Tax Strategy FAQ: 30 Questions High Earners Ask

Most earners above $300K are overpaying by 15-25%. That translates to $30,000-$150,000+ per year depending on income, assets, and which strategies you qualify for. The biggest savings come from stacking multiple strategies (cost seg + STR strategy + retirement maximization).

Under Treas. Reg. §1.469-1T(e)(3)(ii), rentals with average guest stays of 7 days or less are excluded from passive activity rules. If you materially participate (100+ hours, more than anyone else), losses directly offset W-2 income.

A cost segregation study reclassifies portions of your building into shorter depreciation categories (5, 7, and 15 years instead of 27.5). This accelerates deductions into the early years of ownership, especially powerful with 100% bonus depreciation.

Yes. OBBBA restored 100% bonus depreciation permanently for qualified property acquired after January 19, 2025. This reversed the TCJA phase-down.

Yes, if your rental qualifies as a short-term rental (<7 day average stay) and you materially participate. For long-term rentals, you need Real Estate Professional status (750+ hours).

Under IRC §469(c)(7), spending 750+ hours in real property trades or businesses (and more than half your working time) reclassifies all rental losses as non-passive. Most common for non-working spouses who manage rentals.

Contribute $7,000 to a non-deductible traditional IRA, then immediately convert to Roth. The conversion is tax-free (since contributions were non-deductible). Future growth is tax-free forever. Still legal in 2026.

Key changes: 100% bonus depreciation restored permanently, SALT cap raised to $40,400 MFJ (with phase-out above $505K), TCJA brackets made permanent, QSBS tiered exclusion, enhanced 401(k) catch-up for ages 60-63, new 0.5% AGI floor for charitable deductions.

If you're self-employed earning $100K+, an S-Corp lets you split income between salary (subject to SE tax) and distributions (no SE tax). Typical savings: $5K-$20K/year depending on income. Requires reasonable salary and payroll setup.

IRC §199A allows a 20% deduction on qualified business income from pass-through entities. Made permanent by OBBBA. Phase-outs apply for specified service businesses (consulting, law, medicine) above $364,200 MFJ.

Usually yes. A $500K property typically reclassifies $96K-$120K into bonus-eligible categories. At 37%, that's $35K-$44K in year-one savings against a study cost of $5K-$10K. Below $400K, evaluate case by case.

The most common test: 100+ hours in the activity AND more hours than any other individual. There are 7 tests total, and you only need to meet one. 500+ hours guarantees qualification regardless of others' participation.

When you sell property, depreciation you've claimed is 'recaptured' and taxed at 25% under IRC §1250. On $200K of claimed depreciation, you'd owe $50K at sale. This can be deferred indefinitely with a 1031 exchange.

No. California requires standard MACRS depreciation and does not recognize federal bonus depreciation. You must add back the difference on Schedule CA. Your federal savings are unaffected, but CA state savings are significantly reduced.

$40,400 for MFJ ($20,200 single) under OBBBA. However, it phases out by $20 for every $100 of AGI above $505,000, fully phasing out at $605,000. Earners under $505K benefit most.

Yes, as long as YOU still log more hours than any other individual (including the property manager). Hiring a cleaner or co-host doesn't disqualify you, but delegating everything does.

A tax-deferred exchange under IRC §1031 allows you to sell investment property and reinvest in like-kind property without paying capital gains or depreciation recapture taxes. Strict timelines: 45 days to identify, 180 days to close.

Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. After 65, non-medical withdrawals are taxed as ordinary income (like a traditional IRA). $4,300 individual / $8,550 family limit for 2026.

IRC §1202 excludes gains on qualified small business stock. OBBBA changed this to a tiered system: 50% exclusion after 3 years, 75% after 4, 100% after 5 years. Cap is $15M or 15x adjusted basis per issuer.

It depends on your current vs. expected future tax rate. If you expect to be in a lower bracket now (sabbatical, job transition, early retirement) than in the future, converting saves money. If you're at peak earnings (37% bracket), the math usually doesn't favor a conversion of large amounts.

A filing under IRC §83(b) that lets you pay tax on restricted stock at grant (at the lower current value) instead of at vesting (at the higher future value). Must be filed within 30 days of grant. Missing the deadline is irrevocable.

Yes, if you own rental property. Cost seg applies to the property, not your employment type. The key is making the losses usable: for STRs, you need material participation. For long-term rentals, you need REPS or passive income to offset.

Concentrating 2-3 years of charitable giving into one year to exceed the standard deduction threshold ($30,000 MFJ for 2026). Itemize in the bunching year, take the standard deduction in off years. Donor-advised funds make this easy.

High earners with income not subject to withholding must make quarterly estimated payments (Apr 15, Jun 15, Sep 15, Jan 15). The safe harbor is the lesser of 90% of current-year tax or 110% of prior-year tax (for AGI above $150K).

A 3.8% surtax on investment income (interest, dividends, capital gains, rental income) for taxpayers with MAGI above $250K MFJ / $200K single. Strategies that reduce MAGI or convert investment income to non-investment income can reduce or eliminate NIIT.

Yes. Realized losses offset gains dollar-for-dollar with no limit. Up to $3,000 of net losses offset ordinary income annually. The rest carries forward. For large portfolios, systematic harvesting can save $5K-$20K per year.

Traditional: contributions reduce taxable income now, withdrawals taxed in retirement. Roth: no current deduction, withdrawals tax-free in retirement. At 37% marginal rate, traditional usually wins, since you're unlikely to be in a higher bracket in retirement.

The total combined employee contribution across all 401(k) plans is $23,500 (2026). But employer contributions are separate for each plan. So you can max employee contributions at your W-2 job and still make employer contributions to a Solo 401(k) from self-employment income.

Under IRC §469(g), all accumulated suspended passive losses are released in a fully taxable disposition of the activity. They can then offset any type of income, including active, passive, or portfolio. This is the 'unlock' event for long-term rental owners.

Most strategy-level calculators (including Unlevered) are accurate within 10-15% for federal estimates. That's precise enough to know whether a strategy is worth pursuing. Your CPA will refine exact figures. The goal is screening, not filing.