Do your taxes like the rich and save money

Learn how to use Roth IRAs, investment losses, and even hiring your kids to save money on taxes, just like the wealthy.

"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in Facebook – all safely within the confines of the Roth IRA, that investment ballooned to $5 billion, which can all be withdrawn tax-free when he turns 59½.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.