The majority of San Francisco’s high-income tax earners didn’t normally receive all that wealth but grew it over time. They formed partnerships and LLCs as one strategy to manage their goals and assets.
It requires a high level of savvy to maintain and continue building resources while remaining compliant with tax code. High-income tax preparation isn’t only about filing forms; it’s a daily effort to choose the right path for minimizing taxes and maximizing assets. There are three basic goals to getting there:
TIMING: Tax liabilities can change depending on when income is taxed throughout the year. There are opportunities to reduce liabilities while taking advantage of deductions. A common tactic for high-income individuals is to schedule a quarterly tax planning discussion with a CPA.
STRATEGY: Working with a professional CPA n the San Francisco Bay Area iwho is always reviewing current changes in tax law and obligations is critical. Regular review of income and asset fluctuations will help address potential changes to filings before they become a problem. There are moments when the individual either needs to defer income or accelerate it in order to maintain a lower tax rate.
RISK MANAGEMENT: High-income tax earners typically own assets across state lines and in other countries. A regular review of global tax risks is essential to balancing obligations across state and world-wide tax laws. Risk management tools help keep individuals remain aware of their tax obligations and meet them on time.
The Difference Between High-Income vs. Middle-Income Tax Earners is Clear
Investors, executives, and other professionals juggle various income streams while constantly reviewing their assets and when to buy and sell. It’s why capital gains management is a core practice for high-income earners. The middle-income earner can use capital gains taxes for a few things in their life. For instance, when they sell a home or leverage their retirement investments. But capital gains are part of the ‘natural habitat’ for high-income earners. The timing of when something is purchased and sold can affect taxes each year. When selling underperforming assets regularly, they may need regular reviews to offset capital gains. For example, tax-loss harvesting, also known as tax-loss selling, is used to claim a credit against profits from other assets. Managing constant moving, selling, and buying of assets is just one challenge for high-income tax earners. Other advanced tax strategies include bunching charitable contributions, maximizing deductions, and donating appreciated assets.
High-income tax preparation requires the support of a CPA with expertise in advanced tax strategies. Our Safe Harbor tax advisors are ready to ‘push the button’ on a successful tax filing strategy to get San Francisco’s high-income earners through the season successfully.
