What high-earning W-2 employees often miss

If you think all W-2 employees have “simple” taxes, think again—especially if your income is in the upper brackets or you have multiple income streams. High earners sometimes leave money on the table or risk penalties, because they don’t realize certain items apply to them.

Here are five common mistakes—or missed opportunities:

1. Overlooking Pre-Tax Benefits

Maxing out your 401(k) is just the beginning. Many employers also offer:

• Health Savings Accounts (HSAs)

• Flexible Spending Accounts (FSAs)

• Commuter benefits

• Dependent care assistance

💡 Tip: These benefits can reduce your taxable income dollar-for-dollar. Review your benefits package annually, and make adjustments before year-end for the next year.

2. Forgetting About Stock Compensation Taxes

Stock options, RSUs, and ESPPs aren’t just “extra perks”—they come with unique tax timing rules. Misreporting can lead to:

• Overpaying taxes

• Double taxation

• IRS notices down the road

💡 Tip: Keep every statement and transaction record, and be sure you are working with a tax professional who understands equity compensation.

3. Missing Deductions for Job-Related Expenses (Yes, Some Still Apply)

While the 2018 tax law suspended many miscellaneous deductions, certain work-related expenses for specific professions (educators, reservists, qualified performing artists) are still deductible.

💡 Tip: Ask your CPA whether any job-specific deductions apply to you—it’s often overlooked.

4. Not Reporting Side Income Properly

If you also have consulting work, a rental property, or even significant investment income, your W-2 is only part of the picture. Missing this income can trigger penalties and IRS letters.

💡 Tip: Keep track of all income sources and related expenses year-round, not just when the tax forms arrive.

5. Underestimating Quarterly Estimated Taxes

High earners often owe more than what’s withheld from their paychecks—especially if they have bonuses, investment gains, or other taxable income. This leads to underpayment penalties.

💡 Tip: Avoid the penalties by calculating your estimates each year after you file your returns.

Bottom Line

Your employer handles your paycheck, but remember - you are ultimately responsible for your tax return. Higher income = more complex rules =  higher stakes.

A mid-year review can save you money and stress.

📩 Ready to review your 2025 tax strategy? Let’s talk before year-end.