Minimizing Tax Bill

quote:

---

Boss

---

Pay your employees more.

quote:

---

So what are options? Real Estate? What else.

---

This helps for sure.

Yup all W2 unfortunately. So we are rich poor lol.

quote:

---

So what are options? Real Estate? What else.

---

You are making a nice living. Be grateful. It beats the alternative.

Sorry to hear about your $385k in taxable income.

On a serious note, maybe look into muni bonds for any of your taxable investment/savings accounts. At least you’ll keep more of your interest that way.

The only real way to make your taxable income go down as a W2 employee is to lose money somewhere else, at least on paper.

Two white collar professionals making 180K each isn’t absurd. Middle management + bonus at a large company effectively.

quote:

---

What else.

---

Don't get divorced

If you are W2 it is quite difficult.

With the increased standard deduction and SALT cap it is definitely much harder to justify itemizing. If you do donate a decent amount to your church or charity that can get you over and help some.

If you have kids many (most) states allow a state deduction for 529 contributions. In LA it's $4,800 per kid and can be done even with standard deduction.

HSA (if you qualify) can be another decent option. It's triple tax free if you use for qualifying expenses.

From a pure tax standpoint, that is pretty much it. As a high earner you get phased out of the child credits and everything else.

If you want to get into real estate that can open some new avenues, but not as many as people thing. To actually POTENTIALLY lower your tax burden you would either have to have a real estate professional status or dedicate a majority of the time (I think it's like 200 hours a year) to short term rentals. The benefit here is that in the scenarios any loses are considered active and you can deduct them from your regular income.

The problem with the above is that you end up letting the tax tail wag the dog.

The simple answer is that for most people there is not some magic, hidden tax break. Unfortunately, if you make a decent living you are going to pay a hefty sum in taxes.

If it makes you feel any better our tax bill was $304k last year....

You can use I bonds as an emergency savings vehicle. No tax on interest until maturity. Don't go crazy on savings you are likely getting taxed on interest at your marginal tax rate plus a surcharge of 3.8 percent and state taxes so if you have excess savings you might as well use it for something you need or want or find a tax deferred vehicle that is not so hard to get to for the larger amounts of cash. I had over 4 K in interest on savings and got hit this way this year. Will use a chunk for a new roof and HVAC system in the next year or two.