Tax Strategy Consulting for High Net Worth Individuals in Miami

Planning at this level is mostly about timing and sequence rather than any single deduction. When we build tax strategy for high net worth clients in Miami, we start with a multi-year picture instead of one filing season. The taxable income that lands on a Form 1040 in a given April is usually the product of decisions made a year or two before it. A family holding concentrated stock, an operating company, a few rental properties, and a private fund interest does not have one tax problem. It has several, and they push against each other in ways a single-year return preparer never sees.

The work starts with a model. We take the current year, the two behind it, and three years forward, then lay out where income shows up and what rate it carries. Wages and short-term gains sit at the top bracket, along with ordinary distributions from a retirement account. Qualified dividends and long-term gains on the property described in Publication 550 sit lower. Rental losses may be suspended under the passive activity rules in Publication 925 and sit unused until a disposition frees them. Once that model exists, the real questions become answerable. Should a gain be taken in December or the following January. Should two years of charitable giving be combined into one. Should the business owner fund a profit-sharing plan of the kind covered in Publication 560 before the extended due date.

Here is a worked example from a client with a Brickell condo and a consulting practice. She expects 900,000 dollars of ordinary income in 2026 and about 220,000 dollars in 2027, because her consulting agreement ends in March of that year. She also holds a position with a 400,000 dollar unrealized long-term gain that she wants to sell to buy a home. Selling in 2026 stacks that gain on top of a full year of ordinary income and exposes all of it to the 3.8 percent surtax figured on Form 8960, roughly 15,200 dollars of surtax by itself. Waiting until February 2027 drops most of the gain into the 15 percent long-term band and pulls her modified adjusted gross income under the surtax threshold for a good part of the year. The modeled difference on those two moves came to about 47,000 dollars of federal tax. That figure is a projection under current law, not a promise, and it moves if the market moves or her income changes. What matters is that she made the call with real numbers in front of her instead of finding out in April.

Charitable timing carries similar weight. A client who gives 40,000 dollars a year and carries no mortgage may take the standard deduction every single year and get no tax benefit at all from that giving. Combining two years of gifts into one year, often through a donor advised fund, pushes the itemized total on Schedule A above the standard deduction in the giving year, then the standard deduction covers the off year. Owners of pass-through businesses get a second layer through the qualified business income deduction computed on Form 8995-A, where wages paid and property held can change the answer entirely. A compensation decision made in November is really a deduction decision.

The common mistake we see is treating the tax return as the plan. By the time the 1040 is being prepared, nearly every lever has already been pulled and the preparer is just reporting history. The second mistake is planning against a published rate table without looking at the phase-outs and the surtax, which is where the real marginal cost hides. Clean bookkeeping feeds the model, and the model drives the individual return, not the other way around.

If you want to see what the next three years look like on paper before you commit to anything, request a consultation and bring your last two returns along with your current statements. We will build the model, and you will walk out knowing which decisions belong in this calendar year and which ones can wait.

Florida is the reason a lot of these families are here, and it changes the shape of the plan considerably. Florida imposes no state personal income tax, so a resident pays federal tax on a long-term gain and pays nothing to the state on that same gain. A comparable family sitting in a high-tax state might pay another nine or ten percent on top of the federal bill. That single fact is why tax strategy for high net worth clients in Miami is almost entirely a federal exercise. The Florida Department of Revenue still collects sales tax and reemployment tax, so a family with an operating business or short-term rental property does have state filings to keep current, but the personal income side stays quiet.

That quiet has two consequences people miss. The first is that every planning dollar now has to come from a federal lever, because there is no state deduction game to play and no state credit to chase. Bracket management, the surtax computed on Form 8960, holding-period discipline on the assets described in Publication 550, and retirement plan funding carry the whole load. The second consequence is residency itself. Moving here does not automatically end the prior state’s interest in you. Those residency examinations look hard at day counts and at where your primary home actually sits, and they can reach back years.

A worked example makes the stakes plain. A family relocated in 2026 and sold 2,000,000 dollars of appreciated stock the following spring, with a basis of 400,000 dollars and a long-term gain of 1,600,000 dollars reported through Schedule D. At the 20 percent federal long-term rate that is 320,000 dollars, plus roughly 60,800 dollars of surtax, for about 380,800 dollars total. Had they still been residents of their former state, they would have owed somewhere near 160,000 dollars more on the very same transaction. The move was worth real money on that one sale, but only because the residency change held up. Had they kept the old house, spent most of the year back north, and left their driver license unchanged, the prior state would have had a serious argument, and the savings would have evaporated in an examination.

The common mistake here is assuming that no state income tax means no planning is needed. We hear some version of that in almost every first meeting. What actually happens is that the federal exposure grows because nobody is watching it. A family that used to have an accountant fighting over state apportionment now has nobody modeling the surtax threshold or the gain sequencing, and the federal bill quietly runs 40,000 or 50,000 dollars higher than it needed to. The other frequent error is selling too soon after the move, before the residency facts have had time to settle.

Sales tax is the one Florida item that catches families who own a business on the side. A charter operation, a rental of tangible property, or a private art dealership can create a collection duty even when the personal income side stays clean. Registration and remittance run through the state, and the cost of guessing wrong compounds quietly across quarters. Anyone with an operating entity should confirm the assigned filing frequency once a year rather than assume the registration filed at formation still matches the current volume of business.

So the Florida answer is not that planning gets easier. It is that planning gets narrower and the federal side carries more weight than it did before. We coordinate the strategy work with the preparation of the annual return so the same people who modeled a decision are the ones reporting it, which removes the gap where most surprises live. Over the next several years, as more families make this move, the residency documentation will matter as much as the tax math itself, and the file you build in year one is the file you will be defending in year four.

Harvesting is the most misunderstood piece of tax strategy for high net worth clients in Miami, mostly because the popular version of it is backwards. People hear the phrase and think it means selling losers every December. The useful version is broader. It means deciding, each year, which positions should be realized and which should be left alone, based on the bracket you are actually in rather than the bracket you assume you are in. Some years the right move is to take losses. Some years, and this surprises people, the right move is to take gains on purpose because the space in a lower bracket is there and it does not carry forward.

Mechanically, every disposition runs through Form 8949 and totals up onto Schedule D. Short-term and long-term buckets net separately before they net against each other. Capital losses offset capital gains without limit, and only 3,000 dollars of net loss reaches ordinary income in a year, with the remainder carrying forward. Basis rules come out of Publication 551, and the holding period and wash sale rules come out of Publication 550. Your broker reports proceeds and often basis to you and to the IRS on Form 1099-B, but that form is a starting point and not the last word.

Here is a real pattern. A client held a fund position bought in three tranches over six years, with a total basis near 310,000 dollars and a value of 640,000 dollars. She wanted 150,000 dollars of cash. Selling by default meant first in first out, pulling the oldest and lowest basis shares, which produced about 108,000 dollars of gain. Specific identification of the newest tranche instead produced roughly 34,000 dollars of gain on the same 150,000 dollars of cash. The tax difference at 20 percent plus the surtax ran near 17,600 dollars, and the only thing required was telling the broker which lots to sell at the time of the trade rather than after. That instruction has to happen before settlement, because you cannot rewrite the lot selection in April.

The wash sale rule catches people constantly. Selling a position at a loss and buying it back inside thirty days on either side of the sale disallows the loss and rolls it into the basis of the replacement shares. The trap is that the rule looks across accounts, so a loss sale in a taxable brokerage account and a purchase in an individual retirement account within the window can wipe the loss out permanently. Dividend reinvestment causes this without anybody making a decision at all, because a small automatic purchase inside the window is still a purchase.

The common mistake is harvesting on the last business day of December with no model behind it. That timing ignores the mutual fund capital gain distributions that land in mid December, ignores any carryforward already sitting on the prior return, and often creates a short-term loss used against long-term gain, which is the least valuable pairing available. The other mistake is letting tax tails wag the investment dog, and we do not do that. We are a CPA and tax firm, not a registered investment adviser, so we do not manage portfolios or tell anyone what to buy. We work alongside your own licensed advisors, we give them the tax consequences of the trades they are already contemplating, and we make sure the results land correctly on the return. Pair that with clean books and coordinated planning work, and the December conversation gets much shorter. Next year, start the lot review in October and the choices will still be open to you.

The net investment income tax is the quiet 3.8 percent that shows up after everything else has been figured, and it is one of the most reliable places to find money in tax strategy for high net worth clients in Miami. It applies to the lesser of net investment income or the amount by which modified adjusted gross income exceeds a threshold, and it is computed on Form 8960. Net investment income includes interest, dividends, capital gains, annuity income, royalties, and rents, along with income from passive trades or businesses. It does not include wages, self-employment earnings, or distributions from qualified retirement plans.

That last sentence is where the planning lives. Two people with identical total income can pay very different surtax, because the character of the income differs. A business owner who materially participates in her S corporation pays no surtax on that flow-through income. Her sister, who owns the same percentage but does not participate, pays the surtax on every dollar of it. Material participation under the rules in Publication 925 is therefore a tax variable, not just a description of how someone spends her week, and it is testable with contemporaneous records.

A worked example shows the size of it. A couple has 260,000 dollars of wages, 90,000 dollars of dividends and interest reported on Schedule B, and a 300,000 dollar long-term gain from a property sale. Modified adjusted gross income lands at 650,000 dollars, and net investment income is 390,000 dollars. The surtax applies to the excess over the 250,000 dollar married threshold, which is 400,000 dollars, so it applies to the full 390,000 dollars of investment income and costs 14,820 dollars. Now shift 60,000 dollars of the couple’s wages into a profit-sharing contribution described in Publication 560 and take a deductible individual retirement contribution under the rules in Publication 590-A where eligible. The retirement dollars do not reduce net investment income, but they do reduce modified adjusted gross income, which narrows the excess and can drop the surtax base. In this case the surtax fell to about 12,540 dollars, and the couple also picked up an ordinary deduction worth far more than the surtax savings.

The common mistake is not knowing the surtax exists until the return is done. It is a separate form, it does not show up in any bracket table, and payroll withholding does not account for it, so it lands as a balance due. Families see the 20 percent long-term rate quoted everywhere and mentally stop there, then find the real federal cost on a large gain is 23.8 percent. On a 1,000,000 dollar gain that gap is 38,000 dollars, which is not a rounding error. Rental income is another blind spot, since rents flow to Schedule E and generally carry the surtax unless a real estate professional exception applies.

Trusts deserve their own mention, because the threshold there is punishing. A non-grantor trust reaches the surtax once its undistributed net investment income passes a figure near the top of the compressed trust bracket table, which amounts to a few thousand dollars of income rather than the 250,000 dollars a married couple receives. A family trust holding 200,000 dollars of dividends and realized gains can therefore pay the full 3.8 percent on nearly all of it. Distributing that income to a beneficiary who sits below her own threshold moves the same dollars out of the surtax entirely, and the decision gets made fresh each year on the trust return rather than once at formation.

None of this removes every audit risk, and none of it is a guaranteed result, because facts and law both change. What it does is put a number on a decision before the decision is made. We handle the surtax modeling inside our planning engagements and carry the conclusions straight through to the return itself. Look at your last three returns and see whether Form 8960 was ever attached. If it was, that is a place to start this year.

A liquidity event is the one moment where a few months of planning outruns a decade of ordinary filing, and it is where tax strategy for high net worth clients in Miami earns its keep. The event might be the sale of an operating company, a fund distribution, a real estate closing, or a block of stock finally coming free. Whatever the form, it produces a single year that looks nothing like the years around it, and that distortion is the opportunity. The planning window opens well before the letter of intent and closes on the day the documents are signed, which is why the call needs to happen early.

We build a three-year frame around the event year. In the year before, we look for income to accelerate into a lower bracket and deductions to push forward into the spike year. In the event year, we look at what can be deferred with an installment structure, what charitable giving belongs there while the bracket is high, and how the gain reports through Schedule D and Form 8949. Asset sales may throw off depreciation recapture that runs through Form 4797 at ordinary rates, which surprises sellers who budgeted for 20 percent. In the year after, the income drops and the low-bracket space becomes the place for a Roth conversion or a deliberate gain.

Cash flow deserves its own paragraph, because this is where good plans still go wrong. A client closed a sale in August with a 3,100,000 dollar gain. Federal tax at 20 percent plus the surtax came to about 738,000 dollars. He had no withholding, because there is no employer on a stock sale, so the entire amount was due through estimated payments. Under the rules in Publication 505, we set his September and January installments using Form 1040-ES and applied the annualized income method on Form 2210 so he was not penalized for the first two quarters, when the income did not yet exist. Without that annualization the penalty math treats the income as if it had been earned evenly all year, and the underpayment charge would have run several thousand dollars for no reason at all.

Installment reporting deserves a hard look whenever the buyer pays over time. Spreading a 3,000,000 dollar gain across four years can keep a large slice out of the top bracket and under the surtax threshold in three of those years, which on that size of gain has been worth 90,000 dollars or more in the files we have modeled. The election carries consequences of its own, interest may be charged on deferred tax above certain limits, and depreciation recapture is still taxed in full in the year of sale no matter how the cash arrives. The election happens on the return for the year of the sale, and electing out of it is permanent, so the modeling has to be finished before that return is filed rather than after somebody notices the balance due.

The common mistake is calling the accountant after the deal closes. Once the papers are signed, the allocation between assets and goodwill is fixed, the installment election is gone, any charitable transfer of pre-sale shares is too late, and the entity structure is whatever it was. We have watched sellers lose six figures to a purchase price allocation negotiated by people who had no reason to care about their tax bill. Ninety days of lead time changes that conversation completely. The second mistake is forgetting the year after, when income falls off a cliff and nobody uses the low bracket that is suddenly sitting there.

Florida helps here, since no state personal income tax applies to the gain and the whole analysis stays federal, but the federal number is large enough on its own to deserve months of attention. Steady bookkeeping in the years before a sale also raises what a buyer will pay, because clean records shorten diligence. If a sale is anywhere on your horizon, start the planning work now rather than the month the offer arrives, and the choices will still belong to you.