With progression in time, progressions have also been made in ideologies and methodologies. Today, it is not necessary for an entrepreneur to hold a degree from a highly valued B-school. There are a number of individuals who have grown from nothing, and now own millions worth of assets. Such people are known as High Net Worth Individuals. Now, when thinking of these individuals who are highly wealthy people, you do not necessarily have to think of Elon Musk or Mark Zuckerberg.
This set of the group comprises every person who owns a net wealth starting from 6-7 figures and on to more. It could include C-level execs, entrepreneurs, affluent investors, etc. Not only do these individuals earn more, but they also have to pay more taxes, making them high-wealth taxpayers. Experts in the field know the importance of wealth management for taxpayers who have a high net worth. Despite seeming conceited to plan taxes for this particular, the Internal Revenue Service (IRS) and Wealth Management are really no different for them and support all the legal ways for tax saving.
With new industries opening, the number of High net worth individuals are also increasing. As of 2018, there are 5.3 million HNWIs in just the U.S., stated a report from Capgemini.
The wealthy can follow all the wealth management guidelines and carve ways to save their income from taxes and also seek investment opportunities with higher ROIs.
There are a number of ways and plans under which high-wealth taxpayers can manage their wealth in a way that not only supports the growth of their income but also optimally pays taxes.
Let us look at some of the tips that can be used by High-wealth taxpayers
1. Increased Investments – As we know, the market is currently slow, which makes it the perfect time to load up on investments. Equity is a great way to go. But to give creativity a little more credit, investment in cryptocurrency and other stocks could also prove to be beneficial to high-wealth taxpayers as they already have a separate stream for investments. Not limiting investments to stocks, taking a stake in smaller businesses, and developing benefits and health programs for the staff would also be advantageous. Investing has also translated into exemption of taxes, and for HNWIs, it is one of the best options because of the fact that this money is not directly taken from their regular accounts, making it further safer to use.
2. Real Estate – Government backs several individuals who want to own or invest in real estate in a variety of ways. The top is granting loans and exempting taxes. Affluent investors can always invest in real estate to save up on taxes as well as create an additional pathway for revenue. Commercial properties can be utilized to their full potential by renting or leasing them out. Though the rent received is taxable, the tax rates and tax brackets are comparatively considerable and can further if there is a loan taken, the property can pay for itself. The taxpayers deduct the amount needed for maintenance and repairs and then calculate the tax.
3. Tax-advantaged medical savings accounts – There special savings accounts that are aimed at tax advantages along with saving up for any medical contingencies that might come up in the future. In today’s date, most of us have health insurance that covers a lot of our medical expenses, but they do not cover all of it. These additional costs are to be borne by the patients, the more expensive the treatment, the more expensive is this amount, with special tax-advantaged health savings accounts, high-wealth taxpayers can exempt taxes from the amount that is put in these accounts.
4. Retirement Plans – Everybody earns for a better future, and a creative retirement plan is what will not only leave scope for a greater future but also save some sum in the present. People put in some amount from their regular income to pension funds that they wish to receive after they retire. High net worth individuals can make use of a retirement benefit plan which can be designed according to their earnings and potential savings and taxes can be exempted or deferred from the same.
5. NPOs – All said and done, several ways can lead the high wealth taxpayers to invest or save money for later, but there are also ways under which they can present these earnings to somebody else under certain plans and guidelines, and not be charged the tax on them. There are specified caps and rates on these pals, but a person can always make donations to NPOs and other such entities and not be taxed for it.
Tax management can be utilized and leveraged all at the same time by just being well-informed and up to date with the latest tips and tricks in the financial market and ever-growing financial ecosystem.
Tanvi Tirthani is a content writer and strategist with a special foray into technology. She has been a keen researcher in the tech domain and is responsible for strategizing the social media scripts to optimise the collateral creation process.