Business Owners Tax Strategy Update - Keep More of Your Money in 2021

Foreign.

Welcome, everyone, to the Main Street Business Podcast. I'm Matt Sorenson along here with Mark J. Kohler. Probably the guy going to be talking more today. I think I am. Color commentary. Mark likes to claim himself as color commentary because I'm introing the show. I am claiming color commentary.

You're going to throw down your stake. You're going to far and away Tom Cruise just stake it in the ground. This is my land. This is my land.

This is my land.

Oh, man,

you know it is.

You know, I can tell this is going to be a good show where within the first 15 seconds we quote a movie. You know, it's going to be good.

Yeah. And the topic, of course, as you've seen, is tax strategies for you business owners or investors out there too. You know, you work in the real estate space. Anybody self employed, of course. Side gig, throw out tax strategies. Yeah. Side hustlers.

Yeah. Well, having rental property is a business. I have to reiterate that constantly. To business owners. I'm sorry. To real estate investors that you're a business. That's a business. And side hustle, side gig, you're driving Uber. That's a business, you know, so.

Yeah, baby. Well, what we're going to do today is go through these strategies. We'll hit some things on the personal side, too. So maybe some of you are aspiring business owners, haven't taken the, you know, the leap yet, but there's a lot of things that are going to cross over, at least some for just on the personal side of your tax return that are related to being a business owner. Well, because business owners are individuals too.

I was just going to say that every business owner has to file an individual return. And I think one of the key strategies we've preached for years is the goal is to legitimately and honestly and ethically, whatever you want to say, transition any personal expense possible that could be related to your business and write it off without getting into trouble with irs. And there's, there's a lot of gray there, you know, and heck, I'm gonna go through the pearly gate someday. I don't want to be in trouble. You know, when they ask, did you cheat on your taxes? I want to say no, but I pushed the envelope and I think that's okay. You have my seal of approval. Go ahead and use that free pass. You don't say, hey, when you go through the pearly gates, go. Well, I got this card from Mark Kohler that says I pushed the envelope, but that, that should be okay. See what that does for you.

Those cards have expired. We no longer accept those cards. Seeing a lot of those cards coming through here.

Yeah, we're not honoring those anymore. But you know what? If that's your biggest worry, going through the pearly gates, you're probably going to be okay, you know?

Okay. Although even before the pearly gates, you don't want to end up like Wesley Snipes, you know? True. Let's not forget there's a difference between tax planning and tax fraud.

And.

Yeah. So just don't. Don't be like Wesley Snipes, who went to prison for not paying taxes. I always joke. I just wonder what the. Because he was sending in tax terms to the irs, basically claiming refunds, like no income and requesting refunds for any amounts that were withheld. And he had some crazy herobrine tax strategy behind it all. I just imagine, like, being the IRS agent because that return somehow pops up in the system. Wesley Snipes guy, you're like, man, that name sounds familiar. He's in a ton of movies at that time. He's got to be making money, obviously.

Yeah.

Tens of millions of dollars, probably. And you're curious what his return is? 0.

Yeah. I wonder maybe it wasn't a good move to be in Fugitive 2 and be pulling that, you know?

Yeah. U.S. marshals. He was us.

Oh, you mean us March, which was the. Sorry, the predecessor, not the sequel.

Yeah.

To Fugitive. So. Yeah. Yeah. If you're getting. Maybe it was a. A foreshadowing being in u. S. Marshals, you know?

Yes. Yeah. Got some experience of, you know, wearing handcuffs and stuff and all that. So, you know.

All right, well, let's get to it. For those that are new to the show, we try to keep this light. It's no fun talking about taxes, but we want to save you money. We want to make sure that you're taking these strategies to your tax professional. You are the captain of your ship. If your accountant's not bringing up strategies and you have to bring them up, I'm sorry, but do it. You can't just wait for your professional to serve you up a tasty meal. Sometimes you have to get in the kitchen.

Yeah. And there's no easy button to tax planning. There's no, like. Well, just give me the low tax option. Well, the tax code isn't built that way. All right, there's like, 20. Yeah. There might be 20 strategies out there to consider, and you might do seven of them, you know, but you can't do. There's no easy button to Just get the seven that work for you. So you got to kind of do some work on your end. And what I'll say is this preliminary point is taxes are the number one expense for a successful small business owner. This is the number one creditor you have is the IRS and your state. And so nailing this strategy is a way to manage your expenses. Okay. All right.

Make more money.

You get to keep more, of course,

penny saved, penny earned. Okay, now, as a precursor to the show and as we start to go through our list and I've got a fresh yellow pad, just nothing on it here. Look at. For those on YouTube, look at this. Nothing here. And I'm going to. Every strategy we say or come up with, I'm going to write it down. We'll see how many we come up with today. Now, here's my introductory story. That puts us in really good light. I was at the gym this morning, bumped into a client. Great people. I told them I'd never mention their name on the show, but I might bring up this topic. And so they had their S Corporation tax return done with us and their personal return. And it was their first time doing both business and personal return with us. Previously, they'd done their personal return, and we've done some. Some kickback tax planning. I mean, we've really been knocking it down. I thought we were doing great and they were very happy with that. But we finished the tax return early this year, which is right now is getting your return done early. Because with all the changes in government, I was actually impressed. We already had it out, but they were like Johnny on the spot getting us their info early, early in January. And she said, yeah, I was a little surprised. And I had known there had been a little email exchange. And so I ran up to him at the gym and wanted to talk about it. That a little email exchange about the bill. It was a little more expensive than they expected. Now, just so you can put it in perspective, we charge $800 generally for a personal return, and we start at $1,200 for a corporate return. And that doesn't include bookkeeping. So it's very common for a business owner with our company, our accounting side, to pay a couple grand for their business and personal tax prep. Now, some of you are like, oh, my gosh, you know, I paid. And then she said this last year, we paid $300. You know, paying 2,000 is new for us. And she was a little shocked. And she had emailed my staff. Then my staff told me and this and that she quickly paid the bill because here's what happened. She goes, mark, at first I was really shocked at how much we paid your firm. And then she goes, hold it. This is the first time we got a refund in 10 years. And I thought, this is the lowest we've ever paid in taxes. And she goes, within about 10 minutes, I regretted sending the email, immediately paid my bill and said I had to change my paradigm. I mean, I had a paradigm shift on my perspective of tax preparation. And she goes, I'm so embarrassed that you had to come talk to me about it because I truly did regret sending that email because so many of us. And she goes, us, meaning professional and business owners out there are used to paying the lowest amount we can with our tax professional. And that's where we think we save, when in reality, she said we saved 10 times what we paid you. That the paradigm shift she had was so many business owners and professionals like us go out and look for the cheapest tax preparation service we can find. And that's what we think is saving us money. When in reality, if we. We save 10 times what we paid you, your firm, Mark, by doing tax planning and strategy that we never dreamed of, we're putting away more money in savings. We've got all sorts of retirement accounts going for the kids and college saving. She goes, we are thrilled. But I didn't. I never had that perspective before. And she goes, so she said, I'm sorry about sending the email. We're totally thrilled. Da, da da, da, da da. And I said, good, good. And she recognized that that's a difference. So for a lot of you, I would just suggest again, realize that spending a little money with strategy can have a tenfold or 20x benefit. And we can't focus on what am I paying my accountant. We should be focused on what are we saving. So just a thought.

Yeah. Yeah.

All right.

Good opening story. And I think there's other benefits to being of what you're spending in terms of good tax planning and preparation is you're putting investing time, too. Okay, you're gonna invest some time into this. Now, what I'll say is most of you are going to get a strategy and structure in place that's efficient for you. That might be a little tough the first year or two, but eventually it's the same thing over and over. Your business stays the same. You're doing the same strategy over and over every year, and you're saving and saving and saving. It's that first year or two where you're maybe investing some more money than you typically would and some of your own time to learn this stuff and to know which ones are going to work for you. So, but like I said, because this is the number one expense for any successful business owner, there's just so much opportunity here for you to keep, to take money home. It's just like. It's like shooting fish in a barrel, so to speak. It's just like you can really win. It's not that hard. Just get engaged in it. Okay, okay.

She said that too, Matt. She said that too. She goes, yeah, we invested in an S corp this year too, so there's some extra costs. And then said, but now it's done. Now, now, now we're, we're structured properly and the savings gets exponential. Okay, do you want to give a strategy? What would you. And I don't know, I don't know, people, if we're going to put these in priorities, we'll probably, probably hit the. Some of the hotter, sexier ones up front. But let's just go through Matt. We'll just take turns. We've got typically podcasts and articles and YouTube videos on every one of these strategies, so we're just going to brush over them. But the goal here today is to give you a list of what you should be doing this year or considering doing. Okay. You're number one.

Number one. Number one, assess your structure.

Okay.

All right. What is your entity structure? How are you filing? Let's start at square one. Because so much of what you can do and so much tax savings comes off of. How are you filing? Are you a sole proprietor doing Schedule C? Okay. Are you an S corporation? Are you in an LLC with other people? Or an LLC taxes an S corp? Maybe you're even in a C corp. Heaven forbid. Okay, so the first thing I want to do is what? Let's look at your structure and I

want to add to it and say, understand your structure.

Yes.

Some people say, well, my accountant did it. Oh, no, no, no. See, and this is where we've said before, you might have your kitchen remodeled and get three different results from three different contractors and three different prices. Are you really going to let them design which way your doors open? And am I going to have that cool drawer to hold all the cookie sheets and am I going to have a drawer for garbage? So you've got to be engaged in that, and if you don't, you're good. You're just going to let your, your contractor decide. And they may be conservative, they may be Creative, who knows? Same thing with gowns. So assess your structure and understand it. Okay, good one man.

Okay, number two, I'll just give a quick example of a recent one. I had a client that basically had some small hotels. Okay. They've had a rough year this last year. But things are starting to pick back up for them and they're reassessing their structure. They are basically sole proprietors for this. They own the hotel personally. There's two of them. They just claim the income on their personal return. We re engineered that for not just tax purposes but legal purposes by putting the hotel on property in an LLC and setting up an S corp. That's the operating business that's going to, you know, take the income and pay the employees. And so a lot of times some people just got sole proprietorship by default. So one thing I want to do is just look at your structure. I think the most common one that's messed up is someone just a sole prop when they should be an S corp and you should do S corp if you're making 50k or more net income or someone just did an LLC and it's just basically a sole proprietorship falling down to your personal return.

Okay.

Not income. Get that to an S Corp or Tesla.

Yep. And I'm going to put that as number two. S Corp for self employment tax. So number one is assess your structure which should mean integrating your assets with your retirement accounts, with your operations, with your day job, with with your side hustle. Do you have a family trust? Are you single with a little trust? Are you engaging in privacy strategies, asset protection strategies? See that overall structure is something we do in a first consultation. You may spend just 400 bucks with one of our tax lawyers and go give me my structure for 2021 and a checklist. Boom. That's number one. Number two is if you are paying more in self employment tax than you should be, you're going to take your LLC and convert it to an S corp or just get your S corp going. We're in the third now, the fourth month of the year and time's ticking. If you haven't got that structure in place for 2021, you may have already missed out on a fourth of the year in savings. That's a big haircut. So self employment tax. I like what Matt said. If you're netting in your, in a schedule C or multiple schedule Cs. I had a consult this week with a husband and wife and they each had their own, their own schedule C. We combined them into one S Corp. And they still ran their own business the way they wanted to. So I'm part marriage counselor, part tax planner. Kept that separate. They were happy.

Yeah. Okay, Dynamic.

That's number two. Got a number three.

Oh, I thought I did one and two.

Okay, fine, I'll give number three. Okay, I'm gonna dip number three here.

Commentary. I already claimed color commentary privileges.

I thought I hijacked number two when you said seven point. Actually, I was like, all right, escort. Okay, I will say this. Take advantage of any deadline. Sorry, any strategies before the May 17 deadline. Now, some of you may be listening to this podcast after May 17th. Fine. Take a note to self of. I'm never going to let that happen again. But we've got. I'm just going to rattle off some of the May 17th strategies, which are

traditionally April 15th, but. But for 2020, you're getting up until May 17th, 2021.

Yeah. Now, these are also going to be some strategies for 2021. But I also think we need to think of what is there anything left to do for 2020? And that's a fair thing to think about. So I would say, have you done your backdoor Roth? Now, remember, people, I don't care what income level you're at, you can always do a Roth. That always shocks people. I know someone's listening. Go. My accountant said I can't. They're wrong. Everybody, including Bill Gates, can do a backdoor Roth right now. And if someone's telling you otherwise, they're wrong. You can still contribute to your backdoor Roth for 2020. Have you done an educational savings account? That's a covered L. It's kind of an educational Iraq. Those are $2,000 per kid for 2020. Deadline, May 17th. Have you done your HSA contribution for last year? Health savings account? That is for 2020, the deadline May 17th. Now, if you're extending, you can still do a solo 401 match from the company, your solo 401 contribution. And if you're doing a SEP, which is usually I made a mistake and did a SEP, eventually we're going to get you into a solo 401K. But the 401K and SEP, the deadline is May 17th. Unless you extend. That's one more. You can kick down the road. But if you're not going to do an extension, the 401 and the SEP is due by May 17th. And finally, I would say, are you funding any Roth IRAs or traditional IRAs for your children since you paid them in your business last year and that's going to be another 2021 strategy we'll come to. But funding kids retirement accounts. Anything else By May 17, Matt, you'd talk about?

Yeah, well, the solo K I'll just note too is the secure act, which went into law about a year ago, changed a rule on Solo KS where you can still adopt a 2020 Solo K plan up until the return deadline. So for you sole proprietors, you're going to have now until May 17 to adopt even the solo K. A lot of people think this is the traditional rule. You know, you're so December 30th is the last day. Now you're not going to be able to make employee contributions still for 2020, but you could make the employer contribution under a solo k for 2020 still,

which is the equivalent of a sep, which is the equivalent of a set.

Exactly, exactly.

Can I extend and get that?

Yes.

Okay.

Yes, you can. So we've been still setting those up for clients that want. I mean, we're setting them up now, of course, but still have some eligibility for 2020 contributions also, which includes the extension deadline.

Okay, cool.

Excellent.

Okay, number so May 17th deadlines. Now, if you're listening to this show after May 17th, forget about all those. Maybe you'll be able to take advantage of those during 2021 for 2021. So you're not trying to catch up in the spring of 2022, but whatever the case may be. Okay, number four, do you have a strategy when it comes to my talk

about kind of a cool one for 2021. Okay, it's. I mean, it's lunch time right now. Oh, I'm thinking about a good meal.

Dining.

All right. Dining for 2021. This is an update. Yeah, 100 deductible, baby.

Yeah.

Okay.

Wow.

This is from a lot of the COVID relief bills that came out. Basically help the restaurant industry encourage more businesses to be going out for meals. There's no 50% limitation on anymore 100% deductible going out for business purposes. You know, partners meeting a customer or vendor, there's a business purpose for that meal. 100% deductible, baby.

Yeah. And keep in mind that's dining by yourself if you're traveling. And one nuance is if you buy non prepared food for the office, let's think of the coffee maker, the water cooler, maybe you've got some snacks in the kitchen. Those are going to be 50%. A 50% reduction. Those you have to cut in half, which has always been the traditional rule. But if you bring in prepared food. And this is what the government's trying to do is encourage Americans to go out and use restaurants and delis. Again. That's 100% write off. And so I'm gonna go with donuts. Bagels. Now, if you bought bagels at the grocery store in a bag, I don't think that's gonna fly. You gotta go out and get a fresh bagel at the deli.

Okay.

Okay. All right. Dining 100%. Next. Let's grab a fun one we're gonna get into. Oh, I think our goal is to get over 20 people. You're gonna love this. Okay, number five, auto deduction. The auto deduction is still extremely strong for 2021 and 2022. We start to see some changes in the bonus depreciation come 2023. This is part of the phase out that was implemented under the Tax Cuts and Jobs Act. Joe Biden says I want to, I should say President Biden wants to repeal a number of Trump's tax provisions. I don't know if this will be one of them. I hope not. But the auto deduction is bigger and better than ever before. So you could do mileage or you could do actual. Now for 2021, that means if you've thought about buying a used car. A new car. A used truck. A new truck. A used van. A new van. I just had a client buy an RV and put it in a rental pool. They're renting it out for $300 a night. Their payment on this thing is about 2,000amonth. And they bought a $100,000 RV. They could bonus depreciate and write the whole thing off in the first year. And that depreciation is deductible against other income. So you've got this bonus depreciation for any type of vehicle. That could be a plane. Some of you may commute between multiple cities. You needed a little Cessna or a little bonanza, oftentimes called a doctor or lawyer killer. Those are great write offs too.

Yeah, yeah.

So autos.

Now let me say on, on auto too is just remember, of course, mileage is the most common. So if you didn't buy something new, obviously you're, you know, you could just, you're using your car auto for purposes or even if you buy something new, sometimes people are just gonna still just do mileage. It's 56 cents a mile for 2021. So if you, for every thousand miles you drive that car, it's a $560 write off. This was a one of those things, that was a shocker to my daughter, who was doing doordash in college, was how many miles. I'm like, we got to track your miles. Now, luckily it has all of the. I mean, like, did she keep a journal of all the miles? No, but as a record of all the deliveries she did. Right. So we could kind of recreate a good record of, well, what were the miles you actually drove. It got a pretty sweet deduction on her return. That helped her get a refund, basically.

Yeah. Now, and see, for those listening that have a side hustle or side gig, you're entitled to all these same write offs is a multimillion dollar business with delivery trucks. You're just a smaller version of that. So you're going to want to look at am I leasing a vehicle? Am I buying a vehicle over £6,000? There's all these options. Now, we've done entire shows on the auto deduction. I have a great article on my blog that I issue each year. The one for this year was, of course, in January. Go check it out. I have seven rules of thumb on how to maybe approach your vehicle deduction. But then when I say autos, vehicles, I'm also including planes, RVs, motorcycles, lots of those are all considered equipment for the use of transportation. So. Okay, number six, Matt, yours.

Well, I know you did mention hsa, but I just want to bring up healthcare and health savings accounts in particular. So remember, in a health savings account, and this is something for right now, I believe open enrollment has still been extended. They keep extending it because of COVID So getting to a high deductible health insurance plan that will qualify you for an HSA can be an awesome option for getting deductions on money throwing into an hsa. So when you put money into an hsa, let's say it's family. You get to put in, what, seven grand for 2021? Or is it up to 7200?

Oh, for 2021, it's right here in the Marc J. Kohler calendar. 7200 for married, 3600 for single.

Okay. And that could be family too, right? You don't have to be married. Right. You'd have to do family, head of household. Yeah. So that, let's say you do 7200 for the year. And right now, if you have the high deductible plan in 2020, you could be throwing in 7200 for 2020, 7200 for 2021. Right now, you can put in 14,400 now, the cool thing about the HSA is you get a tax deduction above the line. Like whether you itemize or not, you're going to get a $7200 tax deduction. If you're, you know, for doing family HSA here and that money's growing, you can invest it, you could self direct it. We do HSAs at Directed IRA, of course. And it's gonna come out entirely tax free for your health care expenses, any

healthcare expense, not insurance, but like anything, dental, eyes, co pays, deductibles, acupuncture, massage therapy, physical therapy, prescription drugs, everything. You don't have to wait until you're 59 and a half too. So if you're young and you think, well, someday I am going to have a baby or I'm going to get sick or break a leg or blow out a knee or whatever, this HSA is there to pull it out and use it. Okay, let's stick with healthcare. So number six was HSAs. All sorts of goodies on our blog and show history on HSAs. The next one I'm going to say is health insurance. Now, for some of you that went through the COVID pandemic, you may have been let go at your company and you ended up jumping into the side hustle, side gig world and you ended up getting a personal health insurance policy. Maybe that's. And I can imagine there's someone listening,

maybe you were just paying cobra. You stayed on your prior employer's plan, but you're paying now for the insurance.

Yeah, your business gets 100% deduction for health insurance for you, but you have to let the business pay for it. Now some of you just said, well, hold up, my business isn't profitable enough. Put money in your business from a day job or a W2 or from mom or dad or grandma, whatever. Put money into your business to pay your monthly health insurance premium. Now it's a deduction. Now some of you may go, what's a write off no matter what, if you get audited. The IRS is getting more particular in this area. There's a lot of new notices. In some cases in the last two to three years, the business has to show that it's paying the premium for you, the business owner. You don't have to cover your other employees. That's a rule that came about in the Tax Cuts and Jobs act as well. Wonderful thing. It was a kind of a carryover from the Affordable Health Care act, ahca, all these acronyms, but everybody pay for your health insurance premiums out of Your business. That's it. 100% right off.

Yeah. The policy doesn't need to be in the business name. Okay. It could just be in your individual name. Just the checks getting cut or the payments getting withdrawn from the business account. Yeah. Okay.

Before you. Before I got to just. If I could suggest one last healthcare strategy for your number eight. May I impose one on you? The hra. Oh, yeah, let's finish with that. So we have the triple, which is we have the hsa, health insurance premiums and hra. Could you explain that for a moment?

Ooh, the hra. Health reimbursement arrangement. Now, this is for those I like, starting with the HSA. And once you've done, let's say the 3100 single, 7200 married, head of household

or for family plan, 36 or 72.

36 or 72. Yeah, that math didn't add up. Dang it. I'm glad the CPA between the two,

we got each other's back.

I'm just a tax lawyer.

I'm your. I'm your wingman. I'm your wingman, Maverick. Okay.

All right. I'm Maverick. And your goose. Oh, sweet.

Damn it, I walked right into that one. Hey, requesting flyby.

Technically, the wingman is Iceman, right? That's true. Yeah. Because. Yeah, I think. I think.

I think that was the high point of Val Kilmere's career, too. I really do. Oh, man, he looked so good. Yeah, he was good. He was tough. He was just a jerk.

I like how he went after Maverick, too. You know, I don't like you. What?

Now?

It's like every time you go up, you're dangerous. I don't like you because of that. That's right, Iceman. I am dangerous.

All right, all right, Maverick. I got your. I got your back, so. 36.72.

Okay, HRA. This is a health reimbursement arrangement that the company can establish. Now, if you're an S corporation, it doesn't work. You're going to need to do a little sidestep here with a family management company that's going to. The S Corp. Is going to pay some income over to the family management company. Family management company is providing services to the S Corp in exchange for it. And you're going to adopt the HSA and the family management company. Now, the hra. Now, Mark has articles. We got videos on this. The nice thing with the HRA is I can put more than this 3600 single, 7200 family into it. I can Use it to pay for medical for me or dependents. And it's a reimbursement arrangement. So you can track all your medical for the year, then come back. Now this is something for 2020, you're too late in the game. Okay. You would have had to have done this by December 31st, but for 2021, as long as you get this adopted and in place and you do the reimbursements, you reimburse yourself back for all this medical by December 31, 2021, it becomes an expense. Okay. In essence, you might want to play cleanup on that. But that is the health reimbursement arrangement.

Yeah. I'll just add a couple words. This family management company is going to typically be a C Corp if you're single. So you can adopt the HRA for yourself through this little management company. And that's the only time we really like to use a C corp is when we're trying to tackle a medical expense strategy. And number two, if you're married, then we have the little family management company that's there to hire children and the spouse provide the HRA, pick up the kids on under age 18 on payroll. Very, very common, very legitimate. I want the kids legitimately working in the business, and the spouse will be helping in the business in order to justify these expenses. But again, if you're single, you can still do the same strategy. The only other, only other thing I'd add is the HRA starts to make a lot of sense when you have medical expenses exceeding 4 or 5,000. We're not talking about health insurance. Let's say you're going through a really big year with some dental work, maybe some reconstructive surgery. You've got this ailment that you need to really finally take care of. That knee is still bugging you from playing basketball in the gym on a Saturday morning thinking you were younger than you really were. It could be you've got kidney dialysis.

Yeah. Rehab, I mean, things like that. Someone you know, a child or spouse, someone like that. Those are qualifying expenses. Sorry.

Yeah, yeah. You could have cancer, kidney dialysis, diabetes, some element that's really adding up some medical bills. And I like what Matt just said. Let me be very clear on that. Drug rehab or mental health rehabilitation. Those are all uncovered. Those can be 100% reimbursed through your business. And there's no limit on a single employer plan hra. So this is not the QSE hra, which are for groups of employees. This is just for you. Now, if you have Employees, The HRA is going to be a little more difficult to adopt. But anyway, we've got articles on that. I've got a new article this week coming out that for 2021. Lots of new developments in this area.

So HRA does require an actual plan. Okay. You do have to actually adopt this and we do them and tax lawyers and KQ lawyers can help establish that. So. Yeah.

Yep. They're 500 bucks. You have to adopt them each year and it includes a half hour consult with the tax lawyer to take you through the steps. It's self administered. There's no insurance company involved. They're very simple. But anyway, so HSA Health Insurance Premium HRA, that takes care of your 2021 most strategic medical strategy options. There is a thing called out there a 401H. It's like a 401K for healthcare that the uber rich use and you can get massive deductions for that. I'll leave that under the HRA column of number eight. Okay. Is it my turn?

Sure. I got one. You tell me if you're ready.

Well, I kind of forced you to do the hra, so why don't you take another one? Take another stab. What do you got?

Okay, I want to do paying your kids.

Okay. Like it?

We brought up the family management company just a second ago. So let's go over just a couple quick scenarios here.

Hey, you know what, Matt, let's tackle this easy. Let's do one line for paying kids under age 18 and another line for paying kids over age 18. So why don't you tackle under and I'll tackle over. Okay.

All right. Under age 18, the first thing point is these kids actually need to work in your business. Okay, but this could be your rental property. You take them to help mow the lawn. I used to mow the lawn at my dad's rental properties. Okay. I don't think he knew he could, you know. Expensive, of course. I mean, it was five bucks, but if that, you know, but, but you know, get your kids involved and for, for LLCs or sole proprietorships, just pay them right out of the business. For S Corps, however, in an S corporation, you cannot pay them directly out of the business unless you're going to put them on payroll and do some withholding. So we will do that again when we will do the family management company. The family management company is providing services to the S Corp. The S corp is going to expense over some, some income. Basically, it's going to expense some money over to the family management company which picks up his income. Then the family management company is going to pay the kids. And this will be a little possibly sole proprietorship on your 1040 on a schedule C. Now, this strategy, of course, think of your kids, if you can pay them. Let's say I don't. I don't know how much your kids are worth or how much work you're having them do, but let's say it's 5,000 bucks for a teenager working in your business. I mean, that's 5,000 off of your income and tax bracket, which, let's say you're at one third of a tax bracket. You know, it's now going to your kid. Well, if I spend. Send. Pay my kid 5000 bucks and you actually need to transfer it into their own bank account, they will need their own bank account, and I'm in a 31/3 tax bracket. I mean, I'm saving. You're basically saving 333 bucks for every thousand bucks. So I'm saving over 1500 dollars in tax that I do not have to send the irs. All right, now that money can hit your kid's bank account, and you can transfer it right back to your personal bank account as a reimbursement for all this crap you paid for for your kid. But the kids actually got to get paid from the business account into their account. So it's basically a way to shift some of your income where you pay tax down to your kid. Now, does your kid need to file a tax return? Probably not. There's the standard deductions for the IRS you want to look at. That's in the Marc J. Kohler calendar. I think Mark's pulling his out.

Yep, we are 1221 for 2021. We are at 12,550 for the federal. Now, that brings up an important distinction. Do you want me to comment on the.

Yes. Yes.

Okay, so that's a mess. Yeah. So for this year in the Marc J. Kohler calendar, you can see it here on the YouTube video. I held it up as a demo. We're currently sold out. We're debating printing new calendars. Another round. Send us an email if you're interested in buying one. The first federal limit of income before you have to file a tax return for earned income is $12,550. Now, this is not income subject to the kiddie tax. This is earned income. So if someone says, yeah, but my accountant says it's taxed at my rate because of kiddie tax. Nope, that's unearned. Income, that's when you make your kid a part owner of your company, which is not a big no, no in our opinion. Or your kid has a stock portfolio bigger than average Americans, then they're going to have the kiddie tax. But this is earned income. Now, in the new calendar, I created a table that goes through all the states. For those on YouTube, you can see this table, and it goes through which states your kid might have to file a tax return because the standard deduction is not 12,550. So you're. So let me just give you a quick spattering of states that would cause a problem. Oregon, the standard deduction is $2,315. So in Matt's example of paying your child 5,000, the child would have to file an Oregon tax return and pay tax on approximately $2,700 of income. Montana, 4710. Rhode Island, 8900. Vermont, 6150. A few bigger populated states. Sorry, I didn't mean to be up in the Northeast there. California. California, $4,601. So you'd have to file a California return. Georgia, 7,300. Hawaii, 2,200. Iowa, 2,130. Kentucky, 2690. Maryland, 2,300. So the list goes on. So you not only have to look at, okay, what am I paying my kid, I might have to file a state return and pay some small tax, but it's still just a pittance compared to what your tax bracket would be. That's why we're doing it.

Okay. All right, now that's for the kids under age 18. All right? You're going to pay them. You're not doing a W2. You're not withholding Medicare and Social Security. All right? You're. And you're getting an expense of this. Your kid is not claiming it as income and having to pick it up unless you're in one of those states where you've paid them above the deduction amount or if you're paying them over the federal deduction, which your kid would really have to be doing a lot of work.

So. Yeah. Okay. So now if your accountants are there cringing, not liking this strategy, we've got blog articles with all the chapter and verse code sections. We back this up. We've been doing it for years. We have no concern as long as your kids are legitimately working. Okay. Paying kids over age 18. Now, I'm going to be clear now,

is this 18 and older?

Yep, 18 and over.

Okay.

All right. I was just going to Say that My daughter Molly turns 18 next week.

Wow.

Can you believe that, Matt?

I cannot believe that she was.

When you first met her. She's a baby.

Oh, my God. Yeah, she was so. Wow.

She was tiny. I remember, Matt, we first met in

my backyard in kindergarten. Yet, I mean.

Oh, no.

Yeah.

So anyway, so you pay kids 18 and over through a 1099 from any business you have. So no matter what your side hustle is sole prop LLC or S Corp or C Corp, whenever you pay your children 18 and over, it's going to typically be a 1099 subcontractor. Now, if they're acting like rank and file employees, like I've got my daughter Allison and her husband Jack working my company now, they're like regular employees. They have a desk, they have a computer. I have to pay them as a W2 because they act and are working as an employee type definition, which is standard for every situation. But if your kids are serving on the board of directors, they're off at college, they're showing up on occasion, helping with administrative tasks, marketing tasks, maintenance tasks. With a rental property, a 1099 is 95% of the time going to be sufficient. My strategy is with Molly turning 18 next week, I'm going to pay her and maybe even prepay her for the services she's going to provide this year before she turns 18. Because once I issue her a 1099, she has to file a schedule C return and pay self employment tax. So I'm going to. She's going to see some big money go in her account next week before the 18th birthday. And then mysteriously it's going to get moved to what we're going to call our 11th strategy. And I'm going to let the infamous Matt Sorenson talk about paying kids and taking it to the next level. So pay kids with 109918 and over. Okay, Matt, what did we do? What's, what's the steroid level? Can we go there?

Okay, yeah. Now this is where there's some, there's some good family kids teaching them about life and how to work hard. Like let them work in your business. That's one of the best things you can teach your kids, I think, is a good work ethic and the value of like, you know, earning money and just like doing a good job at whatever it is you do. So that's of course a great benefit. You got a good old tax deduction for doing it. So it's a little win win there. And then on top of that, you can teach them how to invest. And why not have them use the best account out there, a Roth ira, because what do they have now? Earned income. Whether they're under 18 or over 18, they now have earned income. They can qualify and contribute to a Roth ira. And the cool thing about the Roth IRA is it grows tax free and comes out tax free. But it's also a cool little savings account, because anything you put in a Roth IRA you could take out and not pay penalty or tax. See, when I put money In a traditional IRA and I want to take it out in two years, I have to pay a 10% early withdrawal penalty. Like, there's penalties for pulling money out of a traditional IRA early. Plus I got to take it into income. But in a Roth ira, it's also a great savings account because whatever I put in, I can pull out for whatever I want. I don't have to meet a hardship exception or anything. And so this could be a great savings vehicle for your kids, rather than putting in a savings account or buying a savings bond. And if anyone does that crap anymore, use the Roth ira. That's a great savings tool. Plus they can then learn how to invest.

Okay, now I'm going to add a little variable here. Some of you listening may go, well, hold it. I thought this was 2021. Tax strategies for Business Owners. Why are we talking about my kids Roth ira? Here's why. I had a phone call with the client that I've been working with for years. So he got onto my schedule with clients that I've been maintaining. I'm taking those calls. I'm trying to manage administrative work here as well as best I can. So this client, he's from back east, very successful, and he pitched me on a new project he's doing. And he's like, I need to save tax on it. And I'm like, oh, my gosh, you're in the highest tax bracket already. We're scraping the barrel for every possible strategy. And I go, here's your best strategy. Don't do it. And he's like, what? What are you, stupid? I'm going to do it. This is a home run. And I believe him. I said, maybe you do do it, but let your children's retirement accounts participate with you. Let your own retirement account help fund this deal. Let your Roth, your hsa, your Coverdale, the Roths for the kids, be your partners. Now, there's some rules. He's not going to be able to provide as much sweat equity, and he can't take a salary. And all these Goodies. But I said, hey, if you can keep this as a arm's length transaction, you're going to make a lot more money tax free by not doing the deal 100% yourself. So the message to you business owners is don't do every deal yourself. You're funding these accounts so that they're capital that you can tap into to launch your next business idea. Because you're an entrepreneur, I know you're gonna have an idea and it could even be another rental property. Don't do it entirely yourself. So that's where it kind of relates to the business owner. Okay, number 12.

And I think.

Oh, go ahead, Matt.

Yeah, I'll just say a lot of, a lot of high income people of ours that get sick of paying taxes but have more and more deal flow and more and more business opportunity, which just tends to happen once you have a little success. Hopefully. You keep working hard, you keep your eyes open, stuff starts coming your way. It just does is figuring out how to use the retirement accounts, particularly the Roth counts, which is the only way to make money tax free and not go to prison in the United States. All right, okay. The next one I want to bring

up, oh, it's yours. Okay, fine, whatever.

Okay.

No, I thought, I thought you brought up the Roth ira, not me, but that's okay.

Yeah.

Okay.

I mean, all right, I'm going to go.

Okay, what do you got? What do you got?

Buy a rental property.

Oh, good.

Okay. Buy some rental real estate. Not only is it a great long term building wealth strategy, it also has the sweet little benefit of being a great tax strategy. And we always talk about buying real estate in an IRA and buying it personally. We're not saying do one or the other. Right. Real estate is an investment. We're buying stuff for the investment return. But it also has some good tax benefits to you when you're buying it personally.

We're saying do both, do both.

And I do both. I do both myself.

Literally this Saturday, last Saturday, five days ago. We're recording on a Wednesday. So what is that? Four or five days ago? Saturday I was working on my own personal duplex rental. My father in law, who I love to death, hasn't been feeling well this month and he's my property manager and we had to onboard a new tenant and there needed to be a little painting and I had to call the carpet cleaner and get him over there. And I had a couple college or high school kids doing some demo in the garage, but I worked on it all day Saturday and that was My own little duplex. And it's great little cash flow property. It's not making me rich in and of itself, but in concert with all of my other strategies. It's absolutely an integral part. This coming Saturday, my daughter Alison and Jack are closing this week on their triplex mat.

Oh, sweet.

Yep. Two renters already in an unfinished basement. So this Saturday is clean out the basement, have a yard sale, and start demo, baby. So I'm Chip. I get to be Chip. I go, allison, I won't give any advice. You know, you're Joanna. This is your baby. She goes, my little daughter Allison. She's a designer. And so I don't get to choose colors, design, but I said, can I be there with the sledgehammer and be Chip? She's like, you can be Chip. So, yeah, that's what I'm doing for you.

I love it.

Yeah.

Cool.

So we're living this. We're doing it.

Now, keep in mind, on real estate, many people will cash flow their real estate, right? Like you're, you know, the, the rental income you have covers the mortgage, it covers the expense on the property. And you're keeping money in your pocket. Not only you're paying down the mortgage and getting the appreciation of the real estate, you're also paying down, or you're also, sorry, you're paying down the mortgage, getting appreciation of the property, but you may be getting a tax loss because you have a depreciation expense on the property every year. Now, when you have a tax loss for those of you that aren't over 150,000 yet in income, you're going to be able to take that loss against your regular income automatically. It's pretty sweet. If you're over 150,000 of income, these rental losses are worthless to you unless you have other real estate gains you can use to net against them, which will happen if you start buying more properties over time. And you may be able to become a real estate professional. Maybe you are a real estate professional, maybe a real estate agent. You should be buying rental properties. These losses can offset your all your commission income. Or maybe a spouse, if a spouse gets becomes a real estate professional. And this could be from owning real estate, not just being real estate agent or that type of professional, but, you know, just from owning real estate or having a lot of properties, one can qualify as real estate professional. And now your real estate losses can offset your other income and your other business possibly. So just look out for that strategy. It can be a good one. If you're going down the real estate route. We love it. Most of our successful clients do it. And there could be a lot of great tax planning in there with those tax losses.

Now, on that note, I made real estate professional number 13. Because it is separate from rental property, we want all of our clients to buy rental property. I buy rental property. Yeah, but my. I do not, nor does my wife qualify as a real estate professional, much to my chagrin. But that's okay. Does that mean I don't buy rentals? No, I still buy rentals. And my admonition to clients every time I get a chance to talk to someone is one a year. One a year. Now, that could be residential rentals, commercial buildings. I just had a call with a client this week. They said, mark, I don't want to buy residential rentals. I didn't say buy residential rentals. I said buy rentals. Are you currently renting a building for your business? Yes. We're gonna start shopping, be your best first tenant, buy your own building, rent it to others. And so huge opportunity. Okay, Tax strategy as well as investment strategy number 13, real estate professional number 14. I've got to bring in my favorite movie. I don't know about all time because I can be a sappy guy, too, but it's. It's up there. The Accountant with Ben Affleck in the first 10 minutes. What's the strategy, Matt? In the first 10 minutes. Oh, I'm putting you to the test.

Small business.

No. No. Well, yes.

Home Office.

It was Home office. It was a combination of the two. In fact, Matt, I. Well, I'd like to say one of our top business strategies is have a small business, but I think that's perfunctory because you're listening to this, so obviously you have a small business. But in the movie, in the first 10 minutes, he talks to this little farming couple and says, what are those necklaces you're wearing? And of course, he has this autistic, backward, socialistic, you know, social personality. And she's like, oh, do you like him? He's like, not particularly. He's like, and do you ever sell them? And she goes, yeah, I sell them at the church bazaar and the PTA or whatever at the school. And he's like, you may have what's qualified as a small business. Where do you do this work? On my kitchen table. And he goes, you mean the home office? And so anyway, it was pretty classic. He really did quote tax law accurately in that first section of the movie. And maybe it was a little gray talking about the Kitchen table and home office. Some accountants would, you know, cringe, but there's definitely opportunity for this. So everybody. Everybody should have a home office deduction. Now, maybe it's only 3 square feet. Maybe it's 300 square feet. Maybe it's 3,000 square feet and includes your garage that holds tools, supplies, and inventory. I don't know. But don't let an accountant freak you out and tell you you don't qualify or it's high risk. Bullcrap. Bullcrap. So home office deduction for 20, 21 again, we got articles and vids on that. Okay, Matt, your turn.

All right, this is a. We might turn this into two. But I'm just had some. A couple of examples, I think, ones that people miss.

Okay.

But they catch it because they have good bookkeeping.

Okay.

All right. So there may be a tip here of having good bookkeeping.

Yeah.

Some of these little things that you might forget.

Yep. I'm gonna say. Let's just go there. Let's stick with bookkeeping for a moment. Because I think what comes with bookkeeping, separate checking accounts for business and personal and separate credit cards. Try to be religious with that. You don't have to be the best bookkeeper in the world. But when you use separate checkbooks or separate debit cards or separate credit cards, it's going to make the accounting a lot easier at the end of the year because you can say, yeah, this credit card is all groceries and underwear and blah, blah, blah. But this credit card or this debit card is where I spent everything for business. And then you can go comb through it. So I think bookkeeping doesn't mean you have to become a QuickBooks Pro by any means, but it does mean using good checkbook and accounting separation. Would you. Anything you'd add to that?

Yes. And the one example I was just going to give is interest. Okay. Interest, expense.

Yes.

This is one. Like maybe you've got a line of credit that you used to in your business to buy to cover some expenses or to buy some inventory or whatever. Whatever it was for. This could be the credit card that you end up not paying the balance off for a few months, or maybe you still haven't. Okay. That interest is deductible.

Yeah. Here's a couple other ideas. Let's say you get a second mortgage on your house as a personal expense. That interest is no longer deductible. But if you used the credit line on the second mortgage on your personal house for the business, that now morphs into a business loan. So now I'm able to deduct the interest on my second mortgage because the principal that I pulled out was used for business. You know another good one, Matt, too, The auto. The. When you use the mileage deduction that there's only one expense you could do on top of mileage, it's the auto loan interest.

Yeah, that's. That one is missed very frequently. Remember to track that one and that should be in your books and your bookkeeping. Okay. Interest, expense.

I didn't expect you to choose that one. You kind of impressed me on that one.

Yeah, that was just a good one. I just had some client asked me about the interest on like a credit card they use for business and had a kind of a larger expense that they put on it. Frankly, it was a personal card, but it was used for business purposes. And yeah, that interest you're paying for that purchase going to be tax deductible.

Good times. Good times.

Yeah, good times.

Thank you, Mr. Sweaty. Mr. Sweaty, your holiday treats. Okay, I'm going to stick with that, some of these little nuances. And I'm going to go with electronics. Now this is one where you've got to think outside the box, people. And I'm just going to look around my desk right here. I've got a cell phone. I've got a cell phone case. I've got earbuds, all used for making conference calls in business. I have a laptop. I have a clicker for the projector. I've got some Bose speakers here. Bose speakers right here in front of me. Those Bose speakers are using here in the studio or at home office to listen to podcasts. I've got a camera, I got a microphone. I got a light. I got a monitor. I got monitors back here. I'm looking over here. I've got a battery charger and I've got a special case here to hold all my little electronic gadgets. I've got an extra charger. I've got some other headphones, people. Anything you buy at the Apple Store or Best Buy, Fry's Electronics online, Amazon, that you could use in your small business. Let the business pay for it and put money into the business to let you pay for it. Oh, look, here's an adapter. I can plug this into my laptop and convert it to hdmi. All right.

Yeah, as are the services. Or cell phone bill, for example, that comes every month.

I put cell phone bill separate, but keep going.

Okay, so think of those things. Cell phone bill, Internet service. Of course, if you're. If you're getting That a lot of these things you're doing, maybe you're. Maybe you use QuickBooks or other services, of course. That you use in your business. Those are expenses.

I'm going to quiz you. Why do we like cell phone bill? Think of our Verizon plan. Think of our Verizon plan. Why is the cell phone bill a good write off? Think board of directors. Think of our cell phone bill.

Yeah, you could put your kids on it too. Your kids, phones that are working your business.

Yes.

Because you better believe you're going to be texting them when they're not getting their crap done at your, you know they're supposed to get done.

Yep. So. And I think there's a cost saving opportunity there too, because Matt and I went with the Verizon business plan. And, and as long as you have 10 phones, you can get or 10 services, you can get some really big discounts with all the major carriers. As a business unit, you can also be building credit with a Verizon plan because you can put it under your tax ID number for your company. Another credit building strategy. But cell phones of all your board of directors, now you need to have a primary personal line. But if I'm paying for cell phones for my kids because they work in my business, that's a write off, baby. I was just gonna say, do you have anything else, Matt, on that? I didn't mean to cut you off. I was just excited about the phone bill.

No.

Okay, got it. Okay, I'm gonna say electronics. I'm gonna talk about drones, video cameras. All of you should have social media sites where you're using cameras to create images to go take pictures of your rental property, to take a drone around your rental property, your business to also for your marketing ads, to use a drone. And I'm going to bring up number 19, tools. Now I'm going to put tools and equipment as a separate line because this is for those of you that have rental properties. You need tools. Look at what I just bought here, Matt. New gadget. This tests electrical wave current in an outlet. Usually my wife says stay away from electricity and plumbing. Those are my two areas I'm not allowed to play with in the house. You know, I can do drywall and I can do patching because you can always fix that. But electricity, she's a little more nervous of me.

Yeah.

Smelling like burnt flesh and burnt hair. But anyway, this little gadget we needed in the studio today to try to find a 20amp outlet that's dedicated for my rig, for my cryptocurrency rig. So I'm moving my cryptocurrency rig into the studio, and I needed to confirm which outlet was dedicated with the 20amp service and. But this is for business, so anything you get at True Valley, Home Depot, Freight, Harbor Freight. Oh, I love Harbor Freight. Oh, you haven't been there yet, have you?

No, but I drove. I was visiting my kids in Tucson at University of Arizona U of A. And there's a Harbor Freight down there. Like Mark Kohler told me about this place.

Oh, dude, it's the best. Because you need tools. Every guy's gotta have tools. It's really a badge of honor. You need it. It'll make you feel more manly. You need a lathe. You need a lathe. You need a table saw.

Yeah.

They're just necessities. There's no way around it.

I get that. I'm not gonna argue that.

Okay, number 20. What do you got for 20?

20? Can I. I'm gonna take a little turn here because this is. This is one. It's not for business. It's personal charity. Oh, okay.

Wow.

Yeah.

Gosh, make me feel bad. It took. It took us 20 items to get to charity. Well, yeah, it is.

Here's. Here's why. Just a couple things. As a business owner, it's not an expense in your business. So if you're contributing money to a charity from your business, which is a great thing, and many businesses do. Right. You have some economic good you're trying to do. If you're in an S corp or even a sole proprietorship, if you pay it out of the business, it's not a deduction. It's not a deductible business expense, frankly, it's going to pass down to the business owners, and they would then claim it as a charitable deduction on their individual return, which you generally will only get if you itemize. Right now, I. I'm just gonna. I was just looking at the rules on this because of COVID and this is some of the things a lot of people are trying to contribute to charities and such is. I believe the cap on charitable deductions, which was put into place last few years, was removed for 20, 20, 20, 21. Are you. Are you familiar on that one?

I think you're right. There's been some expansion of that.

Yeah.

So good stuff.

So there you go. Yeah. Consider. Consider your charitable deductions, which, again, only helps if you're itemizing. But most business owners, you know, are typically itemizing because you're charitable. And mortgage interest deduction exceeds the standard.

And I may make one of you, I may make someone listening here a little perturbed or nauseous. But charitable deductions can still be self serving from a marketing standpoint. I know some of you want to give to charity and be anonymous. God bless you. That's great. Sometimes it is worth it to put your name on a building or on the back of the T shirts of the little league team or the soccer team. And it's okay, you know, give to community. That's why they do quote unquote sponsorships is so that you can give to a community organization and throw it under marketing, which is a business expense. Ooh, okay, there's one. Marketing for 2021 is supporting a little local chapter of athletics or something.

Yeah. And they put your name, your sign out there and yeah, you know, your name's on the kids jerseys. Maybe I was just gonna say on the charitable contribution. One of the. For 2020 is you can still take up to a $300 charitable deduction even if you just take the standard deduction. That was one of the.

That's good. Okay, I'm going to bring up the next one, which I thought Matt would by now. Retirement plan deduction. And that we, we talked about the Roth for the Kids and back in the May 17 March of possible deductions for 2020, still we need to talk about retirement deductions. So I think that's where as a small business owner, you need to choose the one that fits you best. It could be just funding Roth. That's all you. If you're going to fund one thing, it's your Roth and your hsa. Matt and I debate that constantly. If there's two things we want you to fund, it's the Roth and the hsa. And that's your backdoor Roth if you make too much money. But above that, we would love to see a solo 401, possibly a set, possibly a simple. If you have other employees, we create what's called a safe harbor 401k. You might do a DB plan, defined benefit plan, a cash balance plan. So there's a whole modge podge, if that's really a word or not. I don't know. Something my mom would say. But you've got this whole group of retirement plan deductions. Anything you'd add to on that, Matt?

Yeah. And this is one where if you've been getting, you're starting to make more money and you haven't been good at saving for retirement. This is a no Brainer. It is a win win. If you are out there and you're like, all right, I want some tax deductions. You can do the solo K. You could get up to 50,000 plus in tax deductions using a solo K. Now you've got some decisions to make. Do I want to do Roth, you know, in which case I'm going to pay some tax. Now I'm not getting a tax deduction if I pick Roth. That is a long term tax strategy of growing an account that grows and can have investment incomes and returns and comes out totally tax free at retirement. The traditional, though, if you want the tax deductions. And Again, it's over 50k for those that do a solo 401k, which we've got separate stuff on the solo 401k. It's great for people self employed with no employees. If you want to go traditional, you're like, guys, I just want tax deductions. Now you can do 50k. If next year you're like, I don't need the tax deductions bad, I'm going to go Roth. You can go Roth next year. Right? You can do that all in a solo 401k. You got a spouse that's involved in your business, you can do over another 50k for them. And that is not a super complicated pension plan that you pay 10 grand a year for. These solo ks. We do them for less than 1000 bucks with an attorney consult and get the plan set up so you can then be making these large contributions, certainly above the 6,000 Roth IRA or traditional IRA.

I'm embarrassed I don't talk about it enough, but one of my accountants brought this up last week, Matt. We still have the $500 tax credit for creating a retirement account plan, isn't that correct?

Yeah. Now that doesn't apply to a solo, but that would apply for any of the safe harbor plans or where you have other employees on. If the only people participating are owners, I don't believe that credit still applies. I'm pretty sure it doesn't.

Okay. The other. I'm going to throw this down. Dang it. I just had one at the tip of my tongue here. Retirement plan. We're at 22 oh, 23oz zones. That's an opportunity zone. Now we start to get into more of the more, how can I say, the more unique or isolated tax strategies that could play out in a unique situation. They're not available to every business owner typically, but the oz, it's called an opportunity zone investment. You can take any capital gain from the sale of stock, sale of business assets, sale of business property, sale of business, sale of a rental property. And instead of doing a 1031 exchange which probably called number 24, but 23, I'm going to call what's the opportunity zone where you can take the gain only you don't have to reinvest the entire sales price into something else, which would be a 1031 exchange, but the ozone. We've got some articles in our office. Devin Muns has tried to be the expert in that area in our office. He's very helpful. So if you want to reinvest capital gain from a business transaction or personal transaction. Oz. And then 24 is the 1031 exchange where you sell real estate and buy another piece of real estate of equal or greater value. President Biden says he doesn't like the 1031. We'll see if that goes.

But yeah, Biden wants to 86 the 1031. So.

That was sweet. That was sweet.

Yeah.

Okay, can we get to 25? We gotta get to 25 and then we're up to an hour. My producer saying we gotta cut. Do you have 25? What do you guys got? Corey, what do you got? What do we talk about that we're missing? Oh, I'll say this, I'm just going to throw it out there. Tax credits. You might have the solar tax credit, the handicap access type credit investment. There's all these little tax credits. There's really. I once created an article of like seven to 10 of them. There's low income housing tax credit. There's an energy investment type credit. There's some really unique ones out there. But there's the fuel tax credit. A lot of landscapers get the fuel tax credit because they're spending so much on fuel. So there's. You want to try to see if your business falls into a category of a tax credit. There's.

Yeah, we still got the tax credit for electric cars and stuff that are out there. And some states also play in that in addition to the IRS, which the federal tax credits was up to 7,500 bucks.

Yep, yep. But there's a bunch. There's research, R and D, research and development tax credits, foreign investment type tax credit. So there's all sorts of goodies. There's hiring veterans, tax credits, hiring people in certain opportunity areas where they are trying to. Empowerment, I'm going to say empowerment zones I think is a proper term. I don't have my article in front of me, but I. We'll just throw it tax, right? So there's. There we go, 25 ways to save taxes and build wealth at the same time. Boom.

I like it. I mean, I think we did a bang up job. So there's, and there's, let me say there's more to it that we are just hitting what's coming off the top of our heads here. This is, although it is a comp, it's a pretty lengthy list at 25, there's still more things out there to do tax planning. And that's why getting some consult and as Mark said at the outset, being the captain of your own ship now again, I think it sometimes is intimidating and sometimes it's the least. Some people hate tax planning. Some people's personalities, they love it. If you're one of the people that hates tax planning, just get used to it for a year or two. That's just my only plea. Just get good at it a year or two. Get the structure right. Figure out the things that matter for you. Stay at, pay attention a little bit to things that may change in the law and just keep doing the same damn thing over again. If you think your business being around for 20 years and picking up 20,000 a year in deductions, you know, how much is that? That's 400 grand in tax savings you'll have in your business. That's more money that you're gonna have in your pocket because you just kind of connected the dots better. You know, you figured out how to do things. We're not asking you to spend money or send money away. These are things that you're doing that make financial sense. Yeah, you keep it.

We don't want to throw good money at bad just for a tax write off. Well, everybody, thank you for listening. Since Matt Sorenson brought us in, I'll take us out. We'll see you next week. I think we're up for an open forum show next week. Yes, I just heard the yes. So next week will be open forum. If any of you have questions that may have arisen during this show, you can always call our office, make an appointment with one of our tax lawyers to get started. The accountants are knee deep in preparing tax returns. It's always best to start out with the tax lawyer for an hour. Get your plan, get your diagram, get your structure, get rolling. The attorneys are going to be out one to two weeks. That's okay unless you have a closing disemminent. And if there's an urgent crisis, let the staff know. We'll find a way to get with you before a closing or some major transaction. But be patient and it's okay. Don't be upset about it. If your lawyer is busy, that's a good thing. And we're trying to expand and grow and bring on new people. So we'll see.

You don't want the lawyer that can pick up the phone right then and take your call. Okay, that's a bad sign.

Bad sign. So if you have a question for our Open Forum show next week, get over to mainstreetbusiness.com and there's a button right there clearly where you can submit a question to the show. Also, please subscribe to us. Give us a five star review if you feel so inclined. We would really appreciate it. And also subscribe and hit the Bell on YouTube for Marc J. Kohler and Matt Sorenson. We've got a lot of videos we produce on a regular basis and you want to ping when they come out. You want to be on the cutting edge. So thanks everybody. We'll see you next.