NorCal residents may have many commonalities with other U.S. citizens, but they are poles apart when it comes to income expectations. For example, in several states, a family of four can live quite comfortably on an annual income of $80,000.
In the Bay Area, that same family could barely squeeze by on that salary. The government’s terminology for a “high-income earner” doesn’t quite fit our Bay Area residents. The IRS defines a wealthy individual as someone who earns $200k or more. Which is funny because the median household income in the Bay Area is close to $140k annually. And that’s still a very humble sum to live on. The government has determined anyone earning up to $500k is in the very wealthy category. To be considered wealthy around here, a household needs to earn closer to $800k a year.
We may love our Bay Area weather and lifestyle, but living here comes at a price, and our CPA team understands the unique financial burdens locals deal with. We also know that perceptions of ‘who is rich’ differ in San Francisco. And we take an approach to individual tax return prep with that in mind.
There is a Difference Between being Rich and Having Long-Term Wealth
If you own one vacation rental and a nice financial portfolio, you may be doing well. However, you are not considered significantly ‘well off’ in the Bay Area (we are still ready to serve you wherever you land on the economic ladder). San Francisco’s high-income earners live in a very complex financial environment. They own more than one vacation rental and a 401 (k). Bay Area high-net-worth earners can juggle several assets, such as:
Commercial properties.
Home rentals and apartment complexes
Out-of-State investments.
Partnerships in overseas businesses
Private equity
Fine Art and collectables
Precious metals and jewels
Maybe a so-called Bay Area middle-class income earner can get away using TurboTax, but these portfolios require a savvy CPA. Because those assets could work against them during tax time if they don’t prepare! That’s why we are constantly studying the latest developments in tax policy and standards. The Safe Harbor team is focused on helping high-income earners make a list of assets work for them.
There is a difference between looking wealthy and attaining real wealth. All the luxury ‘toys’ like boats and a garage full of classic sports cars may be fun, but will they cover an individual’s retirement? It’s common for high-net-worth individuals to have many possessions but little in real savings. We are here to help turn all that wealth into a long-term benefit, and it begins with individual tax return prep.
