I feel that $90k in taxes is a lot! I'm curious if in the ideal situation, what would be the best possible way to reduce taxes, properly donating it to charities you actually care about etc?
Some other questions - if it's for 2018, can donations be made retroactively (now)?
(Clarification - this is a question I'm asking on behalf of a friend. He does his own taxes, even though he complains he is paying close to 6 figures in taxes!)
If you owe that much in tax, you had somewhere around $300k to $400k in income. This significantly limits your options at this point.
So you are single, have a very high income, and little to no deductions or reductions. There really is not much you can do at this point.
If you had an MAGI (Modified Adjusted Gross Income) of less than $120k single then you could retroactively put money in an IRA, but if you owe $90k you are well above that in income.
One option for you for next year is to max out things like 401k on your income. You could also take out a mortgage instead of renting, mortgage interest is tax deductible up to a pretty high limit, and in many places mortgage will be less than rent. Property taxes will likely not be deductible due to the new limit on state taxes, at your income you already likely pay more than $10k in state taxes, unless you live in Texas, FL or another state that does not have state income tax.
You don't mention the source of your income, but if this was due to day trading etc, you could slow that down a bit, holding investments over 2 years results in capital gains tax vs. income tax, which might help you.
The reality is you make a lot of money so you owe a lot of taxes. Make sure you are planning for that and having enough withheld or making sufficient estimated payments. Underpaying will result in penalties on top of tax owed.
People with high taxes might be able to make themselves sub-contractors instead of employees. As a sub-contractor they can be a LLC company and take extensive business expenses. For example a car lease could be a business expense.
But now the federal tax rate for a C-corporation is 21% . So there is a comparison of being an LLC at the tax rates of an individual versus a C-corp at 21% tax but along with taking an additionally taxed dividend from the C-corp.
Also, the new laws and rules as to which type of LLC can get tax rates similar to a C-corp are very difficult.
