Townsquared Local Leaders

Jake Birnberg

Tax Strategy

About

About 20 years ago I took a long vacation, kind of like a sabbatical, where I didn’t work for an entire year. No work, no income, no tax. I thought it would be a good time to cash out my 401K and pay 0-10% tax bracket taxes on it, plus the penalty. I ordered a payout from the 401K company in early December. But as the saying goes, we plan, God laughs. The check for the 401K money came to me in January of the following year. A year in which I had a six-figure job. I paid a very hefty tax on that money. I was furious and determined to figure out what to do to counteract this.

I called about a dozen different tax accountants, CPAs, experts of all kinds. Until the last one, they all said the same thing. Some version of “nothing you can do” and yes, I’d be paying taxes at a very high marginal rate. The last one asked me about my current situation, what was going to be happening for the remainder of the year. He said I’d have to pay taxes on the IRA distribution, but that if I took certain actions in advance, I could lower the tax rate on it and save a whole bunch on the income I was earning. He became my accountant, and a financial mentor for several years. That’s how I stumbled into the foray of tax planning.

Now I do this professionally. It doesn’t matter how good you are with a stack of receipts on April 15, if you don’t put the right structures into place, you can’t deduct your swimming pool, your kids’ private schools, or your vacation as business expenses.

I love living in Oakland, and have an office across from the Downtown Berkeley Bart station. I take advantage of our many hills to go hiking and waterways to go kayaking as often as I can.