“What’s your take on investing in workforce housing and equipment rentals to offset taxes for W-2 earners?”
Advanced tax strategies — workforce housing, equipment rentals, energy deals — get pitched hard, often with a “get in now or miss out” urgency. Before you wire a dollar, run every one of them through the same three-filter test.
Quick answer: Run every advanced tax strategy through three filters: what type of income are you offsetting, is it deferral or elimination, and is it actually good for you? Most only make sense above roughly $700K–$1M of income, and only after you’ve used the strategies you control. Beware the ‘don’t miss out’ pressure.
Start with your income. Is it ordinary/earned income, capital gains, passive income? A strategy only helps if it can actually offset the kind of income you have. Many strategies work for a high W-2 — but only if you understand exactly what the deal offsets.
This is the one people miss. Some strategies eliminate tax; many only defer it — you’re not paying today, but it’s coming back (recapture is the classic example). Know whether a deal ends the tax or just moves it down the road, and what it takes to unwind it later.
Every investment with a benefit can be a great investment — the real question is whether it’s great for you. Understand the full arc: how you enter, how you exit, whether it needs another strategy to close out, and how long you’re locked in. If the cost of getting in is far higher than your actual tax bill, it’s a deal for the salesman, not for you.
They’re called advanced for a reason. Use the strategies you control first — your cash, your entity, the moves where you own the outcome start to finish — before handing money to deals you don’t control. As a rough line, Laura generally wouldn’t look at these below about $1M of combined high earned income (maybe $700K in a no-tax state). And never let “this is the greatest strategy, get in now” override the question of whether you need it at all.
Official IRS reference: IRS — Abusive Tax Shelters and Transactions
Only if they pass three filters — they offset the income you actually have, they eliminate rather than merely defer (or you accept the deferral), and they genuinely fit your situation. They usually make sense only at higher income levels.
Elimination ends the tax; deferral just delays it. Deferral strategies often bring the tax back later (for example, through recapture).
It can be — Laura has used equipment rentals and similar deals — but it isn’t for everyone. Watch for high entry costs relative to your actual tax bill and ‘get in now’ pressure.
As a rough guide, around $1M of combined high earned income (or roughly $700K in a no-tax state), after you’ve used the strategies you control.
These answers come from our monthly open Q&A. Only newsletter members get the invite (real tax strategy for business owners, twice a week, no fluff).
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Disclaimer: This article is for educational purposes only and is not tax, legal, or financial advice. Every situation is different — talk to a qualified professional about your specific facts before making any decisions.