Financial Freedom & Tax Strategies - How High Earners and Business Owners Can Lower Taxes, Gain Flexibility, and Take Back Control

Aug 11

Most high earners don’t have a tax problem. They have a lifestyle design problem they didn’t know they signed up for.

Their lives are often structured around fixed income, rising expenses, and invisible pressure, whether it's to keep up, fit in, or live up to a standard they never consciously chose. Sometimes it's FOMO. Other times, it's subtle imitation as their social circle shifts. Either way, the outcome is the same: more money, but less margin. And if you're not careful, that system slowly erodes your freedom, even as your paycheck grows.

In this week’s episode of Ambition Aligned, I sat down with Shane Clark, CPA, my long-time mentor, good friend, personal tax advisor, and one of the most grounded financial thinkers I know.

Shane walked away from a high-stress career at a large firm and built a thriving tax practice in Los Angeles, serving entertainers, business owners, and high-net-worth individuals. He made that choice to align with his values: presence with family, autonomy in his work, and the ability to make a tangible difference for his clients every day.

This conversation covers everything from advanced tax strategies and retirement planning to lifestyle creep, personal boundaries, and what success really looks like when it’s designed with intention.

If you’re a high earner, consultant, or future business owner looking to keep more of what you earn, reduce taxes, and live with greater flexibility, you’ll get a lot from today’s episode.

And for those of you who don’t want to read it all, here’s the: TL;DR – What We Covered:

Shane’s “Wallet Goals” system that changed how I built my career
Why high-income W-2 employees are structurally disadvantaged
The playbook business owners use to legally reduce taxes and increase margin
How to flip your lifestyle script and build freedom instead of obligations
Real numbers: $500K W-2 vs $400K consultant—who keeps more

1. The Wallet Goals: A Simple System That Actually Works

To really understand Shane, and some of his most enduring advice, you have to start here: the power of intention.

When Shane was 18, he sat down, wrote out his life goals, and stuck them in his wallet. By the time he turned 35, he had achieved every single one. It wasn’t flashy or complicated, but it worked.

When I met Shane in college, he encouraged me to do the same. That single exercise shaped the next decade of my life. I hit every goal I wrote down, career, financial, personal, and even the kind of family I wanted. Not because I hustled harder than anyone else, but because I knew exactly what I was aiming for.

There’s something deeply clarifying about putting your goals in writing. It forces you to confront what matters. It strengthens your decision-making. It becomes a quiet accountability tool, tucked in your pocket, reminding you not to drift.

And that’s what most people are missing: not ambition, but ambition paired with direction.

Shane’s Approach

What started as a list in his wallet turned into a life designed with intention. He didn’t just “fall into” accounting. He reverse-engineered his path:

What lifestyle do I want?
What kind of work allows me to earn well and be present for family?
What skill set will compound over time and let me help real people?

That led him to accounting. And when the public firm life stopped serving his values, he pivoted again, into entrepreneurship, family-focused business ownership, and long-term freedom.

My Additions to the Wallet Goals System:

If you want to build a life that’s designed, not defaulted, try adding this framework:

Start with your ideal life, not a job title. What kind of time freedom, relationships, and impact do you want?
Reverse-engineer the path to get there. What roles, skills, and income models support that vision?
Break it down into time-based milestones. Annual and monthly checkpoints help you track progress and adjust.
Make decisions that serve the plan. Say yes to jobs, clients, and commitments that move you closer, and no to the ones that distract.
Course-correct regularly/ Reflection beats perfection. If you drift, don’t quit, just realign.
Anchor to your values, not prestige. Chasing titles and status will burn you out. Chasing alignment will build you up.
Attach timeframes to each goal. Without a time frame, a goal is just a wish. Deadlines create urgency and focus.

This system helps you define what success means to you before the world tries to define it for you.

Action Step: Write Your 5 Goals Today

If you haven’t done this yet, now’s the time.

Write down the top 5 goals that truly matter to you.
Add a deadline for each.
Fold it up, put it in your wallet, and carry it with you.

Then look at it every month, every week, or every time you open your wallet. Especially when you feel lost, tired, or tempted by shortcuts. Because your goals won’t work if you forget them and you won’t drift off course if you know exactly where you’re headed.

2. Why W-2 High Earners Are Trapped

If you're a full-time employee. or part of a dual-income household, earning over $300K, especially in a high-tax state like California, you’re likely carrying one of the heaviest tax burdens in the country.

I can’t tell you how many friends reach out asking how to reduce their tax bill as W-2 earners. Shane hears it constantly too. But here’s the uncomfortable truth: if you’re in a pure W-2 role, you don’t have many levers to pull.

Your Current Reality:

Federal + State marginal tax rate: ~45%–50%
No business deductions: You can’t deduct your home office, professional development, client meals, tech purchases, car expenses, or investments made to grow your income.
Limited retirement tools: If you’re lucky, you get access to a 401(k) with employer contributions. If you’re very lucky, your employer offers add-ons like mega backdoor Roth IRAs, HSAs, or FSAs, but even these are capped and mostly long-term in nature.
Zero flexibility on income timing: Your pay and benefits are on your employer’s terms. Most don’t offer income deferral, profit-sharing, or equity liquidity that you can control.

What You Can Do (But It’s Not Much):

Max your 401(k), HSA, and any other employer-offered benefits → A solid long-term habit, but barely dents your tax burden when you're earning multiple six figures.
Donate to charity or maximize → Helpful if you’re itemizing and already exceed the standard deduction. but not a scalable strategy. A good tip he had was doing this ever other year to lump-sum the donations in one period to maximize the tax deductions and get you over that limit.
Leverage a 529 college savings plan → Useful if you have kids and plan ahead, but carries risk if they earn scholarships or don’t attend college.
Buy a home for the mortgage interest deduction → Often a false economy if your cost of living increases faster than your equity gains. It also won’t make a dent in the rent vs. buy equation in high cost of living cities like Los Angeles or San Jose.

The Core Problem: You’re Playing Defense, Not Offense

As a W-2 employee, you’re stuck in a system optimized for consistency, not strategy. Your income is taxed at the highest possible rate, benefits are pre-packaged, deductions are capped, and your ability to plan proactively is almost nonexistent.

Worse, most professionals don’t even realize there’s another path, because this one was handed to them early, and praised for its stability, but stability without strategy just leads to stagnation.

The Bigger Shift: From W-2 Earner to Income Designer

This isn’t about quitting your job overnight. It’s about seeing the game for what it is, and asking whether you're using the right vehicle to get where you want to go.

High earners often hit a ceiling, not of income, but of leverage:

You can’t defer income
You can’t control timing
You can’t shift your income mix from ordinary to passive or capital gains
You can’t take advantage of legitimate deductions tied to building a business or reinvesting in yourself

And once you’re locked into that model, even small lifestyle increases, private school, luxury car leases, property taxes, can erode your savings potential and freedom at an accelerating pace. That’s why business owners and consultants often pay a lower effective tax rate on the same, or higher, income levels.

They’re not cheating. They’re just using a different playbook.

Your Next Move

If you're feeling stuck in your current income model, it’s time to zoom out and ask yourself:

Am I earning in the most strategic way possible?

Because for many high earners, the problem isn’t the work, it’s the structure.

Start by exploring how a side consulting business, LLC, or S-Corp could unlock new levers: flexible income timing, deductible expenses, retirement plan stacking, and better tax positioning—all without jeopardizing your full-time role.

The system isn’t broken. It’s just not built for you to win unless you own how you earn.

Your income model is either working for you… or working against you.

And here’s the kicker: A business owner running a lean consulting firm could take home more net income at $400K than a W-2 employee making $500K, simply because their structure is working harder for them.

We’ll break that down below. But that’s the difference between playing defense and playing offense.

If any of this sounds like your life today, take a pause and listen to the full conversation with Shane. It could change how you approach your next career or financial move.

→ Watch on YouTube

→ Listen on Spotify

3. Business Ownership Changes Everything

Once you step outside the W-2 model, even part-time as a consultant, freelancer, or small business owner, you unlock a completely different playbook.

You move from passive tax subject to active tax strategist.

You get to:

Control how you earn
Decide when you take income
Deduct investments that grow your business or skill set
Build retirement faster with multiple account options
Reduce your effective tax rate without earning less

And it’s not hypothetical. These aren’t fringe tactics. They’re legitimate, well-supported parts of the tax code that reward ownership, risk-taking, and long-term planning.

Oh and to be clear, this isn’t straight tax advice for you to go implement yourself - work with a tax professional (like Shane) to make sure everything you do is auditable and by the book and supportable.

Tools You Unlock as a Business Owner:

S-Corp Optimization

Pay yourself a “reasonable salary” (talk to your tax advisor on the right range here)
Take remaining profit as distributions (not subject to self-employment tax)

Solo 401(k) or SEP IRA

Contribute up to $69K/year pre-tax
Solo 401(k)s allow both employee and employer contributions (more flexible)
Result: Accelerated retirement savings and reduced taxable income

Defined Benefit or Cash Balance Plans

Ideal for high-income, late-career earners or owner-operators with steady profits
Contribute $100K+/year pre-tax
Powerful for “catch-up” years in your 40s–60s

PTET (Pass-Through Entity Tax Election)

Allows S-Corps and partnerships in states like California to pay income tax at the entity level
Circumvents the $10K SALT cap on federal returns
Restores deductibility for high earners hit hardest by TCJA

Real Expense Deductions

Home office, equipment, professional development, software, client dinners, travel
All deductible when they’re tied to legitimate business use
None of these are available to W-2 employees post-2017

W-2 vs. Business Owner: Who Really Keeps More?

W-2 Employee – $500K Salary (California)

401(k) Contribution: $23,500
Standard Deduction: $30,000
Taxable Income: $446,500
Estimated Taxes (Federal + CA): ~$134,000
Social Security Tax: ~$10,453
Medicare Tax: ~$7,250
Total Tax: ~$209,700
Take-Home Pay: ~$290,300

Optimized Business Owner – $400K Income

Salary (W-2 to self): $120,000
Distributions: $250,000
Business Expenses: $30,000
Pre-Tax Contributions:
Solo 401(k): $69,000
Defined Benefit Plan: $150,000
HSA (Family): $8,000
Total: $227,000
Taxable Income (after deductions): ~$143,000
Estimated Taxes (Fed + State + Payroll): ~$96,700
Total Tax: ~$96,700
Total Wealth Retained: ~$302,300

What This Means

Even making $100K less, a business owner can retain nearly the same, or more, total wealth by using the tools available to them. Between strategic income design, higher contribution limits, and real deductions, ownership changes everything.

You can adjust the numbers, maybe expenses are higher or you don’t max out every benefit, but the lesson holds: It’s not just what you earn, it’s how you earn it.

Action Step for High Earners

Once you break $300K+ in income, consider:

Can you shift to a 1099 or advisory model with your employer?
Would it make sense to pay for your own benefits if your spouse retains W-2 coverage?
Are you ready to trade a bit of stability for long-term leverage?

Work with a trusted tax advisor to explore if this model could work for you.

Why This Matters

This is what Shane and I both see behind the scenes: Business owners often take home more, not by earning more, but by structuring smarter.

They:

Control their income timing and mix (wages vs. distributions vs. deferred)
Invest pre-tax dollars into their future at 2–3x the rate of W-2 employees
Deduct what actually supports their growth
Build in buffers and flexibility that lead to better decisions and less burnout

The goal isn’t to become a full-time entrepreneur. The goal is to own your earning model, so your income works for you, not just the IRS.

4. The Best Tax Strategy Is Lifestyle Discipline

"Too many people wait to see what’s left over before they save. I save first, plan for taxes, and then design the rest of my lifestyle around that."

Shane and I wrapped our conversation with a simple truth we’ve both learned the hard way: Tax savings don’t mean much if you can’t manage your lifestyle. Sure, good planning can save you thousands. But lifestyle creep? That’ll quietly drain six figures and trap you in obligations you never meant to sign up for.

We’ve both seen how it plays out. Income goes up. So do expectations. You start justifying things, nicer cars, “must-have” school districts, a house that’s really for the deduction, and before long, you’ve locked yourself into a version of life that requires constant upkeep. And it doesn’t buy you freedom. It robs you of it.

Shane’s approach flips that on its head. He saves first. Maxes out retirement early. Funds his kids’ 529s before thinking about upgrades. Then, and only then, does he design the rest of his lifestyle around what’s left. That mindset creates margin. And margin creates freedom.

Because the best investment you can make isn’t a fund, a write-off, or a clever loophole, it’s the ability to walk away from anything that compromises your values.

🎧 Listen to the Full Episode

Shane and I go deeper into:

Tax strategies for high earners
Lifestyle design and discipline
The hidden cost of W-2 income traps
How to align your money with your values