High earners in Aurora face phaseouts, surtaxes, and timing traps that drain wealth. Strategic planning trims the bill and strengthens long term goals. Start with a focused plan and a local guide. Partner with Koffex Accounting
What counts as “strategic” for high earners?
Strategic planning means shaping income, deductions, and timing across the year to reduce exposure to higher brackets and stealth taxes. It aligns investments, compensation, and charitable giving with a clear calendar, not a last minute sprint. This is where high income tax planning Aurora delivers real savings.
Aurora playbook: proven moves that stack savings
Max out the right accounts
Increase deferrals into a 401(k), cash balance plan, and HSA if eligible. High earners often benefit from backdoor Roth steps and carefully timed Roth conversions when income dips or markets soften.
Shape capital gains and losses
Harvest losses to offset gains while avoiding wash sales. Favor long term holding periods. Locate tax efficient index funds in taxable accounts and interest heavy assets in tax deferred accounts.
Dial in charitable strategy
Bundle gifts in high income years. Use donor advised funds to capture a large deduction now and grant over time. Consider appreciated stock to avoid capital gains while claiming the full fair market value.
Manage surtaxes and phaseouts
Model the 3.8 percent net investment income tax and phaseouts that lift effective rates. Shift income into qualified dividends and long term gains where possible. Evaluate qualified small business stock if investing in growth companies.
Compensation design for executives and owners
Coordinate RSUs, ISOs, NSOs, and deferred comp with bracket targets. For business owners, review reasonable salary, distributions, and retirement plan design. Revisit entity selection yearly as profits and hiring change.
CTA: Want a one page savings map for this year’s income and awards. Get a custom Koffex plan
High income tax planning Aurora for business owners
Owners in Aurora can stack corporate and personal tactics. Explore S Corporation wage and distribution balance. Add a 401(k) match or cash balance plan to raise deductions. Use accountable plans for reimbursements. Schedule equipment purchases to optimize Section 179 and bonus depreciation where it fits the cash forecast.
CTA: Need an owner’s checklist that ties payroll, plans, and deductions together. Talk to a Koffex specialist
Precision timing beats guesswork
Quarterly projections are the control panel. Track income, grants, equity vests, and harvest activity. Pull forward deductible expenses in peak years and push income into lower years when feasible. Confirm estimated payments to avoid penalties that erode gains.
Quick year round checklist
- Reproject taxes each quarter and after any large vest or sale
- Harvest losses and reenter with correlation, not the same ticker
- Pre fund donor advised funds in high years
- Max HSA and retirement limits before deadlines
- Document every strategy with clear support file.
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For a deeper view on filing season versus forward strategy, explore tax planning vs tax preparation.
FAQs: People Also Ask
How can high-income earners reduce tax liability effectively?
Use coordinated tools. Max out retirement deferrals, harvest losses, bunch charitable gifts, and time equity income. Run quarterly projections to manage surtaxes and phaseouts.
Should I itemize deductions or take the standard deduction?
Itemize when eligible mortgage interest, state taxes within limits, and charitable gifts exceed the standard deduction. In high income years, bunching donations often tips the scale.
What are the best retirement saving options for high earners in Aurora?
Employer 401(k) with catch up if eligible, cash balance plans for larger deferrals, HSAs for triple tax benefits, and backdoor Roth steps where appropriate.
How does hiring family members impact business tax planning?
Legitimate roles with market pay can shift income into lower brackets and expand retirement coverage. Follow payroll rules and maintain documentation.
What are common tax planning mistakes to avoid?
Waiting until year end, ignoring estimated payments, selling winners without offsetting losses, missing donor advised fund timing, and poor documentation of strategies.
Are deferred compensation plans worth it for executives?
They can be, when the plan is from a strong employer and expected future tax rates are lower. Evaluate credit risk, payout timing, and interaction with equity awards.
Final word and CTA
Effective planning replaces surprises with control. Keep more of every bonus, vest, and distribution with strategies that fit your Aurora goals. Schedule a strategy session with Koffex Accounting