Contingency fee-based personal injury attorneys and Fortune 500 company CEOs have one thing in common: Both can defer income taxes to future years using non-qualified deferred compensation plans. So, if you want to emulate the tax planning strategies of a Fortune 500 CEO and grow your wealth as they do, consider deferring your legal fees.
Is This Tax Planning Strategy Really Popular Among Fortune 500 CEOs?
To further illustrate what we mean: In 2014, 78% of Fortune 500 company executives had deferred compensation as part of their income package. In 2017, 92% of Fortune 500 company executives were receiving much of their income through deferred compensation.
This trend indicates that Fortune 500 executives understand the power and the value of reducing their current year income taxes by receiving their income through deferred compensation plans that stretch out their income and pay into the future.
Contingency fee attorneys can do the same thing on each case.
You can choose to receive your legal fees the traditional way — take the fees of a case in cash and pay income tax on it this year. Or you can defer receiving those fees into the future through your own private non-qualified deferred compensation plan.
What is the Advantage of Using a Deferred Compensation Plan?
The power of fee deferral is by deferring your income, you’re lowering your current year income taxes significantly. You’re also using what you would have paid in taxes to build your wealth on a tax-deferred basis going forward.
Just like the Fortune 500 companies have figured out, as a contingency-fee attorney, you can reduce your income taxes and grow your wealth on a tax-deferred basis. If you are interested in learning more about deferred compensation plans and tax planning like a Fortune 500 CEO, give us a call. We’d love to talk to you more about it.
