The IRS defines a high-income earner as any taxpayer who reports $200,000 or more in total positive income (TPI) on their tax return. Total positive income is the sum of all positive amounts shown for different courses of income reported on an individual tax return.
That’s important to understand because you might assume that high-income earners are people making $400,000, $500,000 or more each year. It’s possible that you could technically fit the IRS definition of a high-income earner without realizing it.
Understanding where you are income-wise matters when applying tax-saving strategies for high-income earners. Certain tax breaks begin to phase out the higher your income climbs. It’s also important to know which tax bracket you fall in.
Your federal tax bracket represents the percentage of tax you owe to the IRS based on your taxable income. Your taxable income is your adjusted gross income, less any personal exemptions and itemized deductions you claim. For 2022, the highest possible tax bracket is 37%. This bracket applies to single filers with taxable income in excess of $539,900 and married couples filing jointly with taxable income in excess of $647,850.
Earning a higher income can mean paying more in taxes at both the federal and state levels. You might assume that you’re stuck with a bigger tax bill because you earn more but that’s not always the case. There are a number of tax-saving strategies for high-income earners that can help to reduce what you owe. The key is knowing which ones to implement, based on your specific financial situation. Our tax plan designed for high income earners can help you navigate efficient decisions.
Let our team assist you with your High Income W-2 Tax Plan. If you’re in a high tax bracket, you’ll be happy to know that there are dozens of tax reduction strategies for high-income earners. But, you have to be diligent enough to pursue them, and that's where our team steps in.
This 86-page document will assist in tax planning for the next year, offering options and strategies to reduce the amount paid in to the IRS. Additional files are included.