“Tax the Rich” is a popular mantra, but that relies on others to change the tax code. While you wait, experts suggest you take the tax code into your hands and instead, do your taxes like the rich.
Setting aside questions on who contributes the most to U.S. tax revenue (in 2022, the top 1% of taxpayers accounted for more income taxes paid than the bottom 90% combined, according to think tank Tax Foundation), some of their previously leaked tax returns and conversations with tax professionals for ultra high net worth individuals can offer a window into how uber-rich Americans protect, transfer and grow their assets.
Even though some tactics are probably out of reach for most people, others are simple enough that they can be used with enough planning.
Billionaire Peter Thiel famously contributed $2,000 in 1999 to a Roth IRA and used $1,700 of it to buy 1.7 million founders’ shares of PayPal stock. Within two decades, which included eBay’s buyout of PayPal and a private investment in Facebook – all safely within the confines of the Roth IRA, that investment ballooned to $5 billion, which can all be withdrawn tax-free when he turns 59½.
Roth IRA contributions use after-tax dollars that allow tax-free withdrawals after age 59½ and at least five years invested. By contrast, traditional IRAs are funded with pre-tax dollars for an upfront benefit and withdrawals that are taxed.
It’s unlikely that regular folks can find a lucrative private investment like Thiel, but they can still take advantage of Roth IRAs even if they earn more than the prescribed limits.
In 2025, you could contribute to a Roth IRA only if your modified adjusted gross income is less than $150,000 as a single filer or $236,000 if married and filing jointly, with a maximum of $7,000 ($8,000 if you’re age 50 or older). Contribution amounts phase out up to $165,000 for single filer and $246,000, joint.
To avoid those limitations, use a so-called backdoor Roth IRA. Here’s how:
Contribute to a traditional IRA using pre-tax money
Pay taxes. If you took the tax benefit when you contributed to the traditional IRA, you must give it back at tax time by reporting it as income as well as any gains the money earned.
Since retirement contributions for 2025 can be made and counted up to the tax deadline on April 15, there’s still time to use this trick.
A protester carries a sign reading Tax the Rich during the No Kings Protest in downtown Montgomery, Ala., on Saturday morning October 18, 2025. About 600 people attended the march and rally.
Billionaires like Amazon.com founder Jeff Bezos and Trump love losses because they help cut tax liabilities. You can use them too, on a smaller scale. With last year’s cryptocurrency rout, this tax season may be a good time to familiarize yourself with this tactic.
If you sold investments like bitcoin at a loss when the digital asset swooned in late 2025, you could use up to $3,000 a year to offset ordinary income on federal income taxes and carry over the rest to future years. Married individuals filing separately can deduct half of that each year.
Any unused losses can be carried forward indefinitely.
Tip: Short- and long-term losses must be used first to offset gains of the same type, so focus on short-term losses first when looking for tax losses. They provide the greatest benefit because they’re first used to offset short-term gains – and short-term gains are taxed at a higher marginal rate, according to Fidelity.
Warning: The wash sale rule says you can’t take the tax benefit if you sell a losing investment and buy the same or substantially identical security within 30 days before or after the sale. So, make sure you no longer want that investment or can easily replace it with other investments that fill a similar role in your portfolio.
NOTE: Cryptocurrency and other digital assets are exempt from the wash sale rule.
“Crypto is defined and regulated as property, not a security,” said Rob Burnette, investment advisor representative and professional tax preparer at Outlook Financial Center. “You can sell and buy crypto back right away at a lower price if you still want to own it and take advantage of the tax benefit.”
Timing large transactions can also help save money, Burnette said. If you’re looking to withdraw money from an IRA for a large purchase, see if you can split the withdrawal into two calendar years.
For example, you need $300,000 to buy property and build a house. You need to buy the land in the next 30 days but won’t start construction for six months, which would be the next calendar year. Consider withdrawing $150,000 to buy the land then, wait to pull the next $150,000 in the next year.
Since IRA withdrawals are taxed as ordinary income in the year they are taken, “you’ve split the income between two tax returns,” Burnette said. “You save $38,000 in taxes plus earn the return on the $150,000” that wasn’t taken out right away.
“Always consider tax ramifications and remember, it’s not what you earn, but what you keep,” he said.
If you own a business, hire your kids.
You can hire them and pay them big salaries. The salaries will be deductible as business expenses, and you’re passing on money to your kin, experts said.
If your kids are minors, there are even more tax benefits to reap, they said.
According to David Stuehling, wealth adviser at Mercer, if your child is:
“Your child also does not pay Social Security or Medicare taxes on those wages,” he wrote in a blog. “As a result, compensation paid to a minor child can be completely free of federal payroll taxes. In addition, the wages are fully deductible as a business expense, reducing both income tax and self-employment tax exposure.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
