9 tax strategies high earners use to keep more money

0:00 If you just paid your taxes this year and you feel like you're being punished for earning a good income, I totally get it. In 2019, I owed over $30,000 on top of my W2 withholdings. That was the moment I realized it's not about how much you make, it's about how you structure what you keep. And now my tax bill looks completely different. Not because I make less, I actually make more, but because I learned how to legally use the system the way that it was written. And today, I'm going to show you the nine tax strategies that can help you do the same. Now, these aren't shady loopholes. They're real IRS approved strategies that most high-inccome earners just don't know exist. If you made over $100,000 this year, there's a good chance that you overpaid. And this video is going to walk you through how to fix that. First is to max out your HSA. If you have a high deductible health plan, you qualify for a health savings account. Now, most people don't realize how powerful these are. You get a tax deduction going in, taxfree growth, and also taxfree withdrawals for qualified medical expenses. Let me give you an example. I contribute the max every year, but I don't use the account to pay my medical bills. I pay those out of pocket and keep the receipts. That lets my HSA compound untouched. and years from now, I'll be able to reimburse myself taxfree with decades of growth on top. It's like a hidden retirement account, only better. This concept alone and one small shift in how you use a standard account can save you thousands of dollars and also grow your money at the same time.

1:06 The second strategy is a backdoor Roth IRA. Now, most high income earners get phase out of Roth IRA contributions, but the backdoor Roth lets you still get in the game. You put after tax money into a traditional IRA and then you convert it. Every single year, I max it out, convert it, and now I have money growing completely taxree. You'll need to file form 8606. Once you do it once, it's easy year after year. The third strategy is a solo 401k. Let's say you have freelance income, consulting, Airbnb, or even selling things online. You may qualify for a solo 401k. It lets you contribute both as an employee and also an employer, meaning you can potentially shelter over $60,000 per year. I use mine through one of my LLC's, and it's a great way to reduce tax on side income while also building wealth. And you don't have to be a full-time business owner to make this work. Now, let's pause here for a second. These first three are all strategies that anyone can use, whether you're W2 employee or a part-time side hustler. And now we're going to step it up a level. And by the way, if you're enjoying this type of content, I'm going to be hosting an in-depth free workshop on how to cut over $30,000 on your tax bill and also add over six figures to your investment portfolio live. If you're interested, you can click the link in the description. The fourth is an LLC plus escort election. If you're currently a W2 employee, but thinking about starting a business, this is something to keep on your radar. And if you already run a business that's making over $50,000 or more in profit, this move could be a game changer. When you elect ESCORP status, you pay yourself a salary and you take the rest of your income as

2:22 distributions, which aren't subject to self-employment tax. This is exactly what I did when my business income crossed that threshold. And my CPA helped me set it up properly. Now, the first year alone, they saved me nearly $20,000 in taxes. And you're going to want to make sure that you're running payroll and also tracking everything properly, but the upside is going to be huge. And when you elect escort status, you pay yourself a salary and then the rest of your income is going to flow through as a distribution, avoiding self-employment tax on that portion. And that's what I did once I crossed that profit threshold. My CP helped me structure it and the savings added that fast. And again, you're going to want to make sure that you track your payroll properly and stay compliant, but it's totally worth it. Fifth is the home office deduction. If you work from home and have a space used exclusively for business, you can deduct a portion of your housing costs, including your mortgage or rent, interest, utilities, and even repairs. I use a 300T room in my house. It's about 6.25% of the house. And that means I can write off over $7,000 per year just for working where I already live. I just keep the documentation like photos and floor plans in case I ever get asked. The sixth strategy is to hire your kids. If you're self-employed or own a business, you might not realize that you can legally hire your children to work for you. The key here is the work must be real, age appropriate, and also documented. For example, I pay my son for helping with content, organizing, and also admin tasks. We track the hours, use time sheets, and also keep everything above board. Since he earns under the standard deduction threshold, he pays no income tax. I get an induction and he learns real financial

3:40 responsibility and it's a great way to shift income into a 0% bracket and also build wealth inside your family legally. Even if you don't have kids yet or aren't self-employed, keep this in mind. It's one of the most underutilized tax strategies out there, especially for business owners with families. It's real work documented with time sheets and that income stays in the family at a 0% tax rate. It's a legal way to teach your kids about money while saving you thousands of dollars. And I know we just went through a lot, but these strategies are all real. They're proven and used by thousands of business owners. and now you're in the no as well. Seventh is the Augusta rule. The IRS allows you to rent your home to your business for up to 14 days per year completely taxfree. And if you have any strategy sessions, filming days or internal retreats, you can use your home and have your business pay you. I do this several times a year. I document everything, the event, the agenda, market costs for rental rates. My business deducts the rent and I receive that income without paying a dime of tax on it. The eighth strategy is a short-term rental loophole plus cost segregation. Even if you don't currently own a rental property, this strategy is something to consider if you're thinking about diversifying your income and building long-term wealth.

4:38 Real estate is one of the few areas of the tax code where the government practically rewards you with deductions. If you do own or plan to buy a short-term rental and manage it actively, you can use depreciation losses to offset your other active income. And this is a big deal. I own seven short-term rentals. I keep guest stays under 7 days and put in over 500 hours per year managing them. And that lets me treat the income as active, meaning I can use cost segregation studies and also bonus depreciation to reduce taxes on my other businesses as well. In one year, I wiped out over $150,000 in taxable income using the strategy. The ninth strategy is a 1031 exchange. If you're thinking about getting into real estate or already own a rental property, then this strategy lets you keep more of your money when it's time to sell. Instead of paying capital gains taxes when you sell a property, the IRS allows you to roll that equity into a new investment through a 1031 exchange. That means you defer the tax bill and you get to reinvest all of your profit. I used this when I sold two forplexes. I rolled the equity into a 24 unit commercial building and paid no tax on the gains.

5:30 That single move preserved hundreds of thousands of dollars. You don't need to start big, even a small duplex or a single family rental can be the beginning of a long-term wealth building strategy. The strategy helps you scale your portfolio while keeping your capital intact. These are the exact strategies that I use to legally pay less in taxes than most people making the same income. Now, they're not hacks. They're part of the system. You just have to know how to use them. You don't need to implement all of them tomorrow. Just pick two, learn them, apply them, and the next April, your tax bill could look very different. If you want to go deeper on how to structure your income, reduce your tax bill, and also build real wealth, I want to invite you to a free finance webinar that I put together. It's focused on how to cut your tax bill by over $30,000 or more, and also add $100,000 plus to your investment portfolio using the exact same strategies that we just covered, but with more depth and clarity. You're going to see how to bring everything together into a single compounding plan. If that sounds like something that you need, then you can click the link in the description to join for free. If you want to keep learning how to pay less taxes, structure your money, and also build wealth the right way, you can check out my other videos as well. There should be a stream that pops up somewhere on the screen right now. I post everything I actually do so you can apply it as well. Thank you for watching. If you found this video helpful, please give it a like. It helps out the channel a lot. And also subscribe so you don't miss any future videos. Thanks for watching.