the gap.

The $88,000 is also not all tax savings. Preston says it mixes tax savings, cash flow and strategic positioning. In his breakdown, tax savings alone are $15,500 to $27,300.

In Preston's words

The client does not speak in this video, so these are Preston's words.

"He thought he was doing everything right. He had a CPA. He was maxing out his 401k."

"Filing correctly and structuring optimally are two completely different skill sets."

"tax savings don't matter if you just spend the money."

What to take from this

This is one client's plan, as Preston tells it. The client is not named, and the figures are estimates for year one. Your income, your state and what you already own will change every number here.

Timing mattered in this plan. Some steps, like the equipment purchase, had to happen before December 31 to count for that tax year. Nothing here is tax, legal or investment advice, so review your own situation with a qualified professional. More client results are on the reviews and client results page.