Income tax planning for high net worth clients presents special challenges. This module will present several important income tax aspects in dealing with the high net worth client, who often faces exposure to additional taxes and may face the necessity of making estimated tax payments. Some of the additional taxes a high net worth client may face are the alternative minimum tax, the self-employment tax, and the Medicare contribution tax and the additional Medicare tax. This module will explore many of the intricacies of these various additional taxes and, where available, some options for avoiding or minimizing these taxes.

The news is not all bad, however. These clients often have deductions or strategies available that may not typically be available to the moderate income client. The investment interest expense deduction is typically only used by higher net worth clients. In addition, the preferential treatment of long-term capital gains and qualified dividends is very important to these clients. Finally, the ability to utilize the special tax treatment of net unrealized appreciation and the qualified charitable distribution (QCD) is somewhat unique to the high net worth client.

Author: Cindy Shnaider, MSF

Cindy Shnaider, MSF is an associate professor at the College for Financial Planning. After earning her master’s degree from the College, Cindy began developing and teaching finance and financial planning courses in the College’s graduate degree program, and has continued to do so for over five years. Some of those courses include advanced corporate finance, behavioral finance, and portfolio management. You can contact Cindy at cindy.shnaider@cffp.edu.

Complexity Level: Intermediate