Imagine opening a tax bill bigger than your annual salary. That was me (Susan) in 2021 when my federal tax bill hit $137,000—more than I was making at my W-2 job. Yes, my husband and I had W-2 income, but we also had losses from stock sales and real estate depreciation, so I couldn’t understand why those losses weren’t offsetting the rest of our income.
That’s when I knew I needed to get serious about tax strategy.
After diving further into the IRS code, I had my lightbulb moment: all income isn’t grouped in the same way. The IRS separates it into three distinct “tax buckets”:
Active (Earned) Income (like W-2 wages)
Portfolio Income (from stocks, bonds, and interest)
Passive Income (from most real estate and other passive investments)
When you learn to match the right deductions to the right bucket, it’s a game-changer. I created the Tax Bucket Planning Method to make sense of it all—and it worked.
In 2022, I slashed that 6-figure tax bill down to $6,000 (while increasing our total income). And in 2023? We finally achieved the elusive $0 tax bill.
Here’s an example of Tax Bucket Planning in action:
A $0 tax bill on over $400,000 in income
Now, Caitlin and I help our clients have their own “aha” moments with tax strategy. We’ve seen how understanding and applying these principles can unlock financial freedom. After all, taxes are one of the biggest wealth killers, and without a strategy, you’ll always feel like you’re falling behind.
The truth is, most CPAs focus on filing your taxes—not on proactively helping you save. They typically aren’t investing in tax-advantaged retirement accounts for you, buying investments in your name, doing tax-loss harvesting on your stock accounts, or ordering cost segregations on your properties to minimize your liability. That’s why having your own tax strategy is crucial, and why it’s also a cornerstone of the 10-year Wealth-Building Plans we create with our clients.
To kickstart your tax-saving journey, I’m sharing our Top Tax Strategies for W-2 Earners as part of our New Year’s Week of Freebies. This guide is designed to help you keep more of your hard-earned money and take control of your financial future.
Here’s to a new year of financial clarity, smart strategies, and keeping more money in your pocket!
Don’t let another tax season pass without a plan. Download your free guide now and take the first step toward your own lightbulb moment.
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