Top Tax-Saving Moves Used By High Net Worth Individuals
One of the biggest complaints certain groups or individuals have against the wealthy is that they can take advantage of too many tax breaks and loopholes to lower their tax bill. So what are some of the top tax strategies that high net worth individuals use to keep their tax rates down, and could anyone else use them?
One of the top tricks used by the wealthy is that they make the most out of their investment income. Compared to the top income bracket that is taxed at a 39.6 percent rate, capital gain income on stocks held longer than a year is taxed at a top rate of 20 percent, which is almost half of the top income tax rate. The good news is that anyone can take advantage of this rule.
Another tax strategy used by the wealthy is to use their retirement plan accounts to invest in high-growth start-ups before they hit it big. This can pay huge dividends because, if you use a Roth IRA for example, any gains you make from your initial investment are tax-free.
High net worth individuals also avoid getting paid in cash as much as possible. One example is taking stock options instead of huge salaries. A person who does this doesn’t have to report these stock options as income right away. When they do exercise or sell them they will have to report them but any gains in stock value are taxed at the capital gains rate.
While not everyone makes enough to capitalize on these strategies, those who can and do are able to save considerable amounts of money in taxes. Contact GROCO to learn more.
Where Do Californians Stand On Taxes?
Where Do Californians Stand On Taxes? California’s high ranking on the tax meter is well documented. The state is among the highest in the nation for both income taxes and business taxes. It ranks high in several other tax categories as well, including sales tax, property tax and even the gas tax. The Golden State…
Why Do California’s Tax Problems Continue?
Why Do California’s Tax Problems Continue? It’s the classic adage made famous from the movie Robin Hood: “Rob from the rich and give to the poor.” Although Robin Hood may have meant well and his actions noble, the idea of taking more from the rich to give to the poor is not always wise when…
Why Do IRS Audit Numbers Continue to Decline?
Why Do IRS Audit Numbers Continue to Decline? No one would voluntarily go through an audit and, in fact, many people would rather experience a lot of other unpleasant situations over going through an audit from the IRS. Let’s face it, being selected for an audit can be a spine-curling experience for many taxpayers. In…
With Congress Now Back What Will it Mean for Taxes
With Congress Now Back What Will it Mean for Taxes Fall is here and that means the rain and wind are on their way back. Congress is back as well and they have a lot to talk about. It’s not exactly clear how much they will get done in the next three months, but they…