The 5 Biggest Tax Mistakes High-Net-Worth Individuals Make
Published: 08/172025
Author: The Miser Wealth Partners Team
You’ve worked hard to build your wealth
You’ve made smart decisions, taken calculated risks, and achieved a level of success that most people only dream of. But as your income and assets have grown, so has your tax bill. And with that comes the nagging feeling that you might be leaving money on the table – a lot of money.
At Miser Wealth Partners, we’ve worked with hundreds of high-net-worth individuals, and we’ve seen it all. We’ve seen the simple mistakes that cost thousands and the complex oversights that cost millions. Here are the five biggest tax mistakes we see successful people make, and how you can avoid them.
1. Thinking Your CPA is a Tax Strategist
This is, by far, the most common and costly mistake we see. Most people assume that their Certified Public Accountant (CPA) is proactively looking for ways to reduce their tax bill. The reality is, that’s not their primary job. Most CPAs are tax preparers and compliance experts. Their job is to make sure your taxes are filed accurately and on time, based on the financial information you provide them.
They are not typically trained in, nor do they focus on, advanced tax strategy. They are historians, looking at what has already happened. We are architects, designing a blueprint for your financial future. The difference is subtle, but the financial implications are massive. A proactive tax strategist will look at your entire financial picture – your business, your investments, your real estate, your estate plan – and find opportunities to legally and ethically minimize your tax liability. They will bring you ideas that your CPA has likely never even heard of.
2. Overlooking the Power of Advanced Retirement Accounts
Maxing out your 401(k) is a great start, but for high-income earners, it’s just the beginning. There is a whole world of advanced retirement planning strategies that can allow you to save hundreds of thousands of dollars a year, all while deferring taxes. The most powerful of these is the Cash Balance Plan.
A Cash Balance Plan is a type of defined benefit pension plan that allows for massive, tax-deductible contributions – often in excess of $250,000 a year. For a high-income professional, like a doctor or a lawyer, this can mean an immediate tax savings of over $100,000 a year. It’s one of the most powerful tax-saving tools available, yet most people have never even heard of it.
3. Not Optimizing Your Real Estate Investments
Real estate is a fantastic wealth-building tool, but most investors are not taking full advantage of its tax benefits. The most common oversight we see is the failure to perform a cost segregation study.
A cost segregation study is an engineering-based analysis that identifies and reclassifies personal property assets to shorten the depreciation time for taxation purposes. In plain English, it allows you to take much larger depreciation deductions, much sooner. For a commercial property owner, a cost segregation study can unlock hundreds of thousands of dollars in immediate tax savings.
4. Ignoring the ticking tax bomb of required minimum distributions (RMDs)
For years, you’ve been diligently saving in your tax-deferred retirement accounts, like your 401(k) and IRA. But what happens when you have to start taking that money out? The IRS forces you to start taking Required Minimum Distributions (RMDs) at age 73, and that income is taxed at your ordinary income tax rate. For a high-net-worth individual, this can be a huge tax hit, pushing you into the highest tax brackets and triggering other penalties like Medicare IRMAA surcharges.
A proactive tax strategist can help you defuse this ticking tax bomb through strategies like Roth conversions, which allow you to pay taxes on your retirement funds now, at a potentially lower rate, so that they can grow tax-free forever.
5. Failing to Integrate Your Estate Plan with Your Tax Plan
Your estate plan is not just about who gets what when you’re gone. It’s also one of the most powerful tax-planning tools you have. A well-designed estate plan can help you minimize estate taxes, protect your assets from creditors, and ensure a smooth and tax-efficient transfer of your wealth to the next generation.
Strategies like Charitable Remainder Trusts, for example, can allow you to sell a highly appreciated asset, like a business or a piece of real estate, defer the capital gains tax, create a lifetime income stream for yourself, and leave a lasting legacy to your favorite charity. It’s a win-win-win, but it requires the kind of integrated legal and tax expertise that most advisors simply don’t have.
The Takeaway
If you’re a high-net-worth individual, the tax code is not written in your favor. But that doesn’t mean you have to be a victim. By avoiding these common mistakes and working with a team of proactive, integrated advisors, you can take control of your financial future, minimize your tax burden, and build a lasting legacy for your family.
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Tellico Village
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Knoxville
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Result: $31,000 annual tax savings, 4.2% portfolio improvement
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At Miser Wealth Partners, we've created something different. Our team of licensed attorneys, enrolled agents, and investment professionals collaborate daily on your behalf, ensuring every decision optimizes your complete financial picture.
Our Unique Approach
At Miser Wealth Partners, we've created something different. Our team of licensed attorneys, enrolled agents, and investment professionals collaborate daily on your behalf, ensuring every decision optimizes your complete financial picture.