Four Tax Experts Reveal Their Three Top Strategies Save You $$$

Hey, welcome everybody to another live tax and legal broadcast with yours truly, Mark Kohler. I'm going to just say your favorite tax strategist, cpa, Main street helper out there, just helping you all live the American dream. Excited that you're here. We've got an exciting broadcast here for you. This is freaking around the horn, espn. I'll probably get a cease and desist letter for saying that, I don't know. We are going live with three of my favorite tax experts. I am so excited to have them here with me and we are here to help give you some last minute tips on your favorite weekend of the year. It's tax weekend.

Woo.

Filing your taxes. Isn't this a great time? Now one of these strategies may be don't stress and we're going to give you some options. But I've asked each of these experts, I'm going to introduce them here shortly to share a couple tips for all of you. And then we're just going to field your questions here for a little bit and see what we can do for you. Now I will give you a disclaimer. Please ignore any of those stupid computer bots, whatever, making comments on my behalf through Facebook or YouTube. I'm not making any comments. I'm verified. I've got all the check marks. I'm verified on all platforms. So please ignore any statement about how you're going to make millions in Bitcoin or some stupid scam. So just focus on the conversation. Please post any questions you have in the chat. Patrick and Jack in the studio are going to pose those questions for us here shortly. I want to give a shout out to Tristan and Patrick, Jack and Kirby, all helping with the broadcast today. Now let me introduce these illustrious guests. With me, I'm going to go with ladies first, we got Mandy Clark over in Waco, Texas. Welcome, Mandy. Glad you're here. Mandy is a certified tax advisor in my program. She's there every week helping research and give clients help and the other advisors. She's just a huge contributor. She's been a tax preparer and bookkeeper, a professional bookkeeper and those QuickBooks backwards and forwards in the Waco area and broader Texas area for over 11 years. Glad to have you here, Mandy. Then we're going to go with, you know, age over beauty. We got Kim Larson here. Love Kim. He's got more years of experience than me. I love the strategies he shares with me. I've got a couple of his books sitting here. I'm loving these. I got the Tax Strategic Taxpayer Manifesto sounds pretty cool. Kim and the tax pro freedom formula. I've read his books. I love him. Kim's got offices in Maui, in Vegas. That's what I'm working towards is having a lifestyle like Kim. Been in the tax practice for over 40 years as an enrolled agent. Kim, thanks for being here.

My pleasure.

I appreciate you. And then of course, we've got our superstar, Bobby. I mean, ladies, he's taken. Sorry I have to say that. Beautiful family. Thanks for letting me joke around with you, Bobby. I just love him. Bobby has a master's in taxation and also working on the CPA exam. I think you have if. I'm. I'm right here, Bob. You've also got your enrolled agent done and graduated from Purdue. Sorry, I had Purdue in my final four. I mean, it was such a disaster. My bracket, you know, anyway, but. And Bobby's out of the Austin area helping clients around the country as well. Bobby, thanks for being here.

Glad to be here.

Okay, well, even I did the introductions in a certain way. And now let's go in reverse. Let's just. I want to hear a little tip from each one of you. Take a few minutes and if you. Here's the question. If you had a client call you and gay and say, I'm filing this weekend and I got. You know, you can create your own avatar here. You could choose to them to be a business owner or a W2 wage earner, whatever you want. Bobby, we'll start with you. We're going to work in reverse and give us one of the tips you might share with them. Like if you only had like five minutes with them, you're dying to tell them something they might. That might help them when they file their tax returns this weekend. Of course, people, we're going to take your questions here in a moment. But Bobby, what would. What would be the first tip you'd give someone?

Yeah, so, I mean, honestly, I'd say the number one thing is don't stress like this right now. Like, Mark, you always said this is like punting at halftime, right? Yeah. I mean, you know, or like, you know, you're. You still have the. The second half of the game to actually get your stuff together and file this tax return. So right now the most important thing is actually getting an extension filed. Because when you don't file an extension, which means you did not file your return on time, the penalties are ten times worse than actually just not paying the taxes. The IRS would much rather you say, hey, I need to file this tax return, but I Don't have the money right now or I'm not going to send in money at this time. They're like, okay, I get it. You're going to get a little bit of penalties and interest, but not as much as if you just did not do anything at all. Like you just stuck your head in the sand. So I would say the number one thing is don't stress and get a tax return extension filed. And I'll add on to that. One pro tip is if you don't know how to actually file form 4868 is the extension form. All you need to do is log on to your IRS.gov account and make a payment marked as payment with extension. And that is your extension. So the IRS will accept that as an extension. You don't even need to send the form in a check mail. You don't need to worry about any of that. Just log into your account, say that this payment is for an extension, not an estimated tax payment, but an extension, and that qualifies and you're good to go at the federal level.

You know, I'm literally, and I'm such a geek, everybody. I get emotional when I just, when I learn something new. I didn't know that. I didn't, I didn't know that. Little pro tip. I freaking love it. Bobby, you freaking rock. So IRS.gov, log into your account, making a payment with your extension. You're done. And I like what Bobby said too. This is people. It's okay to, not to. It's okay to file an extension. You can reduce your chances of an audit and it gives you time to breathe. Don't ruin your weekend. Let's get our records together. Let's do a better job gathering our documents. I love that tip. Right out of the gate. Bobby, thanks. Anything else you'd add to that? Sorry, I'm giving you a little commentary. Anyone else on that point? I, in fact, I should say to.

I'm good.

You nailed it. All right, well, Kim, let's jump over to you. What, what would be. I mean, I probably, probably stole my number one. So what would you say as another last minute tip or some advice for someone filing this year?

Well, along the same lines of filing an extension. But I always tell clients if you're not absolutely sure that your return is complete and accurate, you should file an extension. Because filing extension is always better than filing an amended tax return. That's the last thing we want to do in our office is have to file an amendment. Now, the most common things we find in our office the reasons we have to file an amendment are. Here's our top five. One is a change in dependence. Believe it or not, we've actually had dads forget they had a baby last year.

Surprise, surprise.

Yeah. Number two would be a missed W2 from a short term job. And number three, Ms. 1099 from a forgotten brokerage account. And number four, Ms. 1099 from a sales contest or other prize like where they're given a trip to Hawaii or something and it's like it didn't come in cash but it's still reportable income. The other one happens all the time is a late K1 from an investment they forgot they even made.

I love it. Great list. I'm writing those down. Those are number top five reasons why an amended return. We're going to have to do it an article together on that. Kim, those are great. You know why everybody, he chose number four, Ms. 1099 from a prize or winnings because he has a practice in Vegas. So I have to feel that's part of the reason. Am I, Is that a fair assumption?

Well, actually it's more from my practice in the Bay Area and it's all the sales guys that, that we do returns for and they're always forgetting that stuff.

Okay. Okay. I like it. Good stuff. All right. Well cool. That's a great. I like that list of why again, that's a good list for everybody to go through if you are going to try to jam out your return this weekend. And also a good forewarning of why filing an extension is important so you can dig this stuff up. I love it. Great comments, Kim. Now we're gonna go around the horn a couple times here so we're gonna get some more bites of the apple. I love this. Mandy, what would you say that clients coming in. Mandy, rock my world. Give me something good. Last minute tip. What comes to mind for you other than these We've already stated, I would

say that lack of preparation on your part doesn't constitute an emergency for your cpa. So just file the extension. Just because you waited till the last minute to get your stuff to the CPA and you're all stressed out doesn't mean your CPA should be staying up till midnight trying to get your tax return filed. Just let them file extension. Get your, as you would say, Mark, get your shiz together so that they can file before the extension deadline has passed. And then you know what? Find someone that can help you. If you own your own business, get a bookkeeper Get a CPA who has bookkeeping services, but just outsource it so that you can stop being stressed out in April every year. So maybe that's not a tip, maybe it's a reprimand. I'm not real sure.

But no, I love it. And it's regrettable that everybody gets so stressed out about this. And I want to kind of loop back on this because I said it quickly a moment ago and Mandy, you reminded me about it is that you said, well, it's this whole issue of extensions being bad and everybody has this perceived stress. And I learned something interesting from Kim a few weeks ago. I just loved it. Kim had a if you don't mind sharing Kim, on your kind of friend that you will leave them unnamed at the IRS that talks about the IRS district layout throughout the country and how audits are assigned by quota and how literally an extension numerically it's proven, reduces your chances of audit. Would you mind sharing that? I thought that was very insightful.

So yeah, what my friend shared with me over lunch was the process that happens at the irs. What basically the country is divided into districts and each one of those districts has different levels of staffing. So they can basically each district submits to Washington what their capacity is to do audits and Washington sets up queues and once those queues are full, they stop selecting unless something really is smells bad in a return.

Crazy, right? So I don't know there's some analogy, but you definitely want to don't run through the gate early and get picked off by that sniper. Let everybody else run through and then come. I'll just meander on back through when the sniper's out of bullets or something. I don't know what. I don't know what analogy is best here, but something so no, I'd love that, Kim. Thanks for sharing that. I thought that was really cool. Well, I'm going to share a tip as well because I get to back clean up. So I'm going to throw one out. The one thing that I would I love to tell clients, when clients say mark, save me some taxes, I'm like, what do we got to work with? And if they're just simply a W2, which is fine, great benefits, they've got a great career. But that doesn't give me anything to work with. I'm really going to just plug your info in and you're screwed. So what I'd like to ask the client is a last minute tip. Please tell me that you have a small business of any type and with. I've seen it as high now as 50 million Americans have a 30 a side hustle where they're making money on the side, doing something online, 1099, driving Uber, whatever it could be. And when they say, I'm sorry, guys, I've got to say this briefly. I was. I was a scout master for years, and I was by a campfire and one of my scout masters, it was in the spring, we had the boys out under the stars, and they said, help me save taxes, Mark. And I go, well, he works for an insurance company. And I said, you have a side house. And he goes, well, I have a fishing website. I'm like, well, that's cool. And he goes, I sell a $20 little how to catch a fish manual for 20 bucks. And he goes, I make three or four hundred bucks a month selling this around the country, around the world, people call up and go, oh, my gosh, I'm catching fish on the lake now. I just downloaded your thing. And I go, that's great. We can write off all sorts of crap. And I go, well, is it on your return? He goes, no, my accountant said it was too much pain. It wasn't worth it.

What?

And I just. I went ballistic. And so what I want all of you to know is that side hustle is your get out of jail free card, people. That's a good thing. Don't look at a side hustle as, oh, I gotta report it and pay taxes. Oh, my gosh. That opens up the all the loopholes that I know us as advisors love to have. So that's gonna be one of my tips, is embrace being a small business owner. Embrace that side hustle and share it with your accountant. Don't hide it well. It's money under the table.

Bring it, Bring it.

I'd love to see it. So, all right, let's do just for fun. Patrick. Be ready with some questions here, people. But I'm going to go around and I'm going to ask a different question. I'll start with you, Mandy. Give me your favorite. Some of your favorite write offs. Like your clients. You're like, this is a sweet write off. My clients, they miss it or they don't do it? I like to talk about. I kind of have a few. Like, if I was a pitcher, that's like my slider or my breaking ball. You're like, I'm going to wow them. Like, I love some of these write offs. I love to take advantage of them. Any come to mind for you?

Oh, I mean, I Think my favorite one right now is the health saving count. You know, anyone who qualifies with their high deductible and can contribute to a health savings. When we talked about this last year at one of your conferences, you know, my husband and I contribute to the A, and we're not planning on using it for medical expenses unless something comes up and we can't afford. But if we contribute every year, we use it as a retirement strategy as opposed to just put money in, take it out for a copay. You know, I don't, I don't need to take $30 out of my whole savings account to pay for a copay. I can just leave it in there and let it grow. So I feel like it saves you taxes now, saves you taxes later. So I love that deduction.

I love it. I'm going to give you all the numbers, everybody. You can still contribute to an HSA this freaking weekend before April 18th, if you had a high deductible health insurance plan, you can Google this. You can look at my YouTube channel. I've got all sorts of videos and articles on it. The health savings account. Mandy, I'm glad you brought it up. Everybody, you can put up to 38, sorry, 36, $53,650 if you're single this weekend into the account and still get a write off for last year and turn around and pull it right back out for medical expenses. So if you, some of you are like, well, I'm on a budget, throw it in. This is how you launder money. Let's get it in there. And then pull it right back out for medical. And then if you're married or head of household with kids and single, that still qualifies for the, for the family deduction, that's 7,300. So the 7,300 for last year is still a write off you could pull off this weekend. So, Mandy, I love that. Bobby, what do you, what's one of your favorites? Like, one of your favorites. Like, you could pull it out of your back pocket and love to wow people with. When they're filing the return.

Well, I mean, there's always the flashy stuff, right? Like, Mark, you always talk about, like writing off your pets. You got the security. Like, there's cool stuff that you can do. But honestly, I always like to take it back to the basics of like, what is an actual business expense, because there is no list at the irs, right? So every business is different. And an example I like to use because I work with a lot of the Younger crowd influencers, people making money online and they might be making money on Instagram and they think that having to go to the gym is, you know, that's for their brand and they got to write that off because they got to look good for their posts and whatnot. So for me, I like to use the example of like, if you are a personal trainer, right, if you want to write off your gym membership and you are a personal trainer and you have to actually be at the gym to train your clientele, that is a legitimate, ordinary and necessary expense, right? So the two important words are ordinary and necessary. If it's ordinary in your course of work and necessary for you to produce a profit or get a new client or a vendor or whatever, then that is an ordinary necessary expense and fully deductible in your business. So I always like to encourage my clients, like, do things that you enjoy doing so that you're going to be incurring these expenses regardless of whether you are in business or if it was just a hobby. And now you're writing off things that you otherwise you were already going to pay money for those things anyways, and now you're able to write those off legitimately in your business and you're doing something you love. So I would say the main thing is like, educating people on understanding that there is no one size fits all list of like, here's exactly what you can write off at the irs, right? Like, this is what the IRS is going to let you write off because every single industry is different. And if you understand that what an ordinary and necessary expense is in your business, there's a lot more expenses at your disposal that you'll be able to write off.

I freaking love it. And, you know, bringing it full circle back to my buddy by the campfire when we were talking about his fishing website, he can write off his fishing poles, he could write off his boat, he could write off fishing gear, trips to go fishing, because his business is teaching how to fish and he's got real revenue for that. I can't write off my fishing pole, but he can. And I love Bobby's point that you have to look at the angle of what your business is and how you could write off, like for one other example, like with my car and I do the mileage deduction, I cannot write off my car wash. Just can't. But if I have a turo business, I can write off the car wash. So when I detail my car, I'm writing off that expense with my turo business. So everybody's business is going to have different angles and you just have to know what they are. Kim, over 40 years, man, we loved learning from you. You're like the wise to say or, you know, or whatever they say. We come to mountain and kneel at your feet and tell us what are some. What's some cool write offs that you've loved to employ over the years and some things that you do that,

you know, the big thing is that most of the clients we have are really asking the wrong question. You know, they always ask, is this deductible? And the right question is, how do I make this deductible? Because it's usually a matter of facts and circumstances. And just about anything with very, very few exceptions can be a tax deduction in the right circumstances. So my favorite thing is I get a client that comes in and their prior accountant has told them they shouldn't take the home office because it's a big red flag and you're going to get audited and just don't want to go there. And I run the numbers for them, show them what they really can deduct, and then also show them how that it makes it almost virtually eliminates commuting expense. So it helps them on their car deductions as well. You know, that's where you can really wow and show a taxpayer how they can really save money. I wrote about all of the deductions that I typically use in my practice in my book, and they're all described in a way that anybody can understand and know if it applies to them.

Is the better book the manifesto book or the freedom formula?

Okay, so the manifesto book is for taxpayers. The Tax Pro Freedom formula book is for tax practitioners.

Okay, thanks. I've been through both. I love them and I just, I wanted to make sure you reiterated that for everybody. Where's the best place to get your book?

Well, I'm doing a launch later this month with my mentor, Jay Abraham, and then it'll be available on Amazon.

Okay, great.

All right, well, we'll have to do. When you're ready to launch official, we'll have you back on the podcast or something to go live and we'll help get that book out there, Kim. Great. Oh, you bet. Okay, well, let's field some questions here now. I'm going to throw them at you guys now. In fact, Patrick, I'm able to see the questions here. You may have picked out one or two. I'll let you go and then I may start scrolling through them so we could go quick. But Patrick, you go as our studio director here. Is there a question that's on your mind that you want us throw out to the group?

Yes. I have an interesting one here. It says, from Doomsday Preppers of South Carolina, my tax guy said to use my rental as a second home, not to use as a rental because I'd have to count the income and throw me in a different tax bracket. What do you all think?

Oh, my hell yeah.

That's not good.

Yeah. Okay, now I'm going to just throw this one Bobby's way because I. Bobby is really a good rental property expert. And oh my gosh, I just want to start going off. I'm going to hold off until Bobby makes his comment. So I'm going to repeat this. Doomsday Preppers in South Carolina. That gives us a hint here of where we're headed. And hey, I'm a prepper. I love to prep. My tax guy said to use my rental as a second home, not to use it as a rental because then I have to claim the income and it'll throw me into another bracket. Holy hell. Okay, Bobby, give us your take. What would you tell his client?

Well, I would say there's a lot of parts you could dissect on that. And I'd say most of that is incorrect. And I think what the tax preparer is or the tax advisor is kind of getting at is the 14 day rule, also known as the Augusta rule, basically saying you could rent out your home for 14 days or less and you're not going to have to pick up the income and you don't get the expenses, which is great. If that's all you did and you might have like rented out your home a couple days of the year and you don't want to go through all the hassles of depreciation and gathering these expenses, fine. But ultimately, if you're actually trying to save money on taxes, most of the time, real estate, while it may be cash flowing on paper, when on a tax return you're going to be showing a loss, you're showing a tax loss. One of the reasons why real estate is such a good investment from a tax perspective is because of your depreciation phantom expense that you're able to capitalize on. So by not reporting income, which is illegal, unless you're falling in that 14 day rule, you're also not capitalizing on the potential losses that can then be used to offset other sources of income. So honestly, I don't think that is the best advice. And I Think you would definitely want to get a second opinion.

Yeah. Having a rental is a good thing. It's a great business. You're not going to have extra income. The depreciation is going to push you into a loss. Whoever's giving you that advice is not someone you want to be taking advice from. I'm going to take a moment to say this too, for everybody watching. I have a tax advisor network of advisors I collaborate with every week and train on my strategies and learn from myself. These three amazing individuals are in my network of collaboration. I love to hear their voice and learn from them as well. If you want to get to my website, markjkohler.com, go up to the network at the top. You're going to see a list of advisors from around the country that you guys can choose from, that you can interview and find a better tax preparer. They don't have to be down the street. I know Mandy, Bobby and Kim will open the door and take clients at times during the year and you'll see their information at times in that network list. So get there, please, everyone, and find a better advisor. All right, I'm going to throw this one at Mandy. This is a unique one from ADPSG. They said they had $300,000 in trading losses. First of all, I'm so sorry. My heart goes out to you. It was a brutal year in some ways for a lot, a lot of people in different ways. $300,000 in trading losses. But I filed my tax return and did not even list them because it was going to be limited to $3,000 anyway. So I thought, why even list them? And I didn't even put them on my tax return. Should I amend my return and put them there or is it even worth it? That's their question. What are your thoughts?

I mean, my immediate thought is that yes, you would amend your return because you can carry those losses forward every year.

Yeah. Elaborate please. Like this is a good thing. We want to, we want to capture those.

Yeah. I mean, every year you're going to get that three thousand dollar limit that you can deduct, you know, every single year. So it's $3,000 of money that you're making that you're not paying taxes on year over year. I mean, that's a lot of money. 300,000.

Yeah, yeah. And you'll be able to cash in more than 3,000 when you have gains. Who knows, three years from now you could have some money, so some gains. So we can. You want those in the. In the in the hopper adp. So go grab those. Amend your return. I actually like this question for Kim, if I may. Patrick, thanks for letting me jump around. If you'll pin them. This is a good one because this really comes with a lot of years of experience and I've had to play with this type of question a lot and find the best maneuver. So, Kim, this is from Carlos Ivan Solis. He says, I'm applying for a mortgage on my first home next week. In this case, should I file my 2022 before the deadline because the mortgage lender will ask me for those documents. Right. And I think it's a broader question, really. A lot of people may claim more income on their tax return because they want to get a mortgage or they're like, oh, I'm not going to file because I don't have a big enough return. And there's a lot of issues with mortgage lenders when it comes to filing your return. I mean, there's a lot there. Kim, what comes to mind, maybe two or three angles there. You can take it where you want.

Okay. Well, what happens when you're self employed usually is the mortgage lender will average your last two years income from your schedule C or whatever business return you're filing. So if this last year was a better year, you might want to get it filed before you submit the mortgage application. I had the opposite problem when during the pandemic, my income went down a little bit. And so I purposely didn't file that year when I applied for a mortgage because I had two bigger years to work with. So that would be the big thing is does it help you income wise or does it hurt you?

I like it. And what do you do when a client comes in? Kim, I'm interested to hear your answer. When people say, well, I don't want to take all the write offs I could because I want to look better for the bank. I don't know if I buy into that. What do you tell people when they say that?

Well, no doubt I have had clients that have not claimed all of their deductions because they wanted to have a better story for the bank. No doubt. And you know, the bottom line, we as tax preparers, we have to use what the client gives us unless we know something is wrong. So, I mean, I never advise anybody not to take deductions they're entitled to.

Yeah, I agree. And what I tell people in that situation is you take all the write offs you can and then find a better lender. Upgrade to a lender that understands you might be writing off depreciation or other expenses. I mean we all love the stated income loan back through 2000 to 2010. Well 2007 when the crash hit and they had an important role to play. And my understanding is stated income is still a part of certain types of lenders because they understand small business owners are going to have a return that might be filled with write offs that are non cash write offs. So find a better lender is my take. Bobby, here's a question for you Bobby. And it kind of opens up the door to this last minute write off the IRAs. So there's a couple questions here. We've got new view NC that says is there an age cutoff to contribute to a traditional ira? And I don't know if they're saying what's too young to contribute to an IRA or is it can you get too old and maybe you want to hit the dollar amounts for last year what you can do this weekend. I'll pull them up here too if you need that. But what do you think on IRAs and age? Does it matter?

Sure. Short answer, no. But to go back to go back on the actual contribution amounts. Right. So 2022, you can put up to $6,000 if you're under age 50 and you can put an extra thousand if you're 50 or above. And that's for you as an individual. So if you're married it'd be for you and a spouse. And if you have kids who have earned income, they can contribute as well up to their earned income. So what is earned income? Earned income is basically money they have earned. So it's not the parents paying their kids for chores, but it would be if the kids are working in their business or if they're old enough to be mopping the floor shredding papers and they're involved in your business, you can pay them money, you get the tax deduction, they get the money as earned income and then they can contribute that into a Roth IRA preferably or even if they're out doing something else, maybe they have a McDonald's job, maybe they have some other 9 to 5 job, maybe they're babysitting. Right. As long as they're making money and they have earned income, you can contribute to an IRA or Roth IRA at any age. So and if you're going on the other end of the spectrum, you can also contribute to an Iraq at any age even if you're past the actual where you're actually able to pull out, starting to pull out funds as distributions. You're still able to contribute if you would like to.

Okay. All right. I love it. Totally agree. Now, we've got some hard questions in here, but I'm going to take a quick softball and just say, I think this is a good one. Danny. Panita says I. I already filed my tax returns last weekend for 2022. I'm more wondering about next year, Danny. Love it. Tax planning is really about being proactive and planning for the future. And I want to recommend you get with a tax advisor. You can go through our law firm. We do tax return reviews. Any of these certified advisors with me today, have them look at your last year's return. Make a plan for the new year. So everybody, do not wait until next freaking January, February and March to plan your taxes. Do it now. So, Danny, I think it's. I'm glad you're here and you're watching, and this is a great opportunity to make an appointment with one of my tax lawyers or one of these guys, certified advisors, and get some planning done. Okay? Now, Mandy, it's your turn. And I'm going to give you a choice here because there's two unique ones. Would you rather talk about the auto expense for a car you don't own but using your business or investing in an Airbnb in Costa Rica? You get to choose.

I always leave rental properties to Bobby.

Okay, all right.

Auto, auto, auto expense.

Okay. This is from Junior. This is a good one. Junior says, I started my business this year in 2023 as an LLC. I drive my car, which my dad owns. So my dad owns my car. It's in his name. The car is paid off. Doesn't matter, Junior. But can I deduct miles and expenses for a car even though it's not under my name? Great question, and we might have several opinions on this. What do you like?

Oh, man, that's a tricky one for me because I'm not 100% sure of the tax law on that one. But I would say if you're driving it and you're paying for the gas, then you could be reimbursed for your mileage.

Yep, I'm with you. I think. I don't care who owns it. I don't care if you own it, your business own it, your dad owns it, and you could argue even your dad's gifted it to you for the use of it. And so if you're covering the costs of it, I say you take the mileage deduction. Mandy, I'm with you. Would you agree I would.

And I think. Did he say, I saw the question earlier, but did he say something about Ann paying for expenses? So to clarify if that was your question, because I can't find it on this scroll. You can reimburse yourself for mileage, but no expenses. So it's either mileage or actual. So those are your options. You can't do a combination of both. So if you go get the oil changed, you can't reimburse yourself for that because you're reimbursing yourself for mileage.

And I would say this. I, I don't think if you own the car yourself, I, I would stay away from actual. Because now you're talking about depreciation. You own the vehicle and you're going to take actual write offs. I'm going to get a little more squeamish with that. I like the mileage. Take the mileage right off. You're using dad's car for it. That's cool. You're covering the costs. But I would not put it on the books and go actual. So good. Good question. Thank you, Mandy. So let's, okay, I want, let's jump over to Costa Rica if you don't mind, Kim, I'm going to go back to Bobby real quick. I'm going to find a hard one here for you, Kim, but Bobby, you are a great real estate advisor, so let's throw this one at you. Kim, you might have a. I know you've come across this too, but client says, Danny Panita says, I bought a house in Costa Rica in December of 2020. I've been renovating the whole property this past March. I listed it on Airbnb. Just starting to get some bookings. Can I write off anything? Wow, big topic when you start investing out of the country. But so there's two or three things going on. You've got foreign investing, but you also have the fact you have a rental. It's Airbnb. Lots of to unpack there. Where would you start, Bobby?

Yeah, so I would say when you kind of want to break this out into two different parts, the part about investing outside the United States versus the part about actually just having an Airbnb or a short term rental. So there's rules regarding both. But if we're going to address the part about having a short term rental property. Right. You really have to understand what the short term rental loophole is because that might be what you're trying to get at here where you're able to not be a real estate professional and still take Those losses from the rental property against other ordinary types of income. But the bottom line. So let me see, I've been renovating the whole property this past March. I listed it on Airbnb. Okay, so you placed it into service in 2023. Because the important date you're really looking at here is when was this property placed into service? Because before the property is placed into service, you're not able to write off anything. And really those expenses you are incurring need to be capitalized as part of the property. So basically you're not going to get a write off until the property is placed in service. And another important point, I know we talked about this couple of days ago, Mark, regarding when a property is placed in service, when it's a long term rental. A property is placed in service when it is available for rent, not necessarily when a renter is in there actually giving you money or giving you rent, but it's, it's the intention, like it's actually available for rent. A short term rental is different, especially if you're trying to hit this short term rental loophole, which means the average stay is seven days or less, which means the property is placed in service when you actually have those stays. So if you're going to do this seven days or less, and very common this is at the end of the year when people are trying to do this right before the end of the year, you need to have the place rented out at least twice. The more the better. But you have to be able to average a number and you can't average one. So I would say you need to have at least 2 stays with the average stay of 7 days or less to fall into this bucket. So you can go down this rabbit hole all day on the short term rental loophole. It is a great strategy for certain people. But I would say start there and understand that, yeah, you can write things off, but you're not going to be able to do it until the property is actually placed into service. That's the important date.

All right, I've got. And if I can add to this and Kim, let me say a couple words and if you want to say something too, there's a lot here to unpack people. When you go invest in a rental property offshore, that's great. You might invest in a rental in Cabo, Costa Rica, wherever you want to go. You have to realize as a US Taxpayer, you're taxed on your worldwide income wherever you earn it. And so you have a rental property, whether it's in Arizona or It's in Costa Rica. You got to put that rental property on your tax return and you get all the same write offs. You're going to fly down to Costa Rica and check on it. That's a frickin write off. Love it. We don't want to get too aggressive but you know, show work and keep a good log of what you're doing when you're there and yada yada. But you also need to file a tax return in the country where you're going. And I'll tell you right now, I don't know Costa Rica tax law. So you're going to want to engage a Costa Rica tax professional to say I have a rental here as a US Citizen and you've got asset protection issues too. How are you going to hold it? A trust, an llc? What entities work in Costa Rica. And so it may be a great Airbnb that's cash flowing, but you're going to have a lot more loose ends to tie up than a little Airbnb down in Pensacola, Florida. So be careful there. Again, Kim, anything you'd add to that when you've had clients over the years invest in property out of the country?

Yeah, it's just finding a good local council that can help is the big. Is the big problem.

Yeah, yeah. And the language barrier can be an issue. So. But don't discount it, people. You can get in big trouble in another country not following the rules of that country. And don't forget about the legal issue. How are you going to hold title? What happens if you died? Do you have probate down there? What are you going to do? So this is a better, a good reminder to make sure your trifecta is done. You've got your estate plan in place, an LLC in the US that may be doing business in Costa Rica, a revocable trust, lots of moving parts. Kim, let me throw this one at you as well. I know you've done a lot of amended returns in the past. You've always given some great advice on that issue. This is right up your alley, Tammy. Says my tax person, and I'm going to read into this, has already filed our 2022 tax return. So we've already filed and we actually made a Roth contribution to our IRA for 2022. But our tax preparer put it down as a traditional. So we got a write off for a traditional and we got a refund. Should we amend and am I going to pay some penalties and interest and give back some of that refund so maybe unpack that for Tammy, if you wouldn't mind, Kim.

Yeah, well, there's no question you, you would need to amend that return because you took a deduction that you weren't entitled to. And I don't really think there's any other way out other than to amend the return. You will get stuck with some interest on some of the refund you have to pay back. But you know, you want that Roth.

So

let's say, would there be a penalty if they were to able, if they were able to amend?

Yeah. Well, I think the reason you would want to amend soon is because then there wouldn't be a penalty. Most likely there, there would be interest, but if, if, if they catch you at it, then there certainly would be a penalty.

Yeah.

And in the chat, just so you guys know, she said, Since 2016, 16, this has been happening and they just caught it.

Oh, my hell.

So that's a little bit different than just 2022.

Yeah. Yeah. Tammy, you got to fire this yahoo. And maybe it's poor communication. Maybe you need to own some of this. Tammy, you haven't told them that it's been a Roth. I don't know. But if they've been just trying to cook your return to impress you, that's on them, you know, and wow, 2016. So you, would you, you got some amended returns to do, and there's going to be more than just interest on some of those prior years. You know, whenever we have a hard question with bad news, I'm just going to give it to Kim. So, Kim, anything else you'd want to say?

Not that I can think of, but thanks, Mark.

Oh, my gosh. Well, we're getting great comments here. Navi, one of our other CTAs. We love Navi. I've got to have you on the show, too. People are loving the platform. You guys are awesome. Okay. You know, even though Bobby's kind of our resident real estate guru, I know Mandy can hold her own. Ryan Lee asks when you have a rental property. Well, yeah, when you have a rental property, would you. So would you go straight line or accelerated depreciation and maybe you explain a little bit about. You bring in the cost seg and the bonus aspect. Would you feel comfortable answering that? Kind of like what the options are when you depreciate a rental?

Yeah, for sure. So, you know, like Bobby talked about, with a short term rental, there are rules as far as what, I guess what your maximum deduction can be depending on if you materially participate. There are so many rules that go along with that. But if it is a short term rental, accelerating your depreciation through doing a cost segregation study and using the Section 179 bonus depreciation, you can get a great write off the year that you put it into service. Now it may not be beneficial if you're over the income limit and you don't materially participate. It may just be simpler and more cost effective, I guess just to do straight line and do either 27 and a half for residential or 39 for a commercial which would also include short term rentals.

Yeah, I would just add to it. There's a lot of options when it comes to depreciation and you really want to look at what's the end result going to be? Is this a loss that I can use? What's my income level? Am I a real estate professional? Am I active? Where do I get the write off? Because don't worry about accelerated depreciation if you don't get the frickin write off on the back end. So kind of work backwards with your tax situation. Any of these advisors could run that. Okay, I'm going to tackle a harder question here and any of you that want to back me up with a thought on this, this is from Patrick and we'll just take a couple more questions folks. But Patrick says I've got this limited partnership nol net operating loss. So he had it. He was an unlimited partner, let's say think of it like a restaurant maybe. And Patrick invested in it and there was some losses, 18 grand worth. And he says I'm no longer a part of the partnership, but I've got this $18,000 loss. Can I offset gains using these losses even if I'm no longer part of the partnership? It'll be six years of 3k losses. Well, Patrick, here's my take. Everybody is limited partnership losses are not the same as capital losses like sale of stock. So you're as trainers in our program we talk about losses as fruit. You might have a banana, you might have an apple, you might have an orange. There's a lot of ways losses are treated. A limited partnership loss could be very, very different than a capital loss of selling stock, for example. And that $3,000 rule may not apply at all. You might be entitled to take that whole 18 grand right now, especially in the year you give the partnership away or you're sold out or you walk away. You know, there's this disconnect where I can say the ending of the relationship that can trigger the ability to take the Entire loss as well. So, Patrick, what I recommend is you got to get with a tax advisor and get a second opinion before you file. You might be able to harvest that whole thing without knowing all the facts of what type of partnership, when you ended your relationship with the partnership, the final K1. There's a lot of questions to ask there, but it's going to be better than you think I would believe. Anyone want to add to that?

I think that's good.

Okay, I'm getting some nods, head nods here that we're okay. All right, I had one last question. I'll throw this towards. This is from social media on another platform and I'll throw it at Kim, your direction. And then anybody that wants to comment, maybe we'll get one last question from sluggish in California tv. What interesting handle, Kim, we're seeing this too, and it's tricky, let's say. So here's the question. I filed my tax return already and I just realized I had cryptocurrency transactions last year that I did not report. My accountant did not ask and they checked the box no on my tax return. Now I realized I have not reported my cryptocurrency transactions. What do I do, Kim?

Well, I think you file an amendment. I mean, that's the only advice that I could give would be to file an amendment because we know they're, they're going to be seriously looking at crypto. They already are. And you, you do not want to, you know, have a tax return out there where you've misrepresented. And I would, I would say, you know, reconstruct your losses or gains as best you can and amend your return and make sure the box gets checked correctly.

I love it. Thank you. I agree.

Mark?

Yeah, Bobby, go ahead.

I'll add this. I work with a lot of clients who do sell crypto. They are in crypto day trading crypto, which gets super complicated. But the bottom line is it is the first question on the 10:40 after, it's like, who are you, what's your name and where do you live? The first question is, have you done anything in real. In crypto? Right. So basically it's a yes, no question. And the only time you're going to be saying no is if you've never touched crypto that year or if all you did was buy because it's important. If you click yes, you are saying that you had. Basically, they're looking for taxable events. So did you sell crypto? Did you trade one crypto for another crypto did you get staking rewards? Like, did you actually receive crypto that would have created some sort of taxable event? And if you said no, and you actually did, even if the exchanges right now, they don't have the reporting requirements to actually keep up with this like traditional brokerage accounts do, they are going to get better. And the other thing to remember with crypto is it's on the blockchain. Literally the whole point of it is it's permanent. It's literally a permanent ledger that anyone can see. It's a public, open blockchain. So there's going to be professional jobs where all people are going to do is learn how to audit blockchain transactions and be able to tie those transactions to their best, the best of their ability back to individuals and taxpayers. So even if it's in a couple years from now and you've said no, but you actually had yes, and they found out from that later down the road, I mean, you're asking for an audit and that you're basically committing perjury. So the only thing you can do is amend that tax return and do the best you can because I'm telling you, like I'll have clients who they're giving me a puzzle to put together with half the pieces missing. And you can only do the best you can to get to an answer that you honestly believe that you can do. And you use software, which is essentially mandatory with crypto. One I've used personally is tax bit. They do a great job, but the bottom line is you got to amend, you got to definitely hit yes if you had any taxable events in crypto. And then you've got to do your best to try to put together some sort of record to arrive at what are the taxable events and what do I owe.

Love it. Perfect. Great comment. Let me hit a couple last points here and then we'll give it, let it maybe do a final statement from everyone. There's questions still rolling in, but we'll do the best we can. First, someone said, is getting an LLC done worth for a rental property or is doing an LLC for a rental property worth it for tax savings? No, LLCs do not save taxes, people. But you need a frickin LLC if you have a rental. Seriously, do not kid yourself. The liability exposure of having a rental with tenants and their guests and patrons and what you could get sued for, it is not worth it. Get the freaking llc, but it's not going to save you taxes. So sluggish in California says if I have an extra room in my house, I Airbnb it occasionally, and then I use it personally. How much can I depreciate? The home has a total of two bedrooms. I don't know. Anybody want to tackle that for a moment? I've got a question.

There's a lot. Yeah, there's a lot to unpack there. And the bottom line is, if you actually had a part of the home or a separate room that was solely used as an Airbnb, now we're talking, okay. It's not still part of your primary home, because you can do that if you have a duplex. But even if it's not a duplex and it's a completely separate part of the home that is used exclusively as a rental property, like just that area, you. You don't use it personally at all. Now we're talking, and there's some. There's some game to be played there, and you can depreciate that area of the home in proportion to the total home and the total expenses. However, if you are renting out a room and you're using it personally sometimes, and you're renting it out other times, you basically just have an extension of your. Your same home, you're gonna have to report the income and you can. You can offset it with expenses, but you're not gonna be able to drive yourself into a loss. So, yeah, I would say yeah, yeah.

Or take depreciation. I love what Bobby said. You're gonna report the income. Airbnb is going to send you a 1099. Report the income. Take all the freaking write offs you can, but stay away from depreciation if you're using it personally. So it's still a great little business, just no depreciation. I'm gonna ask, answer this real quick, and then we'll go around the horn with the final tip. Erica says I work in web 3. I accepted payment for my services in crypto. We all know that crypto fluctuates. Do I report the income at the price when I received it, today's date, or the price it was on the date I cashed it out? Everybody. If you get paid in crypto and you can pay for our legal services on Coinbase, we have a Coinbase institutional account. You want to call my law firm and pay us in crypto, we'll take it. But we report the income on the day the crypto shows up in the value of the crypto on that date. It's not what it's worth. Later, at the end of the year, December 31st. Doesn't matter. It's the date I was paid in crypto. What was the value? Well, let's. Let's just go around the horn here. Kim, any final words of advice for our group here? And then we'll give ladies, you know, ladies night special here. Mandy, you're last. So, okay, you get final word. You know, we know ladies get the last word. So we're gonna. We're gonna live with that, and we can do that. Kim, what do you got for us? Anything? Final tip.

Final tip would be think about your taxes proactively, and now is a good time to start.

I like it. Boy, man. A few words, but, Kim, I like what you're saying. Start now. You know, don't wait till next year to have the same podcast. Help you out, folks. Let's. Let's get started now. So. Well, Kim, thank you for being here. And we're gonna have another little show when your book's out on Amazon and your information's out there. People know how to reach you, so we hope to see more of you.

Okay, well, thank you.

Yeah, thanks. Bobby, any final tips for us here?

Sure. So I got two. One is, essentially, it's really important for taxpayers to understand the difference between a tax filing service and a tax strategy and tax advisory service, right? Because a lot of people think they're getting tax advisory and tax strategy when they go to their CPA or their tax preparer, once a quarter at most, maybe just once a year, when to file the return. And all they're doing is you're giving them information, everything that you've done that year, income and expense wise and all your assets, and they're going to plug it into software and they're going to say, all right, here's. It's essentially a report card, right? They're going to say, here's how you did, here's what you owe. Goodbye. Right? And that is a tax fine. It's just a commodity service, right? Someone's just putting information into a software and filing tax strategy and tax planning happens throughout the year. So if you're going to your tax advisor right now, right, that is a tax filing service. If you're like, hey, I need to file my tax return, they are filing your taxes based off what you've already done. But if you need help saving money on taxes and you want to actually play the game of taxes and save money, you have to do this now, right? You're doing this now for next year's taxes, because you don't save Money in April for last year's taxes. Everything already happened. There's not. There's nothing else you can do. So I'd say my biggest tip is understand what you're getting from your cpa, your tax preparer. Like, are they just filing your taxes based off the information you're giving them, or are you actually, are they helping you save money on taxes? And it's a, it's a very important distinction, and it's important to know for you to know what you are paying for so you don't get upset at them for not teaching you how to save money in Texas when all they're doing and all you're paying them for is to just file. So I'd say that's number one. And I'll just throw in a last tip here that I feel like it's important to mention because I've learned this the hard way, or I've had, and I've had clients learn this the hard way. When you are sending in payments to the irs, whether it's an estimated tax payment, you're paying off your tax liability, or you're doing it right now for your extension, I highly, highly recommend the primary taxpayer send in this payment. Because if you're married, right, there's two names on your tax return. You have the primary taxpayer, whoever's listed first, and you have a spouse. All right, whoever is that first taxpayer. And if you, if you're not sure, go look at last year's tax return. Whoever's name is listed first, log into their IRS.gov account and send the payment from there. Because I have had spouses who make payments on behalf of the joint tax return, and it just gets lost, the ethers, literally. Like the IRS just loses it in their system, and they get a letter saying, hey, you misreported your tax return. Or they're going to do an assessment and you literally have to call the irs, get them on the phone, explain what happened, have the payment confirmation, all that, then they'll correct it on their end. But it is a glitch in their system where if the spouse is making the payments, it can just get lost. And then you're dealing with the IRS and trying to resolve that. So I'll leave it there.

I love it. Bobby, thanks for being here. Great tips, great advice, great contribution and energy. Appreciate it. Mandy, what do you got? Any final words of wisdom for anyone?

I think mine is more for the CPAs and the EAs and the tax preparers out there who are overwhelmed right now because they've said yes to too many people. I think a lot of them say yes over and over because that's the majority of how they make their money is by filing tax returns. So, you know, my encouragement to you is to diversify your services and maybe that's hiring a bookkeeper and offering that monthly service. Or even better yet, maybe that's becoming a certified tax advisor through your program and mark so that you can offer tax advisory services with confidence and then you don't have to say yes to every single tax return that comes in the door because you've diversified your revenue streams. So that's my encouragement to all those overwhelmed tax preparers out there.

Oh, thanks for saying that. See guys, Manny goes and edifies my program and you didn't say a word. You guys suck. Just want to throw that out. Manny, thanks for saying that. No, the get certified, become a real advisor and let's add those advisory services to your practice. It'll take off so much stress. And here's my final tip. I would say cleanse more frequently and eat more vegetables. I really think it's going to help. You're going to feel a lot better. Even if your tax return is a mess, you're going to feel better. And that's what matters, you know, in life is, you know, just keeping it real, you know. So anyway, I'm so happy about this broadcast today. A lot of fun here and I love the perspectives. Thank you, Mandy. Thanks Bobby. Thanks Kim and everybody out there. Thanks for watching. We'll be back next week with more tax and legal tips to help you live your American dream. Please consume the real information that helps you on a day to day basis. It's fun to get fired up and go out and sell the next day. We got to do some books, we got to take some write offs, we got to be organized and that's what we're doing here for you. So stay in touch, everyone. Thanks so much and we'll see you next week.