Tax efficiency

Where Tax Strategy Leverage Actually Exists

A clear framework for understanding how different types of income are taxed, and why coordinated decisions across investments, business structure, benefits, and real estate matter more than isolated tactics.

Book my intro callSee the five income types

Tax efficiency isn't about chasing deductions. The examples below are educational. Eligibility and outcomes vary.

Five income types, five sets of levers

The tools available depend entirely on how the income is classified

What works for W-2 wages rarely applies to K-1 income, and what works for capital gains has little bearing on business income.

  1. Income type 1: W-2 wages

    Hardest to offset

    • Maximizing 401(k), HSA, and FSA opportunities
    • Short-term rental losses with material participation
    • Real Estate Professional Status (where applicable)
    • Charitable bunching using Donor-Advised Funds
    • Oil & gas working interests (IDCs)

  2. Income type 2: Business & self-employment income

    • Solo 401(k), SEP-IRA, or defined benefit plans
    • S-Corp structuring and reasonable compensation
    • Augusta Rule (§280A(g)) home rental strategy
    • Hiring family members correctly
    • Accountable plan reimbursements

  3. Income type 3: Interest income

    • Municipal bonds for federal (and often state) efficiency
    • U.S. Treasuries for state tax exemption
    • Strategic asset location across accounts

  4. Income type 4: Dividends & capital gains

    • Qualified vs. ordinary dividend placement
    • Long-term holding and tax-loss harvesting strategies
    • 1031 exchanges and Opportunity Zones
    • Installment sales (§453)
    • Charitable trusts and primary residence exclusions

  5. Income type 5: Rental & K-1 income

    • Cost segregation and bonus depreciation
    • Grouping elections (§1.469-4)
    • Passive vs. active classification
    • Monitoring at-risk, PAL, and EBL limits

The coordination lens

It isn't about more complexity. It's about alignment

  1. Stage 1:

    Income type

  2. Stage 2:

    Account and entity structure

  3. Stage 3:

    Appropriate tax levers

  4. Stage 4:

    Thoughtful implementation alongside your CPA and attorneys

The objective isn't more complexity. It's clarity, alignment, and fewer unintended consequences.

This framework sits underneath both planning lanes, see the H.E.N.R.Y. Strategy and the Business Owner Blueprint, or how the planning process works.

The next step isn't a product. It's simply a conversation

If this way of thinking feels aligned, the next step is determining whether coordinated planning can meaningfully add value for your specific situation.

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A 30-minute call. No document gathering beforehand, and no obligation afterwards.

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