The ten basic strategies save you thousands, but the advanced strategies can change your entire wealth trajectory. These are the moves the wealthy rely on once their business is producing real income and the stakes are higher. If you already have the fundamentals dialed in, these next ten strategies are going to take your tax planning to the next level.
1. Self-Directing and Investing Tax-Free in What You Know
This is the strategy that separates Main Street from Wall Street. When you self-direct your retirement accounts, you invest in the assets you already understand. Real estate, small businesses, crypto, private lending, startups and more. Your IRA or Solo 401(k) can own these investments and your gains grow tax deferred or tax free when using a Roth structure. This is exactly how clients have built Roth accounts worth millions. When you invest in what you know best, performance skyrockets and the tax savings multiply.
2. Retirement Plan Optimization
Once your business is profitable, the question becomes how to pack more money into tax advantaged accounts. That is where advanced strategies like Roth conversions, the mega backdoor Roth, cash balance plans, defined benefit plans and even the 401(h) come in. These tools allow high-income business owners to defer or eliminate tax on tens of thousands of dollars every year. If you want to build a future tax-free bucket, this is where you do it.
3. Rental Real Estate
Wealthy clients almost always own real estate. Not because it is glamorous, but because it produces predictable tax benefits. Understanding the short term rental loophole, real estate professional status, material participation tests, and cost segregation is where the real savings begin. Even self renting your own building to your operating company can produce massive deductions. Real estate is one of the few assets where the tax code openly rewards you for building wealth.
4. SALT Workaround for S Corporation Owners
The state and local tax deduction has a cap at ten thousand for most taxpayers. The One Big Beautiful Bill raised that cap to forty thousand but phases it out for higher income earners. Many states now allow S corporations to pay state income tax at the entity level which makes the entire payment deductible. This can produce significant tax savings for high earners when executed properly.
5. Intangible Drilling Cost Deduction
Oil and gas drilling projects generate one of the most powerful first year deductions available. The intangible drilling cost deduction allows investors to write off a large portion of their investment immediately. You do not need to materially participate and the deduction can approach ninety percent depending on the structure. This only works when the economics of the deal are solid, but for the right investor it is a legitimate and time tested strategy.
6. Charitable Remainder Trust
When clients sell highly appreciated assets, the biggest issue is the tax hit. A charitable remainder trust creates a legal way to sell, avoid the upfront tax, and still receive income for life. The asset is donated to the trust, sold tax free, reinvested, and then paid back to you as income over time. The remainder goes to charity upon death, and you receive an immediate charitable deduction. This strategy works for business exits, real estate, and even large crypto gains.
7. Structuring Exits and Real Estate Sales
This is the category where tax attorneys spend most of their time. Tools like 1031 exchanges, qualified opportunity zones, installment sales, qualified small business stock under section 1202, and charitable structures can eliminate or defer millions in tax when selling a business or real estate. Every exit is different, and the structure determines whether you keep your wealth or send it to the IRS.
8. Life Insurance Strategies
Life insurance is not a beginner tax strategy. It becomes powerful when you have stable income and can maintain the long term funding requirements. Properly structured policies can create tax free accumulation, protect your estate, and integrate with tools like irrevocable life insurance trusts. The key is using these strategies only when they fit your cash flow and long term plan.
9. Captive Insurance
Large or growing businesses often pay significant insurance premiums. A captive insurance company allows you to create your own insurance entity, pay premiums to yourself, write off those premiums, and then potentially access the reserves in future years. This is an advanced tool with strict regulatory oversight. When executed properly it allows business owners to turn insurance expenses into long term wealth.
10. Research and Development Tax Credits and Other Tax Credits
Many industries qualify for tax credits designed to reward innovation and investment. Research and development credits, production credits, energy credits, accessibility improvement credits, and transportation related credits can offset substantial tax liability. Credits are powerful but must be legitimate. Promoter schemes built around selling credits to investors should be avoided. Focus on credits that apply directly to your business operations.
The Bottom Line
Advanced strategies are where real wealth is built. These are the moves that separate business owners who stay stuck at the same tax bill every year from the ones who break through and keep multiplying their money. But they only work when executed correctly. If you want a real tax attorney to help you engineer these strategies the right way, book a consultation with KKOS Lawyers. My team will take a look at your structure, map out the advanced strategies that actually apply to your situation, and give you a step-by-step plan you can start using immediately.
This is where you stop leaving money on the table and start keeping the wealth you've worked so hard to build.
