Engineered Tax Advice

Engineered Tax Advice Tax incentives, strategies and advice to achieve financial freedom.

07/12/2026

There's no direct deduction for paying your kid's college tuition, but with the right strategy, you can create benefits that achieve a similar result while building their financial foundation at the same time.

STRATEGY 1 - EMPLOY YOUR CHILD:
If your child works in your business and earns wages for legitimate work, those wages are deductible to you and taxable (at their much lower rate) to them. With their standard deduction, up to $14,600 in wages could be earned tax-free. Pair that with a Roth IRA funded up to their earned income, and you've created tax-free compounding that could grow for 50+ years.

STRATEGY 2 - 529 PLAN:
529 contributions are made with after-tax dollars federally, but most states offer a state income tax deduction for contributions. Growth is tax-free and withdrawals for qualified education expenses are tax-free.

THE MAJOR 2026 UPDATE: Unused 529 funds (after 15 years) can now be rolled into a Roth IRA for the beneficiary, up to $35,000 lifetime. This eliminates the old penalty risk of over-funding a 529.

These strategies aren't just about education. They're about building the next generation's financial foundation while legally reducing your own tax burden today.

The SALT cap increase is one of the most talked-about provisions in the One Big Beautiful Bill, and for good reason. For...
07/11/2026

The SALT cap increase is one of the most talked-about provisions in the One Big Beautiful Bill, and for good reason. For high earners in states like California, New York, New Jersey, and Illinois, the old $10,000 cap was essentially a tax on living in a high-tax state.

Here's what changed:

For 2026, the SALT deduction cap increased to $40,000. That's an additional $30,000 of deductible state and local taxes for qualifying filers. At a 32% marginal rate, that's nearly $10,000 in real federal tax savings, on top of everything else.

Who benefits most:

→ Homeowners in high-tax states with large property tax bills
→ High W-2 earners paying substantial state income taxes
→ Real estate investors with multiple properties in high-tax jurisdictions

The advanced layer: many states allow businesses to elect Pass-Through Entity Tax (PTET) treatment, where state taxes are paid at the entity level and fully deducted federally, bypassing the SALT cap entirely. Combined with the new $40K personal cap, a well-structured plan can capture both benefits.

PTET elections have deadlines that vary by state. Some require election by a specific date mid-year. If you haven't reviewed your state's PTET rules this year, do it now.

07/10/2026

W-2 earners often feel like the tax code works against them; and to some degree, that's true. You can't take self-employment deductions. You can't accelerate depreciation from real estate unless you qualify as a professional. Every dollar of salary gets taxed at full ordinary income rates.

But there are still meaningful strategies available, and most W-2 earners aren't using all of them.

THE 401(K) STACK:
→ Max your pre-tax or Roth 401(k): $23,500 in 2026 ($31,000 if 50+)
→ If your plan allows after-tax contributions + in-plan Roth conversions: you can access the Mega Backdoor Roth, potentially adding up to $46,500 MORE in Roth savings annually

THE HSA:
→ If you're on a high-deductible plan, max your HSA: $4,300 individual, $8,550 family
→ Invest the funds, don't treat it like a debit card
→ After 65, it converts to a secondary retirement account

DEFERRED COMPENSATION:
→ If your employer offers a 457(b) or non-qualified deferred comp plan, it may allow you to defer additional income above the 401(k) limit

You may not have as many tools as a business owner. But the tools you do have are powerful, and they're worth maximizing fully.

07/09/2026

One of the most expensive inefficiencies in wealth management isn't a bad investment. It's a coordination failure between the professionals who are supposed to be on your team.

Your financial advisor makes recommendations based on risk tolerance, time horizon, and return objectives. Your CPA or tax strategist looks at income, deductions, and tax exposure. When these two people never speak to each other, or when you're the only one connecting the dots, you end up with:

→ Investment portfolios that generate unnecessary tax drag (wrong account placements, premature sales)
→ Tax strategies that miss the best timing because financial plans weren't coordinated
→ Retirement distributions that create massive tax spikes because no one modeled the full picture
→ Estate plans built around assumptions that have since changed

The solution is integrated planning; not just coordination, but advisors who are actively building a strategy together and communicating regularly. For high-net-worth individuals, this is not optional; it's the foundation.

A few questions to ask yourself:

→ Have your financial advisor and tax advisor ever spoken directly?
→ Does your CPA know your investment portfolio structure?
→ Does your financial advisor know your marginal tax rate and entity type?

If the answer is mostly no, you're leaving money in the gap between them.

07/09/2026

The most dangerous time to think about protecting your assets is when someone is already threatening them.

Courts will scrutinize any asset protection moves made after a lawsuit is filed or even threatened, they're called 'fraudulent transfers' and they can be reversed. Legitimate asset protection happens before there's a claim. That means building the structure now.

Here's the layered approach that works:

Layer 1 - INSURANCE: Umbrella liability policies are the cheapest protection per dollar. $1M-$5M of coverage costs a few hundred dollars per year and is the first line of defense.

Layer 2 - ENTITY STRUCTURE: Each investment property in its own LLC contains liability. One lawsuit on one property can't reach the others. The layered LLC structure (individual property LLCs + holding company) creates walls between assets.

Layer 3 - RETIREMENT ACCOUNTS: ERISA-qualified plans (401(k), pension plans) have powerful federal creditor protection. IRA protection varies by state, but many states offer full or significant protection.

Layer 4 - TRUSTS: Domestic Asset Protection Trusts in states like Nevada, South Dakota, and Delaware can provide creditor protection for self-settled trusts, a powerful tool for high-net-worth individuals.

The time to build a moat is before someone is trying to cross it.

The step-up in basis is the provision that makes generational wealth transfers so powerful, and most people either don't...
07/08/2026

The step-up in basis is the provision that makes generational wealth transfers so powerful, and most people either don't know about it or don't plan around it intentionally.

Here's the plain-English version: when you die and leave an appreciated asset to your heirs, the IRS resets the cost basis to the fair market value on the date of death. The gain that accumulated during your lifetime disappears for federal capital gains purposes.

This creates a profound planning strategy: instead of selling your appreciated real estate, stocks, or business interests and triggering capital gains, hold them. Borrow against them if you need liquidity. Let the appreciation pass to your heirs with a fresh start.

Real estate investors have been using the 1031 exchange → DST → step-up strategy for decades:
→ Continuously defer gains via 1031 exchanges throughout your life
→ Place assets in a DST (Delaware Statutory Trust) for passive income and continued deferral
→ Heirs inherit the DST interest at stepped-up basis
→ Decades of appreciation: never taxed

This isn't a loophole. It's the intended design of the estate and capital gains provisions working together.

The families that build multi-generational wealth don't earn more. They exit less.

07/07/2026

The Augusta Rule is real, legal, and one of the most underutilized tools for business owners who also own their home.

Here's the setup: Under Section 280A(g) of the tax code, if you rent your personal residence for 14 days or fewer per year, the rental income you receive is completely excluded from federal income tax. You don't report it. You don't pay tax on it.

The strategy for business owners: your business can rent your personal residence for legitimate business purposes; a strategy session, a board meeting, a team retreat, a client event. The business pays you a fair market rental rate for the space and deducts it as a business expense. You receive that income completely tax-free, as long as total rental days don't exceed 14 in the year.

Documentation requirements, because this one gets scrutiny:
→ Written rental agreement between you and the business
→ Actual business purpose for each event (agenda, attendees, meeting notes)
→ Market rate rent, based on comparable venue rates in your area
→ No more than 14 days total rental

Done correctly, this is a completely defensible strategy with decades of precedent. Done sloppily, it's a red flag.

Save this. Share it with a business owner who has a home and a business entity.

07/06/2026

Oil and gas investments aren't for everyone, but the tax treatment is unlike almost anything else in the Internal Revenue Code, which is why high-net-worth investors keep returning to them.

Here's why the tax structure stands out:

INTANGIBLE DRILLING COSTS (IDC): When you invest in a working interest in an oil or gas well, the costs of actually drilling the well; labor, chemicals, fuel, supplies are considered intangible and can be deducted 100% in the year incurred. For high earners, this can generate a deduction equal to 70-80% of the investment in Year 1.

DEPLETION ALLOWANCE: Unlike depreciation, which ends when an asset is fully depreciated, the depletion allowance allows investors to deduct approximately 15% of gross income from the well indefinitely, even beyond the original investment cost. This creates an ongoing tax-advantaged income stream.

ACTIVE LOSS TREATMENT: Working interests in oil and gas are specifically exempt from the passive activity rules. That means losses can offset active income; W-2 wages, business income, anything, without needing real estate professional status or material participation tests.

The risks are real: production uncertainty, commodity price exposure, and high minimum investments. But for the right investor in a high-income year, few assets deliver a comparable immediate tax impact.

The Backdoor Roth is one of those strategies that sounds like a loophole but is fully acknowledged and accepted by the I...
07/05/2026

The Backdoor Roth is one of those strategies that sounds like a loophole but is fully acknowledged and accepted by the IRS. It's a legitimate way for high earners to access the Roth IRA benefits that income limits would otherwise block.

Here's the straightforward version:

Roth IRA income limits mean that if you're a high earner, you cannot contribute directly to a Roth IRA. But there's no income limit on making non-deductible contributions to a traditional IRA. And there's no income limit on converting a traditional IRA to a Roth IRA. Those two facts, combined, create the Backdoor Roth strategy.

The most important thing to understand and the most common mistake:

The Pro-Rata Rule. If you have ANY pre-tax money sitting in traditional IRA accounts, the IRS will treat your conversion as coming proportionally from all of your IRA balances. That means even if you contribute $7,000 in after-tax money and immediately convert it, the conversion might trigger taxes on a much larger amount.

The fix: roll your existing traditional IRA balance into your employer 401(k) before executing the Backdoor Roth. Not all 401(k) plans accept rollovers, but many do.

Done correctly, this is a clean, tax-efficient path to Roth benefits at any income level.

Not all tax advisors are created equal, and the difference between a great one and an average one can easily be measured...
07/02/2026

Not all tax advisors are created equal, and the difference between a great one and an average one can easily be measured in five or six figures.

I want to be direct about this: many people think they're getting tax strategy because they have a CPA. But there's a significant difference between someone who files accurately and someone who actively helps you keep more of your money.

Here's the honest test:

Does your advisor call you proactively, not just when you call them? Do they understand your business model deeply enough to make proactive recommendations? Have they ever walked you through cost segregation, retirement account optimization, entity restructuring, or year-end tax moves unprompted?

If the answer is mostly no, that's not a reflection of your complexity. It's a reflection of the level of service you're receiving.

The right advisor for a business owner or real estate investor should feel like a partner, not a vendor. They should know your goals, your structure, your pain points, and your plans and they should proactively bring you ideas throughout the year.

You're not wrong for wanting more. You're just in the wrong relationship.

Share this with someone who suspects they might be in that situation.

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