HEATH WALTERS INTERVIEW – How to Drastically (And Legally) Reduce Your Personal Tax Liability

Welcome to the Next Level Income show where we help you take your income, your investments and your life to the next level. I'm Chris Larson.

And I'm Caleb Welborn.

You can get our free book@nextlevelincome.com today on our show, we have Heath Walters. Heath Walters is the managing partner of Walters cpa. He's a certified tax coach as well as an instructor with the American Institute of Certified Tax Planners. Heath also conducts training seminars for college planning strategies, continuing professional ed for other CPAs, and he's a mentor for CPAs working towards converting their practice practice to an advanced tax planning firm. He also works exclusively with small business owners, providing advisory services to guide them to more of their hard earned money, which we love. Heath, of course, welcome.

Thank you. So glad to be here, Chris.

Yeah, this is fantastic.

Great to be here.

Yeah. Thanks for coming up to Asheville. A little short drive.

I know. Beautiful area, mountains are wonderful.

Yeah. And I hear you enjoyed the drive up and your. Your fast German vehicle.

Yes. So I am a car fan, as we will all know, once you get to know me a little bit. So just like you, absolutely love the car. The car. And I love the mountains, love the roads.

Yeah. So, well, glad to have you here.

Thanks.

So I originally met your partner, Matt, who reached out talking about one of the opportunities we had and how it might fit with some of your clients. And I've gotten to know you and really enjoyed some of the conversations we've had, which is why we're having you here today. But I was wondering if you could share with the audience, Heath, a little bit more about your story.

All right, Chris, So great question. So I came out of public accounting. I worked for Arthur Andersen, one of the biggest firms out there. And what I saw was I would bill clients 120 bucks an hour to tell them exactly what they already knew, which was how much money did they make? Well, my job was to go confirm what that was. So when we look at the value that I gave, well, there wasn't any. The value was to a stockholder to just assure that the clients gave good numbers. So in life, I didn't feel like if I talked with a client that I was doing anything. And that is really important to me, that if I'm working with somebody, how am I giving value back to what they do? So I went into retail because I couldn't figure that out in accounting. I ran big box stores for about 10 years as a store manager with Lowe's and Home Depot. And then I left and Went to become a financial advisor and thought, hey, there's some great ways to give clients value. Kind of like you started into the whole life side and the tax deductible side of insurance and just couldn't sell anything and had to come up with a new strategy. So I started getting into college planning and learned that there's amazing tax strategies for business owners and started studying with other tax planners that are out throughout the country. And as I learned these, we just developed a niche over time. And now all that we do is work with business owners. We work with reducing taxes in big ways. So people that have big tax problems, they usually want to call me because we know how to handle big problems. That's what we do. So that's kind of how things have evolved. And now I'm teaching other CPAs because they want to know how to do this. And it's all about value to clients, is about value to you. And I want people to want to work with me. You know, when you think about taxes, normally, it's like, oh, man, I got to call my accountant. Well, when you're calling me, it's because I'm going to save you 100,000 or a quarter of a million dollars. It's big money. Now you're excited to want to call me. So, I mean, whoever thought. Would have thought that you want to call an accountant, but here we are.

Yeah. And that's. I mean, that's one of the cool things I had some people listen today may say, oh, I already have an accountant. I'm going to turn off now. But you got on a call with my accountant, Brett and I, and went through the whole tax. Tax process, and it was, you know, a lot of people don't realize that there's somebody out there like you.

Yeah, well, it was great talking to your accountant. I mean, I do that all the time, because I'm not in this to go in and do your accounting work. Like, I'm not a competitor to anybody's accountant. And when you look in the market, 95% of business owners don't want to change their accountant, but 95% think they're overpaying in taxes. So how can I go in and help them save taxes? Because that's what I do, and then not change the accountant. Well, you've got a great accountant. He's amazing. You've got all these strategies that are in place, but there's still more that he's not doing because he doesn't have the time to spend, to devote just to this Advanced stuff. So, yeah, I love working with him. He's great.

Yeah. I actually work with Brett, too. He's fantastic.

Oh, yeah? Yeah. He's very knowledgeable. He is open and understanding to, hey, there's someone else out there that knows something I don't. And he's willing to listen, and he's open to the strategies and what did we do to learn that? And he wants to learn for himself to make it better. Well, I find accountants sometimes that are like, I don't want to hear it. I know everything. Well, that's probably not the right accountant for you.

Yeah, yeah, I could totally see that. So with going into the strategy a bit, can you share what the Wolters way is as I think you've branded it?

Yes. So let's talk about the Wolters way. So Wolters way, if we think about the way a client makes money today, so we just take a business owner making half a million dollars. That's usually where we start because there's a lot more taxes. So it's a bigger problem at that point. So business owner making half a million dollars, they're paying taxes depending on the state, but give or take, all in all, about $150,000 to $170,000 a year. Well, in the traditional sense of doing accounting and doing taxes, we think of, hey, let's go do a section 179 or doing depreciation or a home office deduction. Well, half a million dollars is going to leave you still with a tax bill of $150,000. And that's kind of what you were experiencing when you. When we talk first, even with Brett, and Brett's really good, so you're not quite at the 150. You're below that. But what we do is we focus on a much more advanced type of strategies. There's about four or 500 different strategies that we can use. There's a lot that's out there in tax code.

How long is the tax code again?

Was it a billion words? I think. Oh, my gosh. Yeah. I mean, I think every other day I'm finding a new tax strategy that's out there. Like, dude, there's so much. It's huge.

Yeah, right.

So no one person can know the whole tax code, but what we focus on is these really advanced strategies, and that's all that we do. So if you're writing off your car, which isn't a bad thing, which you are doing, well, I can't make the write off any bigger. Right. But when you focus on the advanced strategies. These are going to be proactive in nature. Things that you have to put in place before the end of the year. What we find is that when you proactively put those strategies in place, we will see a tax bill drop approximately 50% on average. So same client $150,000 tax bill we would typically see about 75 grand.

So can you walk us through that? You have a step by step process the wolters way. And for our listeners today we're going to have a link on the show notes that you can go to Heath's website and you're going to be able to get a slide deck to see this. And if you want more information you can reach out to Heath as well.

Thanks. Alright, so first step is we look at your entity selection and I think that you have an S corp right when you came in. Well, we find that CPAs and I was taught this too is that an S corp is done to save you money in self employment tax and now you can get a 20% tax deduction for most people for having that S Corp. Right. But we don't talk about the fact that a C corp can do lots of great things. Some people forget that in a C corp you can sell without taxes for the right type of industry, up to $10 million tax free. Do you have any idea that you could.

No, no, no.

So that's a new strategy, right? Well that's been in tax code for quite a while now.

Interesting.

Right, so your entity selection when you start is really important. We also find when people are in partnerships with other partners, that one partner wanted a more expensive car or maybe wanted to hire his kids but they couldn't do that because away money from the other person. So what we would do is we would take a partnership and have the partners, instead of owning that partnership individually, they would own it with a company. So the money would divide between the two companies and now each of them could write off whatever they want and not take away money from the other person.

Smart.

So you start with the end in mind when it comes to the actual structure.

Yeah, well you've got the end in mind and then you got current deductions. Is your corporate structure for everybody set up appropriately to take advantage of all the strengths of a C corp, of a partnership and of an S corp. And if it's not and you're only using one, well you have to be missing something because there's strengths in all different types. So you kind of put them all together. That's the first thing we do with every client is entity selection.

So what do you do when someone has been doing it, say in an ineffective way or less effective way for a while and they come to you because you talked about beginning or Chris said it beginning with the end in mind. How do you help people switch once they realize?

Well, there's all sorts of ways to be able to switch. We can make elections to switch, we can start new companies. We can do a thing called income streaming. So using a CPA firm is a great example. And a CPA firm, if a CPA is doing tax returns, they have a lot more liability and they need licensing to do that. But that CPA also does bookkeeping, which doesn't have much liability and it doesn't make as much money. So the CPA can very easily separate and run two different companies. You know, Mr. Smith CPA to do all of his taxes and Mr. Smith bookkeeping. They easily get to an S Corp and a C corp just by making the shift right there. We find it all the time in businesses. They have the ability to do that income streaming and do multiple types of companies. So if a client needs that, the multiple entity selection, then we just figure out how to do that. Sometimes it's adding, sometimes it's subtracting, sometimes it's moving agreements around. But we get there.

That's awesome.

We'll find a way.

So what is the ideal mix of entities?

A S Corp, a C Corp and a partnership would be the ideal. If you can get all three of them and you can then get the strengths of all three to work cohesively. Take the strengths of the added deductions at a C corp, take the flexibility of a partnership to move stuff around and then take the 20% deduction and the savings on self employment tax on the S Corp. All of a sudden you've got the strength of everything.

Wow.

And what makes this interesting, when we talk about people being afraid to change accountants or do any of that, here I am talking about adding companies. Well, if you talk to your cpa, you think, hey, he was doing that because he could charge me more. I have no skin in the game to go charge you more. I don't want to do more. It's more complicated. We don't want to do that. We're doing it because it's a value to you. So it's a real different scenario when you're thinking of it coming from a tax planner that's not doing your tax returns.

That's interesting. It's almost like a coach for your cpa.

Yep.

It's pretty interesting. So once you have the entities set up, what's the next step in the process?

So next is to go take advantage of all the missing deductions that you weren't able to take, Right?

Yeah.

So that's number two. It's whatever entity selection you didn't have. Now you'll have new deductions. There's number two. So number three is called income shifting. That is where we are taking money and we are trying to pay at a 15% rate. If you think about the number. If I go back a slide, like Warren Buffett.

Warren Buffett.

15%. You got it, right. Yep. So 75 grand in taxes on a $500,000 income. That's 15%. And that's on everything. That's your federal, that's your state, that's your payroll taxes. That's not just federal. That's where most people are really surprised thinking of those reductions. We're talking about all of them. So the numbers are even bigger adds up than what they think. Yeah. You imagine saving 75 grand a year.

Yeah.

That's a lot of money.

Oh, yeah. Especially over the course of a. Yeah.

In the course of a decade. Yeah. Yeah.

You do that in the next decade, go add on the. The accrual of interest, and, man, you easily pick up a million dollars. Holy cow.

Yeah. We were talking at lunch before the show. You know, that's what, you know, I tell investors, the first step isn't to invest. The first step is to save more of your money. So if people listen, say, hey, that's not. That's not right. You're not paying. Paying your fair share. What do you say to somebody like that, Heath?

All right, so I do think that everybody does need to pay their fair share. It's absolutely necessity.

We're all.

We would all go to jail if we didn't. But there's a reason why Wesley snipes.

Right.

Well, you know that. That was a little bit of abuse, Right.

I don't know the story.

A little bit of evasion, kind of some jail time. Yeah, no, like, I'm not going to do that. I don't want to go to jail. So we do all need to pay our fair share. But even the irs, the presidents, they all say, hey, go hire the right people and pay the least amount of taxes. That is in the tax code that is stated by the US Supreme Court, you are legally allowed to pay the least amount of money in taxes. So how do you do that? Well, it means you need to learn the tax law or you need to learn. Know a lot of people that know the tax law because there's a billion words, right? There's a billion words. No, I can't know it all, and I'm not going to try. But I surround myself with people that know more than I do. So I agree we, we need to pay our fair share. But what is that fair share? That depends on how good your team is around you.

Yeah, well, the great thing is if people keep more of their money, then they can take that money, they can give it. They can send a check to the government, or they can send a check to their favorite charity, which, which, that's. That's what we like to do around here.

Hey. At the same time, the business owner are in a very unique situation because your small businesses typically employ about 60% of our economy.

Wow, that's a great stat.

So if they're employing that much, who is it that needs the money and the capital to grow their business?

It's small businesses.

It's a small business.

What's interesting is you look at, I read this somewhere, big corporations don't actually produce jobs. Typically, they remove jobs because they're, you know, companies buy other companies. They downsize. I was in Winston salem yesterday, and BB&T and SunTrust are merging, and there's 60 people selling their houses there because they're downsizing. So it's interesting. They're economizing and doing sorts of things like that. Whereas, you know, you talk to small businesses and they're. If they're growing, they're hiring.

Absolutely. Where do you think that entrepreneurship and new products and new inventions come from? Well, that's where small business and then that brings in jobs. So who are we taking care of? You take care of the business owner so that he has enough money to be able to afford this. Because it is hard to start a business. They're the ones that really need that capital.

That 75 grand you save them might mean another person that they can hire.

Absolutely.

Yeah.

Yeah. Speaking of statistics, the other day, I think I had read it something like. Only it's Maybe just around 18,500 businesses in the United States have more than 500 employees. So. Large businesses. Yeah, that. And then there's over 30 million small business owners.

Yep.

So that's crazy.

That's a lot of small businesses, by the way. I didn't know it was that many.

Yeah, 30 million.

Over 30. It's over 30 million small business owners. Because a lot of these small business Individuals sold?

Yeah, like sole proprietorship.

They're only the only employee. Do you mostly work with small business owners or who. What types of people and professionals do you work with?

So generally it's gonna be small business owners. That's my niche. Real estate is a niche within tax planning just as well. But the small business owner, that's my personal niche, where I like to be. I do understand the real estate very, very, very well. But it's where I really enjoy, I think a lot of accountants, as long as they're good at real estate, they've got a niche and they like that. Then I let them do that. So Brad is a great example. He loves doing real estate. So I'm gonna let him do that because he'll do better than I am in that spot. So I like the active businesses that are running. They've got employees if it's manufacturing, if it's construction, if it's professionals, doctors, dentists. So it's kind of a wide range of people that I will work with. We've got several strategies that work for W2. People that are making really, really good money, but they're limited. We only have like, you know, somewhere between three and 10 strategies we can do for W2. So it's not that we don't have that. It's not that we can't save good money in that. But if you look at where we really enjoy being, it's the small business owner.

Yeah. So walk us through a couple of your favorite strategies then, Heath. So I'm sure listeners are saying, what are these three to ten strategies for a W2 owner? You talked about some of the entity structures. Could you give us a little taste of what some of those strategies might be?

So my favorite one, I love kids. I love teaching and educating. That's what I went to school to be. But hiring kids, why do I enjoy doing that? I give a great example of my own daughter, one of my clients. We used the strategy a long time ago. He was a doctor and he was recording and training new interns coming in through or residents, I guess you'd say, through the hospital. Well, he's doing all this recording. Well, if someone's doing that, well, that's actually a job, right?

Sure.

You do this all the time. So what happens if we go take and hire his children to do the editing? Well, how much money can we pay them? Well, that's a lot.

Yeah.

Cause we're not talking about like three year olds. Like your daughter's 12, 13.

Yeah, she's 12, 13.

Yeah, she's old enough to be productive.

Oh, yeah, yeah. My two year old is not on.

Payroll, for the record. Yes.

There are old ways that people use to be able to do that, but it doesn't hold up anymore.

Yeah, I don't. Yeah.

So age seven, by the way, is the court tested date.

Okay, that's fair. Both my boys are above that now. I like that.

Yes, very good.

Court tested. How does it work with child labor laws? Because I know a lot of places you can't hire. Like when I was growing up in Texas, one of my first jobs was working at a grocery store, but they wouldn't hire anyone under 16. And then before that, I was working as a soft soccer ref because they paid you under the table when I was like. When I was like. And they would hire people younger than that. So I was like. Started doing that when I was 13. Paid cash. It was awesome. But it was because I couldn't get a job anywhere else at that time. How does it work for hiring kids that are like, younger.

Got it. So your child labor laws aren't quite the same for a business owner and their own dependents. As a parent, we can hire our own children and employ them in our office. Last year, we did get a couple inquiry letters from Social Security because we hired kids that were four and they were legitimately doing work. So it wasn't bogus. We only paid them $1,200, but they managed the board meetings and they took food in and out and they cleaned up. So they actually were doing work. So $1,200. And we actually got the letter, and the Social Security says, hey, what in the world are these kids actually doing? They're way too young for what we normally see. So we just sent a letter. Here's the job description, here's what we had done, and they're okay, very good. You know, nothing comes about that. But you're not.

They're not driving trucks, like back and forth or something like that.

They're not doing that.

Operating heavy equipment.

Yeah, no. But you can usually find some sort of a job for us to hire our children in my accounting firm. My oldest daughter, that does not do editing, I can't pay her that much because she doesn't do very much. But the daughter that's doing editing, my goal is to shoot about 40 grand to her this year. And if you look at the way that tax law works, I'll shift $40,000 to her, and I might pay 10 or 15% in tax on that. Where if I tried to do that myself. I can guarantee I'm going to be paying about 15 or 20 if I did that. So why not shift it to my daughter? Well, we did this strategy for a business owner that had two kids down in South Carolina, and I live in North Carolina, and so did he. Well, kids are out of state, so two kids in an out of state school, that's $100,000 a year in college fees. So what we did is we created a marketing company for both of the two parents. We shifted about 50,000 bucks to this new company, and they actually did the marketing. They did the Facebook. They had a website, and they're probably better.

They're probably better at that than their parents are. Yeah, Kel was better at that than I am. That's what age, man.

Of course.

Age advantage, huh?

I'm not terrible at it. I gotta hire people to go in and do that.

Yeah.

I mean, there's no way I'm just now getting into Facebook. And how.

Yeah.

I mean, come on. I'm like the prime age for Facebook. Yeah. But anyway, so we shifted this stuff down to the kids. Well, not only did we save a whole lot of money in taxes, well, both the kids got in state residency.

Really?

So that saved them 40 grand a year by just pulling. Yeah.

Now, is that the plan, or did you find that out after the fact?

We kind of pre. We kind of pre. Planned for that a little bit. He had to do some extra work, had to get driver's licenses and, you know, have them have a leased apartment, be off campus. So there were some rules we had to follow. But, yeah, you look at the. Overall, that was like $100,000 a year. We're saved for this one family a year. Wow. Because we did tax planning. Did we do anything wrong? No. Did we violate any rules? No. Would it hold it in audit? 100%.

Yeah.

Because $50,000 for two companies to hire, marketing companies, Nothing.

Yeah.

Yeah. Well, so tell me. So you mentioned auditing. So people, you know, listeners. And this is one of the things that when I started learning about this, I said, well, I don't know if I want to do that. You know, I don't want to be increased chance of an audit. So talk a little bit about that. You know, you employ these strategies. When do you see the audit risks go up if people are scared of that? And, you know, what would you say to somebody that said, you know what, Heath, I appreciate that. I just. I don't want to get audited.

I don't.

I just don't Even want to worry about it.

Well, I'm going to start with asking a different the question a different way. What about if we start and your audit risk goes down?

Sounds good.

Who would have ever thought that, right? You're like, wait a minute, I'm saving money in taxes and I lower my audit risk. So for families that are in a schedule C, if you have over $100,000 in gross sales in a schedule C or single member llc, whatever that might be, a non corporation, you're in about a 3.8% audit rate.

Okay.

An S corp is in a point 8% audit rate. So by saving you money in self employment tax, you actually lowered your audit risk by 75%.

Wow.

One strategy.

Didn't know that. Glad I'm an S corp. Save money.

And decrease your audit.

And decrease audit risk. Right. Whoa. Okay, that's kind of crazy. So next stat. These numbers have been changing as the IRS staffing has changed, but people that make over a million dollars of adjusted gross income on their tax return used to be at about an 8.2% audit rate. Right. Because of the changing in staffing, they're now at a 3.2% audit rate. That number went down. Well, if we go in and employ a strategy like we'll talk about in a minute, but like call it a captive insurance company which might have a high audit rate, well, at the same time we could drop your income below a million and we all of a sudden dropped your audit rate because of the fact that we understand how and when the IRS audits where. So you've got to look at all of the factors and what causes audits, what does not cause audits, and how do you structure an entire plan being cognizant of that. Because I don't want to go through an audit. You guys don't want to go through an audit, but you also don't want to miss the opportunity to save the money in tax.

What's the rate for people making less than a million?

It varies, but typically it's going to be about 0.8%.

So that's what you're saying by getting them below the million, then you reduced it.

Yeah. That in and of itself reduces the audit risk.

Interesting.

When we're looking at, when we're talking about audit risk, we have to look at the whole picture and we also have to look at what particular strategies. There are different strategies that will trigger more. Like there are strategies out there that have a 10% audit rate. You know, if you do it one out of 10 times you're going to get an audit just because of that one. And when you do things like that, you have to be very proactive in nature in your filings and how you report those. Those are typically for more aggressive type of tax planning strategies, or people are making a lot more money that are going to deal with those type of things. Make sure you're around an accountant that understands the filings and how that is done. There's lots of things that happen in that space. To me, when we look at things that are a lot more aggressive, that are. That have a bigger audit rate, then we need to do a lot of due diligence on the vendors, because the vendors are the ones that are going to help us with kind of being able to get through an audit if we were flagged. But our goal while we're doing this is not to increase the audit rate, is to not to go in and cause an audit. We don't typically cause audits from doing tax planning. Like hiring children does not at all cause an audit. It should actually reduce your audit rate because you've lowered your income.

Interesting.

But if you get audited, they audit payroll. So make sure you document what your kids did.

Yeah, right.

And then you will be perfectly fine through that. So it's just, you know, it's a holistic approach, and then it's a particular strategy approach.

Great. How does real estate play into any of these strategies?

We find a lot of business owners own real estate. Do they own their own building? Some convert from rent to ownership. And real estate has got all sorts of advantages. If we look at the president at the time, President Trump, that's all that they do. They're, you know, they're a real estate mecca and they understand a lot about real estate and development and tax code and how to use those codes to help develop more real estate. Because that's what they do. Well, they had to become experts in taxes so that they could help do that. Well, why? Because there's so much opportunity in real estate to take advantage of the tax laws.

Yeah. So that's one of the things I found, Heath was, you know, going from single family to multifamily. One of the big reasons was the tax advantages, all things being equal. And this has been accelerated since the tax law passed about a year, year and a half, two years ago. It's great. You know, you can get a K1. You see the depreciation offset. Can you talk a little bit about, you know, why that is?

So when you've got real estate, you're going to take income, but you're also going to depreciate that, which is an expense. If you take a, you know, million dollar building that, you know, the, the land is maybe 100,000, but the building is, is 900. So you're going to write $900,000 off per year every single or not 900,000 divided by lots of years. Right. Is what you're going to do. But when you get into the better tax planning, especially with a bigger, with a bigger subdivision, you know, a million dollars or a couple million dollars.

Yeah.

Well, what you do is you start to depreciate the roof in like 10 years or you depreciate the carpet over seven years. Instead of just taking the 900,000 and divided by 39 years, we're going to take about, I don't know, sometimes up to 50% of that and write it off in the next seven. So you're going to take a really, really, really big negative, which means it's a loss. So it's going to offset your other.

Income, but it's a paper loss.

Exactly.

Yeah. Which is wonderful cash flow. Yes.

But is that illegal? No. The IRS actually tells you on the IRS website that depreciation is one of the most underutilized or accelerated depreciation. Most underutilized tax vehicles available out there.

Interesting.

They tell you that on their website.

Not by us. We utilize the heck out of it. I mean, multifamily, as you know. You know, you're talking about, you know, commercial building, 39 years. Right. Is the multi family is residential 27 and a half. You know, you buy 100 unit apartment building, that's 100 units, 100 appliances, 100 pieces of carpet.

Yep.

Hundred. I mean, even shrubbery and things that aren't, you know, aren't permanent, that can be replaced, can be written off, correct?

Mm, absolutely.

I was shocked to learn that. I was like, wait, you can write off the landscaping. You know, in a lot of cases it's. But it makes sense because, I mean, you got plants that have to be replaced or, you know, landscaping that has to be, you know, replaced over periods of time and wears out. It's pretty incredible.

Well, if you think about the washing machine, though, when you're running those, you're going to have a washing machine go out every five to 10 years.

Yep. Yeah.

Seven years. What's the average life anymore? Seven years.

Yes. So it shouldn't be 39 years. It makes, it makes perfect sense.

Well, if you think about depreciating that which was included in the major cost of the building over 39. Well, you're going to buy three more of them. And every time you buy a new one, what do you do? You do a section 179, you write it off. Well, why didn't you write it off when you bought it? Well, that's because you just looked at the building as one. You didn't look at all the particular segments. So this is your technical side of tax.

Right.

But there's so much value in knowing people that know how to be able to differentiate those different types of assets because it's a huge asset to you as the business owner and real estate owner.

Yeah, it's pretty cool.

Yeah.

Yeah. And you'll hear some people say, oh, like these real estate guys are just using all these loopholes and it's like, well, they actually want you to do it because it's incentivizing. I mean, what's a huge problem or people are saying is a problem now in the US Housing. What are they incentivizing? Investment in housing. So it's really helping everybody. But some people don't see it that way.

Yeah, it's sad that it's that way. If you look at 2018, there was a couple tax codes that were put out there. One, the Qualified Opportunity Funds.

Yeah.

Well, what the government ended up doing was they used to give credits for going into bad areas. And then they said, wait a minute, what if we don't give the credits and we just turn it around and say, population go out there. We're going to give you incentives to put your own money into these areas and we will let you not pay tax on all of your growth. But we're going to take our credits back. Well, the market's going, wow, this is fantastic. Well, our economy just saved. Our government saved a ton of money because they took their credits back. So if you don't take advantage of it, it's actually hurting exactly what our government is trying to incentivize and to save their own money.

Yeah. And that was a surprise to me. When you learn, you talk to tax professionals like yourself or even former. I took a class from a former IRS agent. This is when I was in college. I started studying it because I figured, what's the best investment you can make? Well, you can save 20, 30, 40% on a dollar from not paying taxes or saving it from utilizing the strategy. And he said the same thing. He said, think of the tax code as incentives that the government gives you to do certain things with your money. And again, I Looked at him, I said, well, what do they incentivize you to do? Real estate, multifamily real estate, commercial real estate development. So you look at all these things, Heath. So here's the million dollar question. What's your average savings for an individual? Either percentage or dollar.

Percentage is the easiest because you have such a huge range. But we average about 47%. Everyone around me tells me not to use that stat, but I am an accountant, so we kind of have to back it up. So that actually is our real status.

You save 47% on average. Wow, that's incredible.

Yeah, yeah. So we range, we don't normally go too much under 25%. That's usually our bottom, like that's the bottom of the barrel. Goes all the way up to as high as the mid-60s or 70%. So somewhere in that range is kind of the variable. So an interesting stat that I find is that the clients that give more money are on the higher end of the spectrum and the clients that spend more money on things we can't write off, like Ferraris or Lamborghinis. We like cars, right? So the stuff that we can't write off, those clients are on the lower end of the saving strategies.

Interesting.

I find that one fascinating in my business when I'm watching that. But a lot of it's because if you take one of the basic premises that we look at, which is don't pay money. Don't. Don't pay taxes on money you're not spending.

Love it, right? Yeah.

Give that money back to you so that you can grow that money. Don't give it to the government. If you're gonna spend it, pay taxes on it. That is very fair and I agree with that. So that causes you to go to jail if you don't follow that. So anyway, so when you look at those clients, hey, the more money that you're putting back that you're reinvesting, the more taxes you're going to get.

So, Heath, if you could go back and give your 25 year old self one piece of advice from everything you've learned, what would it be?

I would surround myself with the right mentors and the more that I've done this, especially when you start dealing with like advanced tax or you're doing very advanced real estate. Right. Well, there's only so much we can learn. When you come out of the gate and you learn something new, your chances of mistake are high. Well, you're better off to have someone around you that's made that mistake before. To teach you, you. And I wish I would have spent that time with the right mentor at the age of 25, because I think I would have expedited my career by 10 years by putting those things together and just having a good leader of experience to guide me.

That's great advice. I think we've heard that on the show before, you know, surrounding yourself by, you know, with smart people, good mentors, and, you know, people that have expertise in other areas. It's fantastic advice.

Yeah. 100%. Yeah. Working with Chris over the last few years and him being my mentor has helped a ton.

Yeah. You will be an amazing investor when you look at all the things that he's teaching you because you've made the mistakes over your life.

Oh, yeah. Made a few.

Absolutely.

We all have. And I've done them, too. You can't get around them. No.

And they're worth multiples of what it cost me.

And in my world, if I make those mistakes, people really don't like me because it goes. It doesn't usually turn out too well. So we can't make mistakes. I do surround myself with lots of good mentors, which is great, though, because I get to learn a lot more now because they know even more than I do. So I learned something new every, you know, every week.

Terrific.

At least.

Well, if people want to learn from you, Heath, learn more about the Walters way. Like I said, we're going to put this in the show notes. What's the best way to get ahold of you and find your information?

If you go to thewaltersway.com then all of our stuff is right there. You can see, see kind of our video. You can kind of understand how we differentiate. What's the difference between a tax preparer and a tax planner? Go watch the rest of the two minute video that's on there pretty quick. And it seems to make a lot of sense to most people.

Absolutely.

Yeah. Actually, I showed that to someone at the shark level and they're like, wow, that's impressive.

Cool.

So if you can explain tax planning to a shark and go, man, I don't have any of that stuff. You know, that it's working and it's in a simple format that it makes sense to anybody if they're super wealthy or if it's just a regular individual.

Awesome. Well, go to TheWaltersWay.com get more information on the strategies that Heath shared today. And you can also go to nextlevelincome.com, get your free ebook and learn more about how you can join our club and have access to our investments in the future. Thank you for joining us today. Really appreciate your time today. Heath.

Thanks.