Here's something that the IRS does not advertise:
Success comes at a great cost, especially when two high-income individuals live together.
You both worked hard. You both advanced in your respective careers. And now you're basking in the post-promotion, post-bonus, equity-vesting glory.
Until tax season hits you with a surprise.
And now you're asking the same question we hear every year:
“How are we making this much… and still writing a five-figure check to the IRS?”
The Dual-Income Tax Trap: What You Don’t Know Is Hurting You
When both couples earn a high W-2 income, it's natural to assume your payroll staff is "taking care of the taxes."
But here's the catch: they're only looking at their little slice of the pie, not the entire household picture.
Which means:
You are struck with phaseouts (such for the Child Tax Credit or education deductions).
You exceed the $250,000 level for the Medicare surtax (3.8%).
You quietly lose the deductions you used to qualify for.
You may underpay during the year and incur penalties.
Consider stock options and bonuses. Forget it; you're flying blind.
According to the Tax Foundation , households earning between $250K and $500K frequently have the highest marginal tax rates due to missed deductions and surtaxes.
Smart Couples Don’t Just File Taxes—They Plan for Them
What is the good news? There are very practical, legal ways to reduce your tax burden and keep more of your earnings.
Here are some of the tactics that high-income couples are now using:
1. Max Out (and Stack) Retirement Contributions
401(k) + HSA + Backdoor Roth equals tax-sheltered growth plus current-year deductions.
If you don't coordinate donations between both employers, you could be leaving five figures on the table.
2. Use a Dependent Care FSA (Even If You Make “Too Much”)
Many high incomes avoid this because they believe they do not qualify.
Spoiler: you do. And you can save up to $5,000 tax-free for child care before reaching your top tax bracket.
3. Consider a Spousal Income Shift (If One of You Has Equity or 1099 Income)
In some circumstances, moving income or restructuring compensation—particularly for side activities or equity—can provide planning options.
Yes, it is legal. No, your payroll staff will not recommend it.
4. Check Your Withholding (Before Q4 Sneaks Up)
This is the most prevalent mistake we see among high-income couples.
If your combined income exceeds $300,000 and neither of you has corrected your W-4s, the IRS will collect—plus penalties.
Tax Software Isn’t Built for Dual-W-2 Households. We Are.
Tax preparation is about reporting the past.
Tax planning aims to shape the future.
If you earn more over six figures as a household and are still "filing in April," you are almost probably overpaying.
Every day, we deal with high-income couples—from technology workers and lawyers to medical specialists and real estate agents—to help them:
Identify missing deductions.
Navigate Dual Compensation Plans
Penalties for underpayment should be eliminated.
And have confidence that they are not funding more than their part of the Washington budget.
Want a Second Set of Eyes on Your Tax Picture?
If this describes you or your 2024 tax bill, let's speak.
We can help you plan ahead of time by reviewing your previous return, discussing changes, and identifying opportunities.
Contact our office to set up a time that works for you.
