Most high-income earners and business owners work with a tax preparer. This person is in charge of preparing and filing an income tax return for either a business or an individual, or both.
However, very many high-income earners (W-2 wage earners, those receiving a 1099 or K-1, as well as business owners), often complain that their tax preparer is not helping them decrease their tax liability.
Why does a tax preparer generally NOT work to lower a high-income earner’s tax liability? What is an alternative solution?
Who is a tax preparer?
A tax preparer is a professional who prepares and files income tax returns (or other types of tax returns) for businesses and individuals. Most often, a tax preparer is an accountant, Enrolled Agent (EA), or Certified Public Accountant (CPA). These professionals sign their name on the tax return they prepare, and take responsibility for the accuracy of the return.
To prepare an income tax return, a tax preparer will ask their client various questions relating to their income, as well as require a series of tax and financial documents from the previous year.
In 2025, we filed tax returns for the year 2024. This means that a tax preparer looks one year into the past to see how much a client owes in taxes (or, if they overpaid, how much the IRS or state owes them).
This is why a tax preparer usually does not handle advanced tax reduction planning strategies for their high-income clients, as those strategies pertain to future income and tax liability.
High-income earners looking to reduce their high tax burden, who work with a tax preparer, often feel unsatisfied. They expect one service (income tax reduction planning) but receive another (income tax preparation). The latter does nothing to reduce their taxes.
Who is a high-income tax strategist?
A Tax Strategist can be a Certified Public Accountant , or other accounting or financial professional, who specializes in tax law as it pertains to tax reduction planning for high-income earners and business owners.
A tax strategist, sometimes called a tax reduction planner, will conduct an in-depth analysis of a client’s taxes, accounting, and finances to determine what can be done to lower their tax liability.
The tax planning process is very meticulous as a lot is at stake – the IRS does not look kindly upon taxpayers who take excessive deductions or claim undue tax credits. Compliance with IRS regulations is very important!
During the tax planning process, a tax strategist may also recreate a client’s income tax returns in order to provide tax reduction projections – how much exactly will a client save annually with a given tax reduction strategy? The strategies matter, but the numbers are also very important!
The final product of a tax strategist’s work is often called a “Tax Plan”. This document will contain all strategies available to the client, projections regarding tax savings per strategy, as well as details regarding the implementation of the aforementioned strategies. The client then decides which strategies to implement, or use, in order to lower their tax bill.
Types of tax planning strategies for high-income earners
A tax strategist may offer from one to a dozen or more tax reduction planning strategies to a client.
The strategies will depend on a client’s sources of household income (W-2, 1099, K-1, business income), the amount of household income, as well as the client’s industry (if a business owner).
Typical strategies may be:
- For business owners: hiring children under the age of 18 to perform business services; establishing an accountable reimbursement plan if the client owns an S-Corp; business-specific tax credits, renting out a client’s primary residence for up to 14 days a year, maximizing other available deductions.
- For high-income individuals whose main source of income is not a business: charitable donation deductions with ROI, commercial solar projects, and an HSA.
CPA vs tax strategist: does a tax strategist need to be a CPA?
No. Not every tax strategist will be a Certified Public Accountant – just like not every doctor will be a brain surgeon. Some tax strategists can be accountants without the CPA designation, and they can even be financial advisers.
Most CPAs are tax preparers only.
That being said, a CPA might have the best qualifications to become a tax strategist. A CPA must have an accounting degree (in most states), and must meet rigorous continuing education requirements to obtain and maintain their license. This means keeping up to date with the tax code, as it pertains to tax reduction.
This is why a CPA might be a better choice of tax strategists than other tax, accounting, or financial professionals.
Can a tax strategist be a tax preparer?
Yes. Some tax preparers are also tax strategists, and some tax strategists are also tax preparers.
Everything depends on experience, knowledge of the tax code, and qualifications.
Tax preparer vs tax strategist: cost
When it comes to the cost of services, a tax preparer will most likely cost a lot less. This is because they are not providing as much value as a tax strategist.
Income tax preparation is something known as “compliance work” – this is a service done out of necessity, in order to stay compliant with IRS and state regulations.
A tax reduction strategist provides a comprehensive consulting service. Few professionals can provide this service well. This is why the cost here will be higher.
That being said, the value provided will also be higher.
A tax strategist can help their client save tens, maybe even hundreds of thousands of dollars in taxes with the right strategies. And many tax reduction strategies can be reused year after year. When taking into consideration the vast amount of knowledge and experience required, combined with the dollar amount of tax savings involved, it becomes clear why a tax strategist will charge more.
How to find a tax strategist
Most clients who find Ratio CPA find us via a web search – and that is often the best place to start.
It usually will not matter if the tax strategist is located in the same state as the client – a special state license is not required to deliver services for tax reduction planning.
When looking for a tax strategist, we recommend taking the following into consideration:
- Credentials: While not all CPAs are tax strategists, they are the professionals with the most knowledge of tax law, due to their educational background and the regulations for obtaining and maintaining a CPA license. Taking professional credentials into consideration can help you in the process of elimination.
- Years of experience: Your tax strategist needs to have at least a few years of experience in the field of tax reduction planning in order to handle both tax savings and compliance with IRS regulations. The more experienced a tax strategist is, the more connections and strategies they will most likely offer, and the more wisdom they can pass on to their clients.
- Experience in a given field or industry: A real estate professional will have different tax reduction planning needs than an IT startup. It’s best that your tax strategist has experience in your particular field of business.
- Working with high-income individuals vs. business owners: Some tax strategists will cater only to businesses, while others work both with business owners and high-income individuals. At Ratio CPA, we feel it’s important to focus on the business AND the individual income tax return in order to provide a well-rounded service.
- Types of tax-planning strategies for high-income earners: Some tax strategists, like Ratio CPA, focus on the needs of high-income earning individuals, and not just on those with C-Corps, S-Corps, and LLCs.
- Transparency: Whether it comes to pricing or the types of strategies that will be recommended, the best tax strategists give the client access to all information upfront and are as transparent as possible. Firms that try to hide the strategies they have in mind for clients, or who have an unclear pricing schedule, should be avoided.
Get More Than a Tax Return—Get a Tax Strategy
A tax preparer usually only prepares income tax returns and does nothing to lower a high-income earner’s tax liability. To decrease a high-income earner’s tax burden, they need to work with a tax strategist. A tax strategist will analyze their tax and financial documents and create a strategic tax plan, with various strategies, to reduce tax liability.
A tax strategist may come with a higher price tag, but they are well worth it, as the value they bring may be in the tens or hundreds of thousands of dollars in tax savings annually. This value far exceeds that of a tax preparer.
For more information, contact your CPA firm or reach out to Ratio CPA. We will be more than happy to help you discover which tax reduction strategies are right for you!
