Ask HN: High income salaried employees – How do you reduce your taxes?
If you are a W2 wage earner who earn a lot of money through salary, RSUs, etc, could you please share your favorite tax saving strategies? What are some legal ways to save on tax and build wealth? Any references to articles, videos, podcasts? I do a 401k (and investing in my businesses, but that's neither here nor there) plus whatever my accountant recommends. I don't have any problem with the idea of paying taxes, so I don't put a large amount of effort into reducing my tax bill. There are more beneficial uses for my time and energy. This is the way. Taxes outside of Europe aren't too bad, and they fund more good things than bad things. I also don't think people get to high income by min/maxing taxes. Best to focus on exponential growth than logarithmic savings. Just fund your 401k and pay your taxes! Count yourself lucky! I'm not a W2 wage earner, but for more general investment advice, https://www.bogleheads.org/ and https://www.reddit.com/r/Bogleheads/ are always my first recommendation to anyone starting to get into this. And max out that Roth IRA! Its growth potential is unreal, it's the best investment vehicle most salaried workers have in their lives and if it wasn't capped at $6500 a year or whatever it would be the financial equivalent of a game breaker. Choose 3 countries. Live 121.6 days of the year in each. Don't pay any taxes because you're not a fiscal resident anywhere. I haven't done it, but am genuinely curious about the tax savings of moving to Puerto Rico. From what I understand, you only need to spend 183 days a year there, so you could leave for hurricane season. Max out 401k HSA and all other tax deferred accounts. After that it’s really complicated game playing I lived outside of the US for five years and claimed the FEIE. That’s about $120k deduction each year. Obviously comes with its own complications and I didn’t do it just for the deduction. maximize all your tax defer accounts (pension etc.), postpone cashing out stocks to lower income periods What else there todo (within legal domain)? With large sums of Money you can play games on when taxes are due that can allow you to invest money that you will eventually owe for taxes and then do a step up basis when you die thereby never paying taxes but not really being able to use it.
There are other tricks to use the money where you take a loan and use the investment as a collateral but it’s all really complicated to manage and only makes sense at the 5-10mil range. In all jurisdictons I know - gov steal your taxes right away from your salary. And then you have to beg them for some return next year. Other types of income I suppose outside of the original question. Yes if you get salary then there aren’t options to play game like this. High net worth people don’t get paid salary for this reason