Strategies For Tax Efficiency

Most parents have no idea how much this is hurting them. What's this account in question? The UGMA / UTMA. They are custodial accounts designed to build wealth for kids. The point is to provide something for them when they come of age. At first, it sounds great. Until you get to the details: - Contributions are irrevocable - Hurts against FAFSA as a "child's asset" (the worst) - Must be released at age 18-21 (were you ready at this age?) In the end, it's very restrictive. They can serve as a vehicle to teach kids education. However, there are other ways to do this too. So what are the alternatives here? Let's dive into them. 1) 529 This is the go-to for education. If used for qualified education expenses, the earnings inside will be distributed tax-free. In addition, some states allow a tax deduction upfront. Some other features include: - A contribution limit of $18,000 annually (2024) - You can front-load 5x of those contributions - This can be transferred to another beneficiary (must be a qualified relative) But there is one feature that should be noted: As of 2024, funds from a 529 can be rolled into a Roth, though they come with strict rules. Due to the restrictions, the fund in a 529 should be used soley for qualified education expenses. 2) Custodial Roth This would be the account you'd roll those 529 funds into if not for college. This account has a tax-free benefit, so it provides parents a way to help their kids build their nest egg for retirement. Since this is a retirement account, these do not count against financial aid. However, the funds must not be withdrawn for college to do so stay that way. As a result, it's vital to use them outside college purposes. In addition, as an IRA, earned income is required to contribute. This means the child must earn income to contribute. For example, if you want to max it out at $7,000, the child must earn $7,000. Note: Earned income from the child will hurt against FAFSA However, for more flexibility, the third option can fulfill this need. 3) A Taxable Brokerage (Under Your Name) If you're looking for more choices, a brokerage account. But why under your name? Parents' assets hurt the least when qualifying for FAFSA. In addition, a standard investment account includes: - No income limits - No contribution limits - No early penalty for early withdrawal  - Discretion when to take the funds out As such, this gives parents more control over the funds. Once the goal is around the corner? Parents can liquidate the funds to pay for expenses. Alternatively, they can gift the funds without selling off and realizing any taxes.

The 1031 Exchange: Why Are So Many Family Offices Still Missing This? Each year, we conduct the largest Family Office real estate investing study in the country. And every year, one statistic continues to stand out: around 80 percent of Family Offices have never executed a 1031 exchange. That number is hard to ignore. Especially when the 1031 exchange remains one of the most effective tools for deferring capital gains tax in real estate. So why are so many families sitting this one out? A properly executed 1031 exchange allows real estate owners to defer capital gains tax by reinvesting the proceeds from a sale into another like-kind property. This deferral can be repeated again and again, effectively rolling gains forward through each transaction. Eventually, if the assets are held until death, the heirs receive a step-up in basis to the current market value. That means the unrealized gains disappear from a tax standpoint, and no capital gains tax is ever paid on those increases. In other words, it is one of the few structures that rewards long-term planning and multigenerational thinking. There are a few consistent reasons we hear from families who have avoided the 1031 exchange: 1. Lack of awareness. Some families simply haven’t been exposed to the mechanics or long-term value of the strategy. 2. Complexity. The rules and timelines around 1031 exchanges can feel restrictive, especially when a sale is moving quickly. 3. Limited planning. Too often, families are focused on the immediate transaction rather than a multi-transaction strategy that supports long-term wealth preservation. These are all addressable with the right education and advisors in place. The 1031 exchange is not just a tax strategy. It is a long-term planning mechanism that aligns perfectly with the goals of capital preservation and intergenerational wealth transfer. When used correctly, the benefits compound over time. Deferred taxes remain invested, growth accelerates, and estate planning becomes significantly more efficient. Every Family Office that owns real estate should understand how a 1031 exchange works. More importantly, they should have a clear plan for when and how to use it. Ignoring this tool leaves value on the table and creates unnecessary tax exposure.

Most high-income professionals overpay in taxes not by a little, but by hundreds of thousands of dollars. And the worst part? Most of them don’t even realize it’s happening I recently worked with an executive who was unknowingly missing out on over $500,000 in potential tax savings. Like many high-income professionals, she assumed her CPA was handling everything. But here’s the problem: 🚫 Most CPAs think backwards, not forwards. They file taxes based on what already happened. 🚫 They don’t integrate financial planning, investments, and tax strategy. 🚫 Some of them miss opportunities that can save you money long-term. How We Fixed It & Saved Her Over $500K ✅ 1. The HSA Strategy – $20K+ in Lifetime Tax Savings She had access to an HSA (Health Savings Account) but wasn’t using it. Why does this matter? 👉🏾HSA contributions are tax-deductible. 👉🏾The money grows tax-free. 👉🏾Withdrawals for medical expenses are tax-free. By fully funding it every year, she’ll save $20,000+ in taxes over her lifetime. But here’s the kicker: we also helped her invest it properly so the account grows instead of just sitting in cash. ✅ 2. The Roth Conversion Strategy – $500K+ in Tax-Free Growth She was anticipating losing her job and had multiple old retirement accounts just sitting there. Instead of letting those accounts stagnate, we saw an opportunity: 👉🏾She was having a low-income year, which meant she could convert $100,000 into a Roth IRA at a lower tax rate. 👉🏾That $100K will now grow tax-free—meaning if it reaches $600K or $700K in retirement, she’ll never pay a cent in taxes on that money. ✅ 3. The Bonus Strategy – Tax-Loss Harvesting We also helped her offset investment gains using tax-loss harvesting, a strategy that allows you to sell underperforming investments and use the losses to reduce your tax bill. By combining these strategies, we helped her: 💰 Save $20K+ in taxes on HSA contributions 💰 Unlock $500K+ of future tax-free income through Roth conversions 💰 Offset capital gains and lower her tax bill through tax-loss harvesting And she almost missed out on all of this because she assumed her CPA was handling everything. If you’re making multiple six figures, but you aren’t actively planning your tax strategy, you’re leaving money on the table plain and simple. The best financial strategies aren’t about making more money they’re about keeping more of what you earn. If you want to see where you might be overpaying, shoot me a message. Let’s make sure you’re taking advantage of every opportunity. P.S See the look on my face…don’t make me have to give you that look because you’re paying more than your fair share in taxes. 😂

I’ve tested these 14 tax strategies for over a decade. They are the most reliable for keeping more money in your pocket: For Real Estate Investors: Cost Segregation Studies: These remain valuable for accelerating depreciation on high-value assets, even with declining bonus depreciation rates 1031 Exchanges: Still available for deferring capital gains when selling properties. Real Estate Professional Status (REPS): This status continues to allow investors to deduct rental losses against active income Self-directed IRAs: These remain a viable option for investing in real estate while deferring taxation. For Business Owners: S Corp Tax Election: This strategy for reducing self-employment taxes is still applicable. QBI Deduction: The 20% Qualified Business Income deduction remains available for pass-through entities Home Office Deduction: Still available for those who use part of their home exclusively for business Hiring Family Members: This strategy for income shifting continues to be valid. Retirement Plan Contributions: Maximizing contributions to Solo 401(k)s and SEP IRAs remains an effective tax-reduction strategy For High-Income Earners: Municipal Bonds: These continue to provide tax-free interest income. HSAs & FSAs: These tax-advantaged accounts for medical expenses are still available. Charitable Giving Strategies: Donating appreciated assets remains a tax-efficient giving method. Tax-Loss Harvesting: This strategy for offsetting capital gains is still applicable. Deferred Compensation Plans: These plans continue to be useful for managing tax brackets. Don’t wait until your tax bill arrives—fix it before it’s too late.

Your tax rate isn’t just one number. It’s a tool you can use to save big this year. Understanding the difference between your marginal and effective tax rates can help you make smarter money moves. Here’s how: Marginal Tax Rate ➡️ The rate applied to your next dollar earned. ➡️ This is the highest bracket you hit. Example: If you’re in the 24% tax bracket, every extra dollar you earn (like bonuses or freelance income) gets taxed at 24%. Effective Tax Rate ➡️ The average rate you pay on your total income. ➡️ Calculated after applying deductions, credits, and lower brackets. Example: If you make $100k but your average rate after deductions is 18%, that’s the actual percentage of your total income that goes to taxes. Knowing these rates helps you: 1. Plan smarter: → See the tax impact of raises, bonuses, or selling investments *before* making a move. 2. Avoid surprises: → Be prepared for the taxes on extra income, like freelance work or side hustles. 3. Save more strategically: → Use deductions and credits to lower your effective rate and keep more of your money. Taxes aren’t just something to deal with in April. They’re a key part of your year-round financial strategy. If this feels overwhelming, I’ve got you. DM me ‘taxes’ to learn how we can use your numbers to grow and protect your wealth this year. Because your tax rate shouldn’t just be a number. It should work for you.

Bitcoin Miners: Your business is made on the margins. Don't let taxes wreck your profitability. Here are 5 Steps to Stay Compliant (And Keep More Profits): 𝟭. 𝗗𝗲𝗳𝗶𝗻𝗲 𝘆𝗼𝘂𝗿 𝗺𝗶𝗻𝗶𝗻𝗴 𝘀𝘁𝗮𝘁𝘂𝘀. Are you a hobbyist or a business? This distinction is crucial. This classification can be nuanced, but the general criteria include: -Profit Motive: Activities aimed primarily at making a profit are more likely to be considered a business. -Effort and Time: Significant time and effort, such as running multiple mining rigs, suggest a business. -Dependence on Income: Relying on mining income for your livelihood indicates a business. -Businesslike Manner: Keeping detailed records, having a business plan, and operating professionally support business classification. Hobbyists: report on Schedule 1 of Form 1040 as "Other Income." Businesses: use Schedule C. Choose wisely – it affects your deductions and scrutiny level. 𝟮. 𝗥𝗲𝗽𝗼𝗿𝘁 𝗲𝘃𝗲𝗿𝘆 𝘀𝗮𝘁𝗼𝘀𝗵𝗶. Record the fair market value of each mined Bitcoin at receipt. This is your taxable income, regardless of whether you sell. Example: Mine 1 BTC at $50,000? Report $50,000 as income. 𝟯. 𝗗𝗼𝗻'𝘁 𝗳𝗼𝗿𝗴𝗲𝘁 𝘀𝗲𝗹𝗳-𝗲𝗺𝗽𝗹𝗼𝘆𝗺𝗲𝗻𝘁 𝘁𝗮𝘅 Solo miners, prepare for an extra 15.3% hit. This covers your Social Security and Medicare obligations. It's calculated on your net earnings from mining. 𝟰. 𝗠𝗮𝘀𝘁𝗲𝗿 𝘁𝗵𝗲 𝗰𝗮𝗽𝗶𝘁𝗮𝗹 𝗴𝗮𝗶𝗻𝘀 𝗴𝗮𝗺𝗲 Selling mined coins? That's a separate taxable event. Your cost basis is the FMV when you mined the coin. Track meticulously to avoid overpaying. 𝟱. 𝗗𝗲𝗱𝘂𝗰𝘁 𝗹𝗶𝗸𝗲 𝗮 𝗽𝗿𝗼 Running a business? Expenses are your friend. Electricity, equipment, repairs, rented space – all potentially deductible. But keep ironclad records. The IRS loves to dig. 𝗕𝗼𝗻𝘂𝘀 𝘀𝘁𝗲𝗽: 𝗤𝘂𝗮𝗿𝘁𝗲𝗿𝗹𝘆 𝘁𝗮𝘅 𝗽𝗮𝘆𝗺𝗲𝗻𝘁𝘀 Expect to owe $1,000+? Make estimated payments. Mark your calendar: April 15, June 15, September 15, January 15. It's better than facing penalties later. Finally, consider enlisting a crypto-savvy tax pro. Their expertise can save you money and stress in the long run. Don't let tax confusion derail your mining operation.

🕊️I regularly catch this tax-savings opportunity clients miss. Ever hear of donating highly appreciated investments into a Donor-Advised Fund (DAF)?! If you're already giving donations to charities each year, why not save additional capital gains taxes on your donations? DAFs provide a more tax-savvy way to give. Lemme break it all down... 1. Open a Donor-Advised Fund (DAF) Account Select a provider like Schwab Charitable, Fidelity Charitable, Vanguard Charitable, or a community foundation. Fund Your Account: You’ll receive account details for funding. No minimum contributions are required with some providers, but check for their specific policies. 2. Contribute Highly Appreciated Stock Obtain Transfer Instructions: The DAF provider will give you specific transfer instructions for in-kind securities (stock, mutual funds, etfs). Complete the appropriate paperwork to transfer the investments over. Confirm the Gift Value: The DAF provider will value your donation based on the average of the high and low prices of the stock on the day the transfer is completed. Receive Acknowledgment: Your DAF provider will send you a confirmation of the donation for tax purposes. 3. Allocate Funds to Charities Log In to Your DAF Account: Access your account online or contact the DAF provider. Research Charities: Ensure the organizations you wish to support are IRS-qualified 501(c)(3) nonprofits. Recommend a Grant: Specify the charity, the amount, and the timing of the grant. Many DAF providers allow you to include special instructions or dedicate the grant. Track the Impact: DAF providers will handle the distribution and often provide updates when the charity receives the grant. 4. Keep Records for Tax Filing Save the acknowledgment of your stock contribution from the DAF provider for your taxes. You’ll only need this one receipt, as donations to charities from the DAF don’t require separate deductions (you claimed the deduction when funding the DAF). This process not only simplifies charitable giving but also helps maximize the tax benefits, especially when dealing with appreciated assets and reducing capital gains taxation on low-basis stock! Here’s why this strategy is a win-win: ✨ Maximize Your Impact: You can avoid paying capital gains taxes on appreciated assets (stocks, mutual funds or ETFs that have grown), which means more of your money goes directly to the charities you love. ✨ Get an Immediate Tax Deduction: You’ll receive a deduction for the full fair market value of the stock in the year you donate. ✨ Distribute Thoughtfully Over Time: With a DAF, you can take your time to decide which organizations to support and when. Giving Tuesday, yesterday, was a beautiful reminder of the power of generosity, and thoughtful planning can amplify that power. I'd love to hear about causes you care about (I'll list one of mine in the comments) 🌍✨

Crypto taxes can wipe out your gains if you don’t plan ahead. Horror stories of six-figure tax bills are common, but avoidable. I’ve seen executives lose wealth because they ignored cost-basis tracking or failed to record DeFi activity. With the IRS introducing 1099-DA forms in 2026, the pressure is rising. Here’s how you can stay ahead: 1. Horror stories show what poor planning costs  ↳ Track early and avoid penalties. 2. Cost-basis matters  ↳ Choose tax lots wisely to save thousands. 3. Software is peace of mind  ↳ Automate DeFi, staking, NFTs. 4. Advanced strategies work  ↳ Use tax-loss harvesting, giving, and trusts. 5. Global trends matter  ↳ Compare U.S. scrutiny with crypto havens abroad. 6. Best practices win  ↳ Record, outsource, review. 7. Redirect taxes  ↳ Build wealth with saved dollars. When you follow these strategies: 📍 You keep more of your gains 📍 You reduce audit risk 📍 You transform taxes into wealth-building fuel 💬 Which crypto tax strategy do you already use, and which will you add this year? 🏦 If you’re tired of “wasting” $250K+ in taxes and want to turn that money into a $5M+ real estate portfolio, take our Tax Exposure Profile Assessment: https://lnkd.in/gVG3yyG3 Enjoy this? ♻️ Repost, follow Ravi Katta and check out the link in bio for more content and resources on building legacy wealth.

"My CPA told me: You don't have to spend your HSA — just let it grow." Last week, I reviewed a client's tax return. They contributed $8,300 to their HSA... and panicked thinking they had to spend it all. They'd been saving receipts all year, planning a December shopping spree for eligible expenses. I stopped them cold: "That's FSA thinking. Your HSA never expires." That money? Still sitting there, tax-free, compounding. Completely untaxed growth — potentially for decades. Their face when they realized their HSA could become a stealth retirement account was priceless. The HSA is the ONLY triple-tax-free account in existence: - Tax-deductible going in (immediate savings) - Grows tax-free (no capital gains taxes ever) - Withdraw tax-free for qualified medical expenses — even decades later And if you don't use it for medical expenses? At age 65, it works like a traditional IRA — withdraw for anything, just pay income tax (no penalties). Here's how to actually win with an HSA: - Max out the contribution every year ($8,300 family limit for 2024, rising to $8,550 in 2025) - Do NOT spend it. Pay medical costs out-of-pocket if you can  - Invest the HSA balance — don't leave it in cash earning nothing - Keep every medical receipt digitally. You can reimburse yourself years later, tax-free - Treat your HSA as part of your retirement portfolio — not a short-term medical fund Remember: The average couple needs $315,000 for healthcare in retirement. Your future self will thank you for this tax-free medical nest egg. If your CPA hasn't explained this strategy to you, you're leaving one of the most powerful tax advantages on the table.

The new tax bill that just passed into law is the single most significant piece of legislation we have had in 8+ years Here is everything you should know as a high-income professional or business owner: (Bookmark this post as I'll be updating it as this develops) Background: I have run a startup for the last 3 years that helps business owners and high-income professionals be smart about taxes So this is an area I know a thing or two about This is also not a political post, and none of this is an endorsement for any specific policy 1 - America's biggest tax break for startup founders & investors gets even more generous QSBS allows C-Corp shareholders to pay no taxes on exit This bill raises the limit to $15M, has partial benefits kick in after 3 years & allows a company to qualify up to $75M in assets 2 - 100% bonus depreciation is back When you purchase property with a useful timeline of <20 years, you can depreciate the entire amount upfront This is very significant for real estate investors, who can recoup a huge percentage of their purchase price as a usable tax loss 3 - Relief for software companies in America There was a wild piece of legislation that forced you to amortize software developer salaries over 5 years This resulted in software companies that could lose money and still face a tax bill since their developer salaries had to be deducted over 5 years This is now fixed for local talent 4 - Qualified business income deduction permanent for LLC and S-Corp owners in America Pass-through business owners were gifted a free deduction of up to 20% called QBI since 2017 This was supposed to end this year.. but with this bill, it's now been made permanent 5 - Estate and gift tax exclusion made permanent at $15M per taxpayer, or $30M per couple These exclusions were supposed to fall by more than half at the end of this year But the new bill increases the exemption to $30M for a couple, which is big estate planning news 6 - State & local tax deduction now capped at $40K Before 2017, you could fully deduct state & local taxes from your federal return if you itemized But in 2017, the deduction was capped at $10K The new bill raises it to $40K... this will lead to more people itemizing taxes! 7 - Opportunity zone program made permanent You can defer capital gains for 5 years on a rolling basis by investing in an opportunity zone Hold the property for 10 years and you receive a free step-up in basis Will be a new stricter threshold on what areas count as an OZ 8 - The lowered 21% corporate tax rate is made permanent This coupled with QSBS expansion makes C-Corps a very attractive choice despite the double taxation At the highest tax brackets, C-Corps get very close to S-Corp tax rates with QSBS being a massive benefit on sale If you want to read the rest, I'll be covering these changes in a detailed breakdown post on my personal finance newsletter Silly Money Join 40k+ others: sillymoney.com/subscribe