5 “Secret” Tax Moves the Top 1% Use—That You Can Use Too

Financial Horizons: Insights for Building Wealth and Securing Your Legacy

By Dr. Jose G. Cardenas, Chief Tax Strategist at The C & R Group, LLC

Let’s be honest—the top 1% don’t just earn more money… they play a smarter tax game.

Most people wait for a W-2, dump numbers into software, hit “file,” and hope for a decent refund. Meanwhile, wealth builders are structuring their income, entities, and investments so the tax code works for them instead of against them.

Here’s the part nobody tells you:

A lot of the strategies the wealthy use are 100% legal, available to you, and hiding in plain sight.

In this edition of Financial Horizons, we’ll break down 5 “secret” tax moves the 1% lean on—and how you can start applying the same logic to your own money:

1. Hire a tax professional (strategist, not just a filer)
2. Create an LLC for your business
3. Invest in income-producing assets (stocks and bonds that pay dividends/interest)
4. Pay off high-interest debt before tax time
5. Use charitable giving as a tax and legacy tool

1. Hire a Tax Professional to Play Offense, Not Just Defense

The wealthy don’t go to a tax pro just to “get their taxes done.” They build a tax strategy team.

The 1% understand:

• The tax code is complex by design
• One small structural decision (like entity choice or how you pay yourself) can move thousands of dollars per year
• Software can file a return—but it won’t sit across from you and ask,
  “What changed in your life this year, and how do we use that to your advantage?”

What a true tax strategist does for you:

• Helps you choose the right entity structure for your business or side hustle
• Designs a plan for deductions, credits, retirement contributions, and timing of income
• Reviews your year before December 31st, not just after the fact
• Aligns your tax strategy with your wealth and legacy goals

The wealthy outsource complexity so they can focus on high-value actions. You don’t have to be rich to do the same—you just have to treat tax planning as an investment, not an expense.

2. Create an LLC for Your Business or Side Hustle

Most high earners don’t operate as “just themselves” forever. They use entities—like LLCs—as building blocks.

Why? Because the right entity can:

• Provide a layer of liability protection for your personal assets
• Open the door to additional deduction opportunities
• Make it easier to separate business and personal finances
• Potentially allow for S corporation election (when appropriate), which can reduce self-employment tax in certain situations

Forming an LLC by itself doesn’t magically slash your taxes—but it gives you the framework to start running your operation like a real business instead of a hobby.

The 1% understand structure is power. Income that flows through a thoughtful entity strategy is often taxed and managed more efficiently than income handled casually as “just extra money.”

3. Invest in Stocks or Bonds That Pay Dividends and Interest

The wealthy focus on this question:

“How can I turn my active work into assets that pay me whether I’m working or not?”

Dividend-paying stocks and interest-bearing bonds are classic tools for this. Depending on the type of account you hold them in and current tax rules, you might benefit from:

• Preferential tax rates on certain qualified dividends
• Interest that may be tax-advantaged (such as certain municipal bonds under current law)
• The ability to hold these investments inside tax-deferred or tax-free accounts (IRAs, 401(k)s, Roths, etc.), where growth may avoid current-year taxation

Big picture: the 1% use their cash to buy income streams, not just stuff. They build portfolios where the tax treatment of that income is part of the strategy—not an afterthought.

4. Pay Off High-Interest Debt Before Filing Taxes

This one doesn’t sound glamorous, but it’s a quiet power move.

High-interest consumer debt—especially credit cards—does two things:

1. It eats your cash flow.
2. It destroys your ability to invest and save.

The wealthy know: if you’re paying 20% interest on debt, it’s very hard to out-invest that with any reasonable long-term strategy.

Before they get cute with advanced tax moves, they attack:

• High-interest credit cards
• Personal loans with painful rates
• Other toxic, non-deductible debt

Why tie this to tax time? Because tax season often reveals the truth about your finances:

• Did you under-withhold and create a bill?
• Did you get a refund that could be applied to clean up your balance sheet instead of disappearing?

The 1% think in balance sheets, not just refunds. Paying down high-interest debt is often the highest “guaranteed return” you can get.

5. Donate Money to Charity—With Strategy

The wealthy don’t just give to charity because it feels good (although it does). They give with structure and intention.

Under current rules, charitable giving to qualified organizations may provide tax deductions if you itemize and meet the requirements. But the 1% go further:

• They donate appreciated assets (like stock) instead of just cash, potentially avoiding capital gains tax while still receiving a deduction
• They use tools like donor-advised funds to bunch giving for maximum tax impact
• They integrate charity into estate and legacy planning so wealth passes according to their values

Here’s the key mindset:

They were going to give anyway—so they design the giving so it benefits the causes they care about and reduces their tax burden where allowed.

You don’t need millions to start doing this. Even modest, consistent giving—with a plan—can create both impact and tax efficiency.

The Real “Secret”: The 1% Use the Rules, They Don’t Just Follow Them

None of these strategies are illegal, shady, or reserved for some elite club. They’re simply the tax code, used intentionally.

The difference between the 1% and everyone else is not access—it’s awareness, planning, and execution.

You can start today by asking:

• Do I have a tax strategist or just a tax preparer?
• Should my side hustle or business be operating through an LLC or other entity?
• Am I converting income into assets that pay me, with tax strategy in mind?
• Can I free up cash flow by eliminating high-interest debt?
• How can I align my charitable giving with a smart tax and legacy plan?

You don’t have to be ultra-wealthy to think like the 1%.
You just have to stop playing defense.

🔗 Read more at: https://thecrgroupllc.com/financial-horizons

📅 Ready to build a tax strategy that looks more like the 1%—and less like “hope and pray” every April?
Book a consultation with Dr. Cardenas

About the Author

Dr. Jose G. Cardenas is a retired U.S. Army Finance Officer and the Chief Tax Strategist at The C & R Group, LLC. With a Doctorate in Business Administration and over 20 years of experience in tax planning and financial strategy, Dr. Cardenas helps individuals, entrepreneurs, and business owners legally reduce taxes, structure their wealth like the top 1%, and build lasting legacies. Learn more at thecrgroupllc.com

📌 Disclosure

This article is for educational and informational purposes only and is not intended to serve as personalized legal, tax, or investment advice. Tax rules regarding entities, investments, debt, and charitable giving change over time and may vary by jurisdiction and individual situation. You should consult with a qualified tax professional, legal advisor, and/or financial planner before implementing any strategy discussed here. Dr. Jose G. Cardenas, DBA, provides tax advisory services through The C & R Group, LLC. Insurance and investment strategies may be offered through his role as a licensed financial professional affiliated with Experior Financial Group.

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