Tax strategy · Topic hub

High income, high complexity.

UPDATED·APPLIES TOUnited States
For high earners above the Roth IRA income limit.

Once you're above the Roth IRAIndividual Retirement Account (IRA)A retirement account with tax advantages and eligibility rules. Traditional IRA contributions may be deductible; taxable withdrawals generally enter income. Roth contributions use after-tax money, and qualified Roth withdrawals are tax-free.Full definition income limit, the standard playbook changes. Backdoor Roth, mega backdoor, NIITNet Investment Income Tax (NIIT)A 3.8% extra federal tax on investment income for higher earners (above $200k single, $250k married).Full definition, IRMAAIncome-Related Monthly Adjustment Amount (IRMAA)A Medicare surcharge added to your monthly premium if your income exceeds certain thresholds.Full definition, equity comp, and state domicile planning all become relevant. The decisions are not harder, just different.

This page covers personal finance fundamentals that apply regardless of your view on Bitcoin or fiat currencyfiat currencyMoney declared legal tender by a government, not backed by a physical commodity. Its value rests on trust in the issuing government.Full definition.

This page covers US-specific accounts and tax law. Outside the US? The principle (rising income reveals new optimization layers) applies; the specific rules differ.

Short answer

High income is a good problem. But the standard personal finance advice stops being useful around $150,000. The Roth IRA phases out, the backdoor becomes necessary, equity comp introduces complexity, and the NIIT starts taking an extra 3.8% on investment income. This page maps the strategy layer that unlocks above that threshold.

Start here

1 · THE WORKAROUND
Backdoor Roth IRA
Available regardless of income. Watch the pro-rata rule if you have existing pre-tax IRA balances.
2 · THE SURPRISES
NIIT and AMT
The two taxes that surprise high earners every year. NIIT alone adds 3.8% on investment income above the threshold.
3 · THE LARGEST LEVER
State domicile
The highest-leverage tax decision for large Bitcoin holders. California to Texas on a $1M gain saves approximately $133K in state tax alone.

Your most important tools

Common questions

I earn over $168,000. Can I still do a Roth IRA?

Yes, via the backdoor Roth. Contribute after-tax to a Traditional IRA, then convert. Watch for the pro-rata rulepro-rata ruleThe IRA conversion calculation generally aggregates your Traditional, SEP and SIMPLE IRAs, including pre-tax balances and after-tax basis. Employer 401(k) balances are not part of that IRA aggregation. Form 8606 determines the taxable and nontaxable portions.Full definition if you have existing pre-tax IRA funds. Backdoor Roth →

What is the NIIT and do I owe it?

A 3.8% surtax on investment income above approximately $200K single or $250K MFJMarried Filing Jointly (MFJ)A tax filing status where a married couple combines their income and deductions on one tax return.. Applies to Bitcoin capital gainscapital gainsThe profit from selling an asset for more than you paid for it. Taxed differently depending on how long you held the asset., dividends, interest, and rental income. Because it is not withheld from a paycheck, you may need to cover it through quarterly estimated taxes. NIIT and AMT →

I have ISOs or RSUs at my company. How do I handle them?

ISOsIncentive Stock Option (ISO)A right your employer gives you to buy company shares at a fixed price later. Cheaper taxes than other stock options if you hold long enough, but can trigger an unexpected extra tax called AMT.Full definition can trigger AMTAlternative Minimum Tax (AMT)A second federal tax calculation. You compute your normal tax, you compute AMT, and you pay whichever is higher. Often triggered by employee stock options or large state-tax deductions.Full definition at exercise. RSUsRestricted Stock Unit (RSU)Company shares your employer promises to give you over time, usually a chunk every year for four years. The shares are taxed as regular wages on the day each chunk lands in your account.Full definition are taxed as ordinary income at vest. The timing decisions are significant; many people leave money on the table by treating them as auto-pilot. If your employer also offers employee stock purchase plans (ESPP), the discount and holding-period rules add another timing layer. Equity compensation →

Does it make sense to move states for a Bitcoin sale?

California at a $1M gain: approximately $133K in state taxes. Texas: $0. The move has to be a real one. California audits departing high earners aggressively. State domicile →

Should I use a mega backdoor Roth?

If your 401k plan allows after-tax contributions with in-plan Roth conversionRoth conversionMoving eligible retirement money into a Roth account. Pre-tax amounts and earnings generally create taxable income; nondeductible basis is treated under the applicable aggregation rules. Conversions can affect tax brackets and income-based costs, and separate withdrawal rules apply.Full definition: yes, up to an additional approximately $47,500 into Roth annually. Mega backdoor Roth →

Reading path

  1. Backdoor Roth
  2. Mega backdoor Roth
  3. NIIT and AMT
  4. Equity compensation
  5. Bitcoin taxes
  6. State domicile
  7. Roth conversion timing
  8. Roth conversion sweet spot tool

Where to go from here

Do next

Backdoor Roth How-To

The step-by-step for the workaround this page opens with.

Read next

Order of Operations

Where these strategies fit in the order for deploying each dollar.

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Last updated . Not financial advice. Do your own research. Disclosures · How pages are reviewed

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