How to Save on Taxes

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Welcome everybody to this week's live broadcast on entrepreneur and Mark Kohler, Facebook and YouTube. I'm here for all of you small business owners or with our topic today, any American that just wants to save some taxes. Now, I'm a CPA attorney, partner in a law firm, partner in an accounting firm, licensed as a CPA and I don't know, six or seven states, been practicing for 20 years, written several books on this topic. And I'm going to give you the straight answers today on which tax write offs are legit, what's crap, what's aggressive. Sometimes that's okay, you want to be aggressive. But there's a lot of tax strategies that just don't work. And people love to talk about them because they sound sexy, but it doesn't mean they work. And so we help hundreds, if not, well, we do help thousands of business owners a year in structuring their business for the best tax strategy and asset protection. And I literally ran here to the studio five minutes ago from meeting with a client who makes great money, works in network marketing. He's so smart. And after paying, I had to break this news to him on the call. He probably paid more than $15,000 in tax. He didn't have to last year because his accountant sucked and he didn't know. He's like, mark, I found you. I want to use you more. Can you, you know, can you give us a consult? We need one terribly. Can you just review our tax return, help us get a structured. We'll do anything you say. And right out of the gate, within 30 minutes, we discovered two or three major problems. It doesn't mean he's going to get audited. The IRS is stoked. He's just paying him more money than you had to. There are some bad, bad accountants and CPAs out there. There's also some really, really good ones, and they can be hard to find. But here's the bottom line, people. You are the captain of your ship. You sign your tax return, and this client that I was just on the phone with said, well, Mark, I just told him what I just been doing, what he told me. I did what he told me to do. And I go, well, oh, so if the IRS audits you, you're going to go, he told me to jump off the cliff. The IRS doesn't care. Now, if you get a big tax bill with penalties and interest and then you want to sue that Yahoo that gave you bad advice, you can, but the IRS doesn't care. They're coming after You. That's point number one. So I'm here today. We've got Darren Charrington, one of my tax lawyers, on the in the house. He's going to be helping me field questions because there he is. He's legit. He's really here. He's so young and vibrant looking. I love it. Darren's going to help me out today on some of these tax tips. I want to give you my top 10, 8, 9, 5, 12, 14, whatever we get to. My brain's always spinning. I got so many ideas. I love saving taxes and I love making money and I love sleeping like a baby at night. Actually, babies don't sleep that well. I like sleeping. I don't know who sleeps really well. Even my grandma struggles sleeping. And babies struggle sleeping.

Teenagers.

Teenagers sleep well. That's true. And they won't get up. Okay. I want to sleep like a teenager at night and not worry about the IRS auditing. So my time is yours today with Darren. So if you have any questions, drop them in the chat below. Whether you're on YouTube or Facebook, just type in your question. Try not to write an epistle or, you know, your high school senior essay and tell me about your entire life. Just say, hey, I heard I can write off my auto. I want to do this, I want to do that. Hey, can I write off my cell phone for my spouse or my kids? Hey, can I take a trip and write off this when this happens? So any of those questions, I'm here for you today, and I'm going to make another general point that's very, very important. But just start thinking your questions and I'm going to give you some ideas. In fact, number one. In fact, what do we charge that good. I can pull this cord. All right, number one, that I want to talk about, and I just mentioned it, but I want to keep a list. We're going to go through our list today. If you don't have a yellow pad handy, please re watch this with the yellow pad because I'm not holding back. There's no mastermind in Vegas in two weeks where you get all the real answers for one hour. I'm going to throw down everything I can. Now, I do have workshops in the fall, one days and two days. A young adult financial training that we're doing for three evenings this fall. I've got my books. Hey, I want you to get this info, but for an hour every week, we just do our little open forum. So I'm here for you. Hope to wow you. All right, number one. That we just talked about is, it's your tax return. You can't blame someone else if it's wrong. Big point. Number two, get your strategy reviewed. Whatever strategies or strategies I'm going to put, get your strategies reviewed once in a while. If you think you're killing it and saving taxes, why don't you double check this client I met with. He's been with the same accountant for four years. I literally got emotional on the call when I broke him the news of how bad it's been and he didn't know. And so get your strategies reviewed. Now, being on a forum like this, picking up my book, watching some YouTube videos, that's a great way to. You don't have to pay a ton of money just to say, hey, what's out there on writing off my cell phone? What's a good idea? What's not a good idea? And you're reviewing the strategy by reviewing the law out there. Now, here's number three. Do not forum shop. Now, what that means. And, Darren, if you have a better way of saying this, do not forum shop means don't look for the answer you want. As soon as you find it, you think you're okay just because when you go to the IRS and go, well, I thought I had the Augusta rule. I can write off two weeks in my house, paying myself to rent it for my meetings and da, da, da. Hey, you want to talk Augusta rule, I'll throw down. You want to talk cost seg. I've got the strategies, people. I've been doing it for 20 years. Any freaking tax strategy on the planet in the United. In the United States. Not the planet in the United States. I've heard of it. I've got a lot to learn. I'm not saying I know everything, but I've heard them all. And I've got an opinion on which ones I think work and don't work. And I'm always open to learning new. I mean, freak. I'd love a good tax strategy, okay? But do not forum shop means don't try to find the answer you like and then live with it. Find an answer that someone answers, that someone can and will stand behind.

I agree with that 100%. I think that a lot of people kind of go out there and they're like, hey, well, I'm living this way and I'm doing this thing, and then they want to go find some justification for be able to write it off. You're not going to be able to change the tax law. You can change your Facts. So stay within your circle of influence and change your facts to be able to get the best circumstances possible.

Yeah, I love it. And sometimes you find out your strategy. The last year sucked, but a little tweak and you're good this year, so it's not the end of the world. This client I just met with an hour ago, we're. We're pivoting. We're making 20, 21. It's going to rock. It's okay. Now, when I say can, I'm going to actually put this in red. Tell me what you think of this. Darren can and will stand behind. See again, if you find a little blog article or an open forum. Yeah, you can write off your kids under 4 years old, because I'm going to use them as a model in my social media. All right, great idea. Great strategy. Is your tax. Who's that person going to do your tax return? Are they going to stand behind it if you get audited? Can you sue them if they're wrong? So make sure whoever you're getting advice from is truly going to sign your tax return. It doesn't mean they have to be a cpa. I don't want to be totally up in your grill on that. It makes sense that they would be. But you might use an enrolled agent, a licensed tax preparer, but they better have malpractice insurance, and they personally guarantee that your strategy is legal. Now, you can still get audited. You might have to proof receipts, but that doesn't mean your accountant was wrong. So if they are wrong, you need to be able to hold them to the fire. So whenever someone goes, yeah, I heard, my friend. They're writing off their kid as a model in their business. I'm like, okay, find out who their accountant is and if they'll sign the tax return for your situation, well, then I can't write it off. You know, who is it? Now, if the facts allow me to write off your kid as a model, I'm on board. But make sure you have someone that legitimately is licensed with malpractice insurance that's going to stand behind your tax return. And if they give you advice, so be it. And I hate it. I know some of you are watching right now. Why don't I go to law school or an accountant to give advice? Sure, give the advice, but you're going to stand behind it. Are you going to sign the return? Are you personally liable if you're wrong? Well, no. Well, then shut the hell up. Sorry. Gosh, that was bad. I'm Going to get kicked out of here. Well, you know what? I'm out there advocating for you. Just remember, it's your tax return. Get your strategy reviewed on a regular basis. And don't forum shop looking for the answer you want. Make sure someone's going to stand behind it and then go for it. You want to sue them? Cool. I may say it's a little aggressive, but if someone's willing to sign your tax return and you know you can go after them for the penalties and interest on the penalties, do it. Love it. All right, so those are your three basic rules. Now, I want to give you quickly, I'm going to give you top 10, I'm going to give you my top 10 strategies, and then I'm just gonna field your questions the rest of the time. Does that sound okay? You guys good with that? I've got Jack, my marketing director here, and Cory, my producer. You guys complaining? Are we okay? All right. Okay. It's a little late in the day for a rock star, so I'm just throwing down the dew. Good year. Okay. All right. Ooh, I got another fine. Okay, I got it. I've got one other major point I need to make. Okay, under these top three, so what should we call these? Governing. Governing principles of tax savings.

Very efficient.

You like that? Sounds very professional. Governing principles of tax savings. All right, I've got one more, everybody. And I know. I just feel like I'm a little sometimes aggressive when I say this stuff, so don't be offended. I'm trying to keep it lively and fun. Tell some jokes if I can. Okay, number four, before we go through, I have top 10 write offs. If you don't have a side hustle, if you don't have a small business, if you don't have a rental property, you ain't saving Jack Diddly. I'll go with jack squat. Or diddly squat. Which one's better? Jack's here, so I'll go with diddly. If you don't have a small business, a rental property, a side hustle, a side gig, whatever the hell you want to call it, if you don't have one, you are not saving diddly squat in taxes, period. The write offs suck for the average 1040American. We're not getting an E rating today, are we? I think we're on the bubble.

E rating is explicit rating, right?

Yeah. Yeah. I think I'm okay with hell. I'm okay with hell. It's a farmer swear word.

It's not G. Maybe pg.

Yeah, this is PG at Best we'll be. All right. Now guys, you have to have a side hustle. Now let me explain why and all of you are going to love this. Okay, here's your 1040. Boop boop boop. Okay, now I love the good old 1040 before two years ago because down here on the front page was your AGI, Jack. What's that stand for? Come on.

Adjusted gross income.

Boy, I caught him on the spot. I tried to trip him up all the time. Adjusted gross income. Now all of you should know your adjusted gross income because when you go to apply for a loan you're going to need to know it. If you go on a credit card app, if you do, you know you're applying for school aid, school loan stuff, whatever, you should know your AGI. Okay? And Corey, I got it. I'm going to do it. Okay? Adjusted gross income. Now here's the, here's the trick everybody. This is literally number four of the guiding no governing principles of tax savings. We're going to trademark that after the show, right? Okay. Millions of Americans make money having a great day job. Corporate America, whatever the hell, they make millions of dollars. Millions of Americans, they pay taxes and then they pay for their cell phone. They pay for a new home computer. They travel to Florida to get on a cruise ship. They help their kids buy new clothes. They help their kids in college because they're eating cereal in your basement. Oh, that sounded, that sounded rough. I say that one all the time. Just do I not Corey, I've been saying that for four or five years. Come on, save me.

Okay, Jack's right here.

Mark, there's a college student in the room that will go unnamed, not Jack or Corey that goes unnamed, that eats cereal in their parents basement. So I just. Okay, so people pay taxes and they pay for all this crap. Millions of Americans pay for their car, their home office, their auto, their cell phones, their kids and they pay taxes. Do they get a write off for this? The answer is no they don't. Here's the trick. I'm going to put it in red. We need to start a small business on the side. I'm not saying quit your day job. At least have a small business on the side which could be a rental property, it could be a service, it could be online, it could be a multi level marketing gig, it could be affiliate marketing, be a hundred things. Start a small business on the side. Now I can convert these expenses down here up to above the line. This is the line above the line, below the line. We want write Offs above the line. So this, don't, don't lose, don't stop watching. I know some of you are like, this is too deep. No, no, no, no. Hang tight. This is your tax return. This is your AGI. This is the line. Any expense above the line is great. Any expense below the line sucks. That's the trick to tax savings. I want to write off your cell phone, your dining, your computer, your kids, the home office, the auto, the travel, all me think my top 10 write offs. If you don't have a side gig, if you don't have a side hustle, you ain't getting diddly squat. That was terrible grammar, but it made the point. People, you've got to have something for me to work with. If you don't have anything for me to work with, I can't get you freaking write offs. There you go. I tried to do that as dramatically as possible. Darren, do you have anything you want to add to that? This is your tax return. This is your brain on drugs. Brain on drugs down here. That was a great commercial back in the day. This is your brain on drugs. This is your brain killing it. Get a small business on the side, then all the freaking write offs I come up with. You're gonna love them, Darren. Final words.

I mean, kind of like I said earlier, it's really about changing your life.

High five. Is that all you want to do, just high five?

You can do a high five, but I mean, you have to, you have to change your facts. You can't just be like, well, I want tax write offs, I should get them, right? Yeah, you got to have that small business. You got to have something to be able to get some expenses and actually write it off.

Okay. All right. Okay, now we're going to do my top 10. Hopefully those four governing principles make sense. And there's so many questions coming in here. Everybody, I got you. Okay, let me just rattle off my top 10 write offs. Well, I'm going to do number one. And some of you think it's cheesy, but it's number one, have a small business, which again, could even be a little rental property, even a rental. Okay, now I'm just going to go through the low hanging fruit. Number two, cell phones. Cell service and phones. I'm going to come up with more than 10 people. I'm going to do it for you today. Cell service and phones. Now here's a deep little topic on that. If your family's involved in the business and you pay for their cell phone, you just got a Write off. All of my kids are on my board of directors or board of advisors. All of my kids help me in my business in some form or fashion. I can write off their cell phone because I got to get a hold of them. Now if they pay for their own cell phone, which I want them to do and some of them already do, then that's their write off. But if I pay for it, I want a write off. Number three, travel. Whenever I travel, I want to find a good reason to travel. That's a business write off as well. Now on every one of these Topics, I got YouTube vids. Please go start binging on them. Share them with your friends and family. You'll freaking love them. I get there in my book too. We should give away some books today. All right, number four, dining. Oh, now 100% dining for 2021 and 2022. Oh my gosh, it's huge. Huge. Again, I've done whole podcast just on dining. Whole other topic. Number five, auto. And you could do actual or mileage. Love that. Number six. You know I'm doing this from memory, so you're going to have to help me fill out any others. Number six, paying your kids and. Oh no, no, no, no. No paying family members. Okay, now that may not include your spouse because I've got some strategies with that. But this could be your parents, niece or nephew, grandchild, kids. So lots of family members in this. Here's the rule there. If you're helping family out with money, take a write off and let them pay their own freaking taxes on it. Boom. Pretty straightforward. Okay, number seven. Okay, let me see. Small business, cell service and phones, travel. Okay, let's throw in electronics. Now some of you may have said phones. Phones are a different nuance for me. I've got my Apple Watch. This is a tax write off. It's a Bluetooth device to help me run my business. It's not a watch. I can't write off my fossil watch. I don't even own a Rolex. But if I did. But you can't write off a typical watch unless it's Bluetooth. For my business, Apple Watch is a perfect write off for that. Go Google how to write off my Apple Watch. My article is number one. Thank you. Okay, electronics, iPads, laptops, microphones, speakers, cameras. If any of you are doing business, you're on the web. If you're on the web, you're on social media. If you're on social media, you're taking pictures. If you're taking pictures, you may need to Upgrade from your phone at some point, get a camera. That's a write off. Do you have a drone? Do you have tripods? Do you have a computer for editing? Do you have all this electronic crap that's around me today? That's electronics. And if you use it 90 to 100% for your business and you wouldn't have it otherwise, it's 100% write off. That's what we're shooting for. Okay, Electronics, home office. Oh, do not get scared off by the home office. I had a fun question on a home office garage question this week. First time someone asked me a question about the garage in my 20 year career. In a unique way, I'll bring it up today. This is real. You people sometimes are the best strategy givers. Let's put them through the matrix here, let's see if they work. But I had a good one, you know. Okay, I'll tell you now and we'll answer it later. It'll be the reveal. If my auto is a business vehicle, can I write off the garage that I park it in deep, right? I will answer that at the end of the show. Can you wait, Jack, are you excited? He can't wait. He can't wait. He's like, it's like anxiety on drugs over here. Okay, home office, electronics. I'm going to go with equipment and furniture. That's different than electronics. We're talking tables, desks, furniture, tools. Any of you doing rehabs or have a rental property, Everything you buy at Home Depot or Lowe's freaking write off. So equipment and furniture, I don't need to highlight that. We could talk about all these. Okay, now I'm getting, I'm getting low here in my mind. Okay, one second. I may ask you to throw it in. Small business, self service and phones, Travel, dining, auto, paying family members, electronics, home office equipment and furniture. Number 10, a deductible retirement account. I want to fund a retirement account and take write offs to fund that retirement account. Now if I'm doing a Roth strategy, I'm coming to that one. But this is possibly a deductible retirement account. That could be company mansioning with a Solo 401. You got a comment? You're looking anxious. Scroll up. Oh down. Oh yeah. Oh, Jack comes out and he stole yours, didn't he?

Well, I was waiting for it right there.

You're the marketing director. Geez, I could have come out of the gate on that one. Okay, a deductible retirement account. Jack, we will give him credit for this. He obviously reads and watches the content he produces here at the firm. Number 11. And I should have brought it up sooner. Fair enough. S Corp strategy to save on fica. The F word. Fica. Maybe that's why we're getting an E rating. Fica. What? The fica. What the fica. Okay. Does that. Are we going to go E this week? S Corp to say I hope you guys are having fun. I'm a dork. I'm just an accountant. I'm just an accountant having fun. Any love you can give me. I appreciate it.

Ahaha.

Once in a while, Robert. Come on, Brophy. Okay. S Corp to save on fica. All right. And I'm going to go one more and then I'll let you back clean up on anyone you can come up with. Retirement deductible. Retirement account. S Corp to save on FICA. Number 12. Make tax free money to begin with. Why not just use your Roth account to mine for crypto? Why do it in your own name? So if we can create income in our Roth account, we don't pay tax in the first place. Make dollars tax free in the first place. Now, I've got a hot 13, but I don't know if you're going to come up with it. You ready? Give me your number. 13. Make money tax free to begin with. Okay, what's your 13?

Healthcare.

Oh, I'm proud of you, dude. I'm proud of you. Are you cheating?

No, of course not.

Oh my gosh. He just got his laptop open. Cory, what the hell?

I got a comment. Mark.

Oh my gosh. 13 health care. Now, with health care, I think there's two strategies. I'm going to go 13 and 14. 13 is get a tax write off for your premiums that you're paying unless your company's covering it for you. I want you to get a write off for any premiums and any health care expenses. Now you might use it. An fha. Sorry, an fsa. An hra. I'll write those down. Fsa. You can look those up. I've got videos on them. Fsa, hra or itemized. I want to write off your premiums and medical expenses. That's number 13. What do you think number 14 is? Cheater.

I'm kind of wearing one right now.

Well, come on, throw down. You don't have it.

I was going to say I've got this shirt on.

That's number 12. That's number 12. Make money tax free to begin with.

Oh, no, no. I was gonna say you can for marketing.

Marketing expenses. Okay, okay. I'm gonna say. Okay, I'm just gonna say Health Savings Account. Oh, yeah, Health Savings Account is a variation on medical, where you can invest tax free to pay for your medical and you can get a tax write off in the front. I really put the HSA and FSAs in different lines because they're so different. Health Savings account. All right, hsa. Now I'm going to answer all your questions. I'm jumping to them, people. I just wanted to get my list. I'm going to finish with 15.

That's fair.

Finish 15.

Yeah.

Marketing expenses. Love it.

I mean, you and. You and Matt went to 25 on a podcast a couple months ago, so.

We did.

Yeah.

That's impressive, whoever that guy is.

Small business tax write offs. I'll drop the link.

Okay, you'll put a link.

I'll drop it. Yeah.

So we did 25.

You guys got to 25.

I came up with 25.

You had, like, charitable donations.

Oh, charitable. Fair enough.

Sponsoring, like, youth leagues and stuff. And marketing.

All right.

You guys went into it.

So that was a podcast. Yeah. Okay, so I did it. Now I did a 25 list. And so. Oh, I gotta look over here. 25. A list of 25 tax write offs with Matt Sorenson on our podcast. Darren is going to put it into the content below. Now, this is a great time, before I start answering your questions, to say, please subscribe. This is what makes it all work. Please subscribe, share this content, this little video with your friends or family or fellow business owners. And I know some of you are like, my accountant doesn't talk like this. My accountant doesn't have this. I'm not saying you have to fire accountant, but bring them up to speed. Sure. Buy him one of my books. Have them go. I teach classes to other accountants. It's okay. We're all learning here. This is just my area. Small business, tax law. There's not many people like me doing what I'm doing out on the web and with the books and the videos and the blogs. Okay, let's do the questions now. Corey, I can't see the questions. Oh, now I can. All right. Where do you want me to start? You want to start at the top? Well, a Peter says, mark is incredible. Thank you. You're awesome, bud. Okay, Bella says. Oh. Vito says, scheduling time with one of our attorneys asap. I will give you our phone number to our law firm, accounting firm, where you can schedule a review and get your stuff put together. But I'm going to go with Bella G. Bella's Been here before. I've seen that face. Right, Corey? Am I right, Bella? She's so cute there on YouTube. Can I switch straight from. From an S corp to a partnership, or is there a waiting period? Oh, Bella, I'm going to generally say no, and frankly, it's because I don't want you to do that. So, Bella. Okay, so if Bella has an S corp, let's do our trifecta. So here's my trust down at the bottom. Here's my 1040. Now, if those of you are new to this, this is our trifecta. And we start with this with all questions, because I want to fit in an ambassador plan. So here's Bella down here. So cute. Here's Bella down here, and she's got a little skirt on, and there's her little legs. There's Bella, okay? She has a trust and a 1040 tax return. And she says, I have an S corp. Okay, so she has an S corp. Now, what do you use S Corps for? People, if you have a small business generating sales, income, product or services, affiliate income, crypto mining, a 1099, you're just out here making money, all right? You're going to ultimately be in an S corp. If you make more than 40 grand net, we're going to get you over to an S corp. And the reason why is I want to save on fica. And you're going to be. Bella's going to be the owner 100%, and she's going to do a W2, and she's going to take draws. Now, the goal is to. I'll put this in red. The goal, Bella, right, is you want to take as much as you can in draws and as little as you can in W2. So as she takes the lower W2 and the bigger draws, she's going to save taxes. And we want to be at a point with our salary allocation. The IRS is happy. We've been doing it for 20 years. Never had a client audited for this allocation. But then Bella says, I want to do a partnership. Now, What's. And don't be offended, Bella. But what's odd about that is I never want you to get rid of your S corp. Your S corp is cool. That's yours. I have 1s corp in life. It's all mine. Now, the trifecta is over here. If you have an LLC for rentals, Bitcoin, or investments or land or oil or gas or whatever, so you're investing over here. The LLC holds our assets. The S corp runs the business this is the restaurant building. This is the restaurant. So, Bella, she owns both the LLC and the S Corp with her trust, but she's bringing it on a partner. So, Bella, the first thing I would ask you is, is your partner going to be on the operations side or is it going to be on the holding side? Because, see, remember, this is holdings. Now, everybody, don't. Just because your question isn't being talked about right now doesn't mean you turn off. Bella's question is a good one. And it's going to probably answer some other questions. Millie. Investment property. Investment property goes over here. Investment property is here on the holding side. Over here is our operation side. Now, I know some of you are sick of hearing this, but you I don't get sick of saying, because I love it. This is your foundation. So Bella's bringing on a partner. Well, if she already has investments, I don't want to make a partner here because they're going to get half of everything she has. So if it's an investment, if Darren and I are going to buy a rental together, my Trust would own 50%. No, mine had probably own 80% and Darren's would own 20%. Is that okay with you? Take it or leave it.

Probably. That's probably per capita.

I'll take it. Okay. This was it. This was your chance. Okay, I'll take it. Yeah, so. But we set up an LLC to hold. Okay, so, Bella, if you're forming a new partnership and it's for an investment property, just set up a new llc. The state where your investment property is now. She goes, well, Mark, we're going to do operations together. Perfect. Set up LLCs for operations. And your S corp owns it and their S corp owns the other one. So if Darren and I say we're going to open a restaurant. Cool. Open up a little restaurant. 80% for me. You want in or not? 20. Come on. Is it.

I'll take it.

Okay. Okay. Now, here's Darren's S corp. And here's my S corp. So here's Darren's S corp. Size matters. And here's my S corp. Did you see the difference? Whose team do you want to be on? Okay. I'm just saying Darren's a good supporter. Okay, now. Okay, so. But Bella, don't change your S corp people. I, Mark Kohler, have one S corp in my life. That's it. Scout's honor. Some of you may like. Well, Mark, you're a tax lawyer. You probably got tons of S Corps. No, I don't want tons of S Corps. Bella, you have one S Corp. Use it for your affiliate marketing, use it for your Etsy shop, use it online, use it for services, products. Have one S Corp where all your income goes. Don't give anybody a partnership over here. Now, if you go, well, I'm married. It's marital property anyway. Unless you're doing a prenup. But I'm going to just. You can own it. 5050 with your spouse. But that's still an S corp, it's not a partnership. A partnership would be up here in the LLC level. So, Bella, set up an LLC that's owned by your S corp. Now, I may have totally missed your question, but don't change your S corp to a partnership unless you're just adding your spouse as a part owner, a shareholder in your S corp. But I wouldn't call it a partnership. Just stay away from that. Okay, Darren, what do you got? You got a question you like or should I go to? Oh, we were going to go to Roy Lee.

Well, I wanted to bring it up because you mentioned. I forget who it was, but somebody mentioned investment real estate. I don't think that was on our list.

Oh, huge. Okay, yes. Rental property.

I'm going to do number 16 and even five.

Okay, everybody go back to your yellow pad. Go back to your piece of paper. We're going to add rental real estate here, man. It's no Longer A top 10. Jack, this is legit rental real estate.

You have to change.

Yeah, I gotta change that. Okay, Jack's job, I talk about. Every client of mine should buy one rental a year or part thereof. Unless you're 80 years old, ready to die be buying a freaking rental. Okay, I'm gonna go over to Roy Lee. Roy Lee says, can whole life insurance be a tax write off if they support your business? No. And people, I don't care if I get the hate mail which will come. Whole life insurance technically works to borrow against, but it is not for everybody. But some people sell it to everybody. And I know I'm going to piss off some of you that sell whole life insurance. Invest in yourself infinite banking, blah, blah, blah, blah, blah. And you're going to borrow against it and it's a guaranteed rate of return and all that. I get it. I know the rules, been there, done that. But Roy Lee, be careful. Investing in whole life insurance as a business strategy. Not a fan. Would never do it. Even If I have $10 million in the bank. I wouldn't even buy a half a million dollar whole life policy. I wouldn't now that's me. Now some of you go, well, you need insurance. Yes, I got term. I'm a term and invest kind of guy. Well, Mark, it's guaranteed rates of return. Yeah, that 4% is pretty hot. Yeah, yeah. I need guaranteed 3 to 4%. Woo hoo. That's party. Darren, you want to go out tonight? 3 or 4%. Oh, but you can borrow against the tax free. Yeah, I can invest in my Roth and get that tax free too. You know, Roy, be careful. Yes. Did you know that Corey, you're borrowing out of your whole life insurance, the cash value and paying interest back to your insurance company. It's tax free. I get it. Technically it works on paper. I just don't like the numbers. Now everybody, I already pissed some people off. I'm sorry. Send the hate mail, but do this first. Go to my podcast from two weeks ago. It's in the. I think we did it in the IRA podcast. So it's directed ira.com podcast and can we put it down in the link below? Corey, can you. It went up today. Okay, so we did a podcast we recorded a week ago, it seems like it was two weeks ago on whole life insurance versus a retirement account. And we go through it for an hour and a half almost and we beat the crap out of it. And we also say where it's good. I'm not saying whole life is bad entirely. I said it has a place, but it's not for everybody. So if you want to, before you beat me up, go listen to that podcast. Because you at the end of that podcast you may say, all right, Mark, I get it. That's all I'm asking. All right. Okay, next question. What do you got?

Okay, I actually really like this one from Eric Gallup. He says, should I start my own LLC or S corps to work for my wife's business or just be a W2 employee to save on taxes?

What do you want to say? You get first shot.

Yeah, I don't. You don't have one S corporation for each couple. Right? You're going to be doing a joint return most likely anyway. It's all going to be flowing down now the way that you're going to be doing. Your accountant might want you to have ownership or have some partnership there, but talk to your CPA on how you want to write it off.

Yeah, I'm going to just say no and no. No and no. Did you hear that everybody? You do not need an LLC to work for your spouse's business. Hell no. Now you might set Up a little management company. Let's put that here. Little management company to hire kids. But it does not have to be an llc. It's just going to be a little sole prop. Okay, Very common. But you do not need an llc. I'm going to cross that out. So you might have a little sole proprietorship to hire the kids, but you as a spouse. No, no, no, no LLC to work your spouse's business. Then they said, well, but I should put my spouse on payroll to save taxes. All right, so let's say spouse is named John. So I'm going to put John on a W2. Oh, sweet. I got a write off because I paid an employee. Sweet. I got a write off. And then we go down to do our joint 1040. And his W2. Oh, his W2 came down here and it's added to my W2 and the K1. Did I really save any taxes? Because I got a write off up here. But we're going to claim it down on the 1040. You're back where you started. And worse, you had to withhold the F word on John's pay. You paid FICA to get a write off. That does you no good. Now, I've got articles out there when to pay your spouse. There's only two times you would ever pay your spouse. 1. I want to pay John just enough to fund the 401k. That'd be number one. So I'm going to pay John and all of his pay is going to go to the 401k. Now, I don't care about the tax write off loop here. Doing it so John can put Money in the 401k. And what we want to talk about is the mega backdoor Roth. The Mega Roth. All these strategies. I got other articles out there. Go to YouTube and type mega Roth Kohler. Whoo. You're gonna love it. But that's when I put John on payroll. Number two. We need to write off medical. And I'm going to add. I'll put it in blue. I'm going to add an HRA over here. It's called hra. So I'm going to pay John through the family management company and fund an HRA and get 100% write off for all medical. But I can only do that if I hire my spouse through a schedule C and fund the hra. It's in my book. I stand behind it. The IRS is good with it. Been around for years. Good to go. So this is an HRA strategy. Then in red, this is the 401k strategy. So those are the only two times I'm going to pay your spouse. So great question. Do not set them up in an LLC and think about those two reasons. Okay, my trifecta is getting ugly, so we're going to start a new one here in a minute. Okay? I get to choose a question. My turn. Oh, who do you want? Well, okay, Herb. I'm going to go to Herb and then Roman real fast. Corey, Herb says I want to know what it will cost to review my tax return and business situation with your firm. Okay, Now, I'm not trying to choose that. That's right in front of me. Corey. Scrolling through them all. There's two types of reviews of a tax return. Everybody pay attention. There's two types of reviews. There's a technical review. Like, is everything in the right box? Did my account screw up my return? I did crypto, but I didn't check and disclose that I did crypto. Do I need to amend? See, this is kind of the need to amend is everything where it's supposed to be type of question. And you shouldn't pay more than three or four hundred dollars to an accountant to do that. Now, my accounting firm, we can't even touch that till after October 15. And that would be a technical review to determine if you amend. Now, when you get on the phone with my team and they go, hey, I want you to review my tax return, and we go, oh, this is a technical review. No, I want you to tell me what strategies are better. Okay, that's a different type of review. That's a strategy review. Now there, I'm going to say you start with one of the tax lawyers because they have a more comprehensive, big picture look of your structure, your trifecta, paying the kids, the family, your S Corp. Llc, so the tax lawyer can take a bigger picture view and give you a checklist of all the strategies you might want to consider. Some clients do both. Over here is my CPA team doing a technical review. And I pay maybe 3 to 400 bucks here, 3 to 400 over here with the tax lawyer. You could be out four to 600 and you're going to pay more, but you're going to get a diagram, a trifecta. My attorneys build this for you online. I did it just an hour ago for my client. I build him a diagram. I gave him a checklist of like 15 things. He was like, mark, I have never had this from a tax consultant in my entire career as an entrepreneur. It's a bummer to hear that, but those are the two types. If you want to set up an appointment with my tax lawyers, you're going to be out about four weeks. Three to four weeks. But heck, it's okay. We still got plenty of time before the end of the year. And you're going to call 1-800-888-088.

I forgot the 880-001. 0-88-8801. Nope.

Going to give you the local number, 435-586-9366. I don't think you're going to have a problem with 1-800- ISSUE. So 435-586-9366. Just call the law firm, make an appointment. Erb, any herb, any of you that want to review, have your tax return in front of us, a list of all your assets, and Darren, you could meet with Darren and he's going to freaking just put a plan together for you on the CPA side, wait till after October 15. Or if you call now. So you could be right after that because we fill up with our appointments. Call the accounting firm, 435-865-5866. So these are two different firms doing two different things. This is tax prep. Kind of technical. Now, we're still going to do strategy sessions once you become a client, but you start your strategy here. Start here for the strategy, all right? Boom, ba da bang. Okay. And then I was going to hit Roman, okay? Roman says, can I use my self directed IRA to purchase a property and to only put a down payment and finance the rest? Yes, Roman. All right, everybody, so let's go to our trifecta. So I have my trust over here, I have my ops. You may have a W2 or an S corp or an LLC, who knows? That's your ops side over here. You may have an LLC with a rental, you may own your own home, yada, yada. But now, right here in the middle, let's say you have a Roth 401K or a Roth IRA. And Roman says, can my Roth go buy a property and get a loan to do it? And the answer is yes all week long. And on Sunday, Boom. Now, this is the shirt Darren's wearing. Okay, Cory, this is the promo moment. Go over here. Shirt say that directed ira.

We need bigger font.

Yeah, we do. That's our trust company we set up years ago. We, we help clients around the country. It's got the best customer satisfaction rating in the industry right now. And one of the fastest growing trust companies. We help clients take their IRA and invest in what they want cryptocurrency, real estate, whatever.

There we go.

Oh, look at that. Zoom in. Yeah. Okay, where you want to go for that is ww.directed ira.com. can you put that down in the notes to Corey for everybody? That's where. If you want to set up a self directed account, you can move your Merrill lynch money, your Oppenheimer money, your Edward Jones money, whatever, get it over to an IRA where you can self direct. It's still a Roth. There's no tax, there's no penalties. You're going to just move your Roth over here. Okay, now Roman says, can I go buy a rental property and use a loan? Yes. Now the steps are, you first, number one, create the ira. Number two, either fund it or move money into it, because you got to get money in there. Didn't do it. Number three, you form an llc. Now some of you say, well, you can do it right out of your IRA account. Not recommended too much exposure to you personally. It's a train wreck waiting to happen from a management standpoint. Okay, now so number one, create your account. Number two, you fund or move in money. Put create number three, you form LLC. It's number three. And your LLC could actually be owned by several IRAs. My Roth IRA could partner with Darren's Roth IRA. My wife's IRA could be in this. My kids IRA, you can pool money from Roths and IRAs and HSAs. So we're going to form this LLC with all the capital you need. This is sweet, right, Roman? Okay, now over@directra.com you can download and watch our summit that we recorded four months ago. And we have a live summit coming up in Phoenix in two months. Every six months we hold our semiannual summit. You can watch a recording of it for a couple hundred bucks. We for two days, we break down all to do all this. All right, so you form your llc, that's number three. Then you fund the llc. See, there's two different steps there. You have to create the llc, then I've got to move all the money in there, Whatever I'm going to fund it with. Number five, you make an offer on a property, so you offer on a piece of real estate, number five. And then let's get rid of some of this mess. Sorry. Let's make this look pretty. Okay, number five, that was ugly. Okay, so number five, we're going to make an offer. Number six, you're going to get a loan from a bank for the. Let's say this Property is worth 200 and you're going to put down most non recourse lenders because this has to be non recourse. You cannot get the loan in your name. Now, it could be one of your other partners, but it can't be family or you. But you could have a partner put their own signature on that loan, but not you. And it has to be a non recourse loan. Most of them want about 40% down, so you're looking at about 80 grand down. So as long as you have in this example. I'm just saying in this example, you want 80 grand in your LLC from all the roths. Get your mom's roth, your dad's roth, whatever, get them all in this LLC, come up with 80 grand. You put your 80 grand down payment and the bank loans you the other 120. It's great. Your IRA can borrow money. That's number six. So the loan comes in at 120. Your LLC has 80 and you go to close. And that's number seven. Step seven, close. And the property is owned by the LLC. We've been teaching this for 20 years. So very, very common. We have, you know, thousands of clients that have done this over the years. So if you want to learn about it, I'm just going to say right now, go to directed ira.com. you can get the book, the Self Directed IRA Handbook. You can get the summit and all that. Now, Darren, you got a question? It looks like you're smiling over there. Is it a funny one?

Robert just says it's squatching time.

Oh, oh, did you want to hear this, people? Okay, Robert's bringing it up. Was Robert. I wonder if Robert's the one. Where's my phone? Did you have it? Was it plugged in? I need my phone. Okay, that could have been Robert. All right. Last week. What? Oh, I'm on that camera. Cory. Cory's telling me what camera to look at. We need one of those little red lights. That tells me what cameras live. Can we get one of those? I want to be legit like everyone else. Okay, okay. All right. Okay. I got an email from one of my fans. It could have been Robert. Last week in Michigan, Bigfoot was spotted. It's Robert. This is Robert. This is him. Okay, so Robert said, keep on squatching, Mark. Now, I grew up in the northwest. Seattle, Washington, Oregon, all those northwest areas. Bigfoot's kind of a big deal. And if you grew up in the northwest, you're a believer. And if you haven't seen the documentary Harry and the Hendersons, you need to See that? Because once you see that documentary, you're going to be a total believer. Now, some may call it a docudrama, but it's pretty legit. So I even have a Sasquatch field guide for any of you that you know, maybe need to go out this summer. There we go. Sasquatch field guide and go squatching. Anyway, Robert sent me a video this week. This is legit, people. Some of you just lost all your faith in me for tax advice. Okay, There was a Bigfoot filmed crossing a river in Michigan with a guy and his group that were kayaking. And it's pretty legit. So if you want to Google that, Google Bigfoot crossing River Michigan last week, you're gonna be a believer after seeing that. Just saying. Okay. All right, back to our questions. Is it your turn?

Yeah, I'll grab one real quick. So I've got one.

I want to do Avery's tube or I want to come back to Avery after you're done. Okay, go ahead. Where was it?

Okay. From Tom. All right, so Tom asks if someone has a side job, like cutting grass. They got paid cash to do it. Do they really want to add this income to their taxes?

Okay, what's his first name? Rob?

Tom.

Tom. Okay. So Tom says he has a sole prop, not an LLC yet. Maybe Tom will in the future and he may have an S corp in the future. And what's his business? It's landscaping. Now the age old question is he's like, Mark, someone's going to pay me under the table cash. I'm just going to take it. I'm not going to report it. Now, first of all, when you go through the pearly gates and Peter asks you if you cheated on your taxes, it's not looking good.

It's the very first question.

Yeah, it's not good. So be careful, number two, you don't get any write offs when you do cash. Sorry, was I whispering? Whispering. Okay, Good for the economy. Helps everyone. Okay, now, sorry, I know you Biden folks don't like that, but hey, we. When Trump was an idiot, I'd call him out. When Biden's whispering in the microphone and freaking me out, I'm going to mention it. So people, I'm not. I'm not team. I'm going to stay as neutral as I can. Not doing team Trump or team Biden. I'm just saying both of them didn't have great things they would do on occasion. Biden whispering in the camera helps everyone. I just. Okay. Anyway. Okay, so Tom has a landscaping Business. And he says, mark, I don't want to claim the cash because then I'll have to pay taxes on it. But you're living under the table, which is not good, and you're not getting any write offs. Before I comment further, Darren, it was your question. Why don't you tell them what you think?

Yeah, I mean, I'd say you want to have it on there, right? Because then you can actually have the write offs. This is the small business that you're wanting to set up. And so start growing it, start using it for other things and be able to decrease your other taxes.

Yeah. And now let's think if some of you go, well, Mark, let's say Tom, let's get specific. I know this argument. Let's say Tom brings in $1,000 and if he just puts it in his pocket and doesn't claim it, fine, he'll deal with Peter at the Pearly gates. Cool. But if he does put it in the sole prop and then he writes off his cell phone and his Internet, which would be easy. So let's say he writes off legitimate and he's back to zero. Some of you may say, well, Mark, it didn't help any. You're in the same spot. So did he really cheat on his taxes? Because if he took the write offs, he'd be back where he started. Yes and no. Let me give you a few reasons why coming up above board is good. Number two, Tom, I want you to make more money, not just a thousand dollars. Let's build this idea. And when you build it, you might be able to take write offs like funding your own little 401k, which you can't do if you're living on off the grid. So you may be paying your kids to help you with the landscaping. If you, if you have children now, if you pay your kids, they can fund a Roth and not pay any tax when you pay them. So you get a write off, they don't pay taxes and they fund a Roth. But if you're living off the grid, you can't do that. Maybe you want to pay your spouse and your spouse wants to fund a 401k. Can't do it if you're off the grid. A lot of times when you go to get a loan, you want to get refinanced your loan on your home, do some other things. By claiming this income and taking write offs, you're showing the bank you got another business. I don't want you to pay taxes on this per se, but I want you to make a lot more than $1,000, Tom. And so, you know, I think getting out of the dark and on the grid for tax purposes is only going to help you, and it allows you to build maybe business credit, more loans, just be a better business owner by getting legit. What do you think? Any other.

Yeah, absolutely. I think you nailed it on the Roth for the kids, because, I mean, that's a huge strategy for being able to save for your children. The nice thing about a Roth is you put those contributions in and you can still take those contributions out later. All right? You can't take the gains, but your kids can be able to take those contributions. So, you know, supercharged savings account for later on.

Now, before someone at the IRS or the cid, which is the criminal investigation division, starts to watch this video, what I'm about to say is a joke, but it's also a little true, Tom. This is how you launder money, Tom. You got to put the money through a business that's legit, because if you don't have a business, where'd this money come from? And it doesn't look good. And so I joke about it, saying, you're laundering your money by running it through a legit business tax return. And that's true. You want to get on the grid. Example. I got asked to do a little presentation down in Las Vegas. There was one of my business owners that he ran a club, unnamed, and he said, I've got a lot of workers that are getting paid in cash, and I want you to come down and give them a training on how to set up their S Corps. These are really nice women, really nice ladies. And I mean, they, you know, these are girls you want to take home to mom maybe, but they were really nice. And I joke around. I'm not kidding on this story. A lot of single moms couldn't buy a home, had no credit because they were living on cash as dancers in Vegas. I did tell my wife I was going down to give this presentation, and it was during the day, and everybody was fully clothed. Darren. But it sounds a lot more deciduous than it really was. But I did give a tax presentation to a bunch of strippers, and I'm not kidding. And I tried to get them all set up on escort so they can get legit. It's the same thing. Now, Tom. Doing landscaping is not as exciting as being a pole dancer, but. But it's the same point, people. If you're doing a business on the side that's just paying you in cash, I mean, I used to be a dancer. I know the feeling. And you want. That was a joke. Now, you want to get your business legit because it allows you to build credit. It allows you to get a home loan. It allows the. It allowed a lot of these ladies to get health. To set up retirement accounts for themselves and their kids. And all joking aside, it was a very serious meeting. It was because these lenders are like, we're in the dark out here. We're under the table. It's not fair. And we want to get legitimate, on the grid. And so we made sure they had S Corps, and they were making their deposits in the morning from their cash at night. So what? I was providing a public service.

It's great. No, it's great. Are you gonna start selling, like, MJK boxers and briefs on your website now?

Yeah. I'm Adam and Eve. I'm available for a sponsorship. Just want to throw that out. Okay.

Now.

Okay. All right. Avery asked a question. She says, mark, can you explain reasonable compensation in regards to a trust? Thanks in advance, Avery. Now, bless your heart, I'm not trying to beat you up. I have no idea what you're talking about. Because a trust. I don't mean that rudely. I'm just teasing a little bit here, Avery. A trust does not do any compensation. There's no comp in a trust. It's a see through trust. You're going to just do your 1040. Reasonable comp is up here at your S Corp. That's where I'm worried about your reasonable compensation. So your S corp is owned by your trust, but your trust is not giving you compensation. Your S corp is. Now, if you want to know, reasonable comp on an S corp, I have created what's called the Kohler payroll matrix. That's taking over America. Not really, but some accountants think it's kind of cool. All right, so here's what the rule is. Some do, some do.

Taking over small circles of America.

Yeah.

Yeah.

I mean, this is a topic at all sorts of CPA parties. I mean, this is a big deal. Was it. What was his name? Morales. That was in Ghostbusters? What was his first name? The actor? That was a little accountant that lived down the hall from Sigourney Weaver. He's like, yeah, we're having a party tonight. All my CPA buddies, you know, he's the first CPA that made it to the golden screen. All right, okay, now here's the deal. Did you watch Ghostbusters? That's how I know it. I remember my Movies. Okay. All right, so some of you may say, well, I don't want to take 100% of my profit. So let's say this is your profit. No, I'm going to be more accurate. You CPAs out there, I'm going to call this draws from your S corp. So, Bella Avery, if you're asking about reason, I wrote Bella here. Sorry. Draws from your S corp, not your S, Bella. Okay, here's your S corp. Whatever you take out of your S corp, you're required to take a reasonable salary. That's cool. So here's my S, and let's say you bring in 100 grand, you have 40 grand in expenses, and we write off everything under the sun. My 16 strategies and your S Corp's here, and you net 60, and you take out 60 grand in draws. Okay? This is bread and butter America saving taxes here. You're going to pay the FICA. If you don't have an S Corp, that's at 15%. So you're going to spend nine grand in FICA. I do not want to do that. So I'm going to do an allocation. I'm going to take a W2, and in this example, I might do a 30%. I may do a 50% allocation. So I'm going to take a 30k salary. Now, you still take a draw. You don't have to issue a paycheck. Just take the money when you freaking get it. But your draw is actually going to be 30 because we're going to split it. So we're going to take part W2, part K1. Now, there's ways to make this so easy. We have a payroll department to do it. But look at what happens now. I cut my FICA in half. So I just saved $4,500 by going to an S corp. That's why it's in my top 15 strategies. This is a big deal.

So can I ask you something?

Hold on. You're going to ask a question, Corey.

Well, for the K1, can you just take a lower. Can you just do a lower draw

and take a higher salary? Yeah. Well, why would you want to do that? Corey says, why don't you take a higher salary and a lower draw? Well, then I'm paying more fica, so. But I think what Corey meant, right, Corey, switch it around. He says, well, I want to take the lowest possible salary and the highest possible K1. I want to split my draw. So W2 low as possible. K1 as high as possible. Right, Corey? That's what you're thinking, yeah. So I met a doctor once. It was classic. He came to my office, he goes, mark, I made 300 grand last year. I took a $10,000 salary. You think I'm in trouble? I'm like, run for the hills, buddy. The IRS is coming. You don't do that. You got to take a reasonable compensation, a reasonable salary. And that's what Avery and Bella and a lot of people are talking about here. So what I want to do with this reasonable salary is take just enough to keep the IRS happy. So here's my matrix. You may take 50, make 50 grand. 100 grand. 150, 200, 250. Now let's wait. So your income is going up. So see, here's my matrix. As your income or your draws go up, check this out. This is ingenious. This is why CPAs eat this up at 50 grand of income. Now, where was. Where's Avery? I used an example of 60. So 60 here, I'm going to be at about 50% allocation, and then I'm going to bring it down. In fact, I start up here, and I go like this. So the more money you make, the less payroll it is. The more money you make, the less payroll you take as a percentage. So if Bella or avery is at 60 grand in salary, I'm going to do a 30 grand payroll. See, I'm at 50%. At 150, I might do a 33%. At 250, I might do a 27%. I flatline, usually at 20%. So I have someone making 500 grand in draws. I do a salary of 100. I have never had an IRS agent audit my clients for this. Knock on wood. I go to every reasonable comp seminar every year. I just had a client go through an audit in California. The agent said, love it. I've had ex IRS agents on my show. Love it. Now, this is a starting point. That's my disclaimer. Because the less work you do, the more this could be goodwill. And your payroll is lower the more work you do. I might adjust the matrix, but anyway. Okay, we got to answer questions quick, but do you want to do one fast?

Yep, I got one.

Rapid fire. Let's just do rapid fire now. Okay.

Iliana Beatty. I think I own two restaurants. My accountant had me form a third company as a management company. I'm supposed to pay a management fee to the management company and pay myself from the management company. Does that sound right?

First name?

Ileana.

I think overkill, don't you?

I think so.

So she has two restaurants, one and two. We're on the op side, and they set up a management company, and then she does her W2 here. Now. Now, if she has partners, okay, there could be partners in this deal. I love it. Yeah, but if she's the 100% owner of these two restaurants, I don't think she needs the management company. You better have a dang good reason.

I mean, the only thing I could think of is maybe doing an S corporation holding structure, Right? If you don't want to share liability between the restaurants. Yeah, maybe split them out. Do two LLCs have it flow down into your S corp?

Okay, now there's a good point. What's her name again?

Ileana.

Ileana. I'm sorry, my brain's thinking about your question. Here's how I would do it, is you have an LLC for each restaurant, so that way you can keep separate liability, but you better have separate payroll, separate employees, all that crap. I don't know if you do, but let your S corp be the owner at 100%. 100%. So you don't. You don't set up a management company. You set up an operation holding company. Bring that back to your accountant and maybe do a conference call with Darren or me and say, I want an operational holding company to own my two LLCs 100%. The beauty of that is you only do one tax return, but you, again, for asset protection, you got to be processing payroll and merchant accounts separate. If you're not doing these separately, they're going to be one thing in a lawsuit, so. But you should have one S Corp, not as a management fee, but just as an owner. That's what I'd say. Okay. Orianna, you want to do another fast one?

Well, it's kind of same diagram. So David was asking, if two spouses have their own businesses, is it better for each spouse to have an S corp or to funnel everything into a single S corp?

Your answer?

I'd say funnel it all into one.

I do agree. If possible. He said if your husband, wife, and you both have two separate businesses, just have one S Corp and two different DBAs. You know, I'd like to try to keep it down to 1s corp if we could. Now, if you each have your own employees, one's a doctor, one's a lawyer, and you've got professional licensing involved, you're going to need 2s corps. But I think the first goal is to keep 1s corp between husband and wife when possible. Okay, Borianna, for how long? I Need to keep my tax returns. I have a home mortgage and rental property. Keep your tax returns at least six years. Keep them six years. Digital copies are fine. Abdielo Palamo from Texas. How do I set up a DBA under my llc? Oh, this right here. I want to start a similar company with a different name but still have the protection of the llc. Right here. This is your example, Abdiel. I just. You just apply for the DBA in the name of your LLC or your S corp and it sounds like you're going to eventually be an S corp. If you're setting up DBAs, that means your operational business because you don't need DBAs for rentals. So you're ultimately going to be an S corp, but you're an LLC now. Just apply for the DBAs in the name of the LLC. Goose Creek Unlimited. Can we set up a self directed IRA in a trust we create without having another holding company involved? I bet you dollars to donuts Goose Creek Unlimited, you're in the state of freaking California and you want to set up a trust instead of an LLC to have your ira? We did a podcast on this as well in the directed IRA podcast series about three weeks ago. Goose Creek, I know you want to get around the $800 minimum tax. I know it. I lived in California for eight years. But Goose Creek trusts have problems and people that are selling them want to sell them because they want to make it sound sexy that you don't need an LLC and they're going to sell you on this all day long and they're going to tell you on their website that it's okay. Now, Goose Creek, if you have a real law firm doing a real trust for your IRA and they can promise you that you're not going to have tax problems or liability issues for yourself with the trust and they think it's going to be all this easier, have them put it in writing and stand behind it and how much are they charging you by the time you're done? A freaking LLC could do the trick. We just don't do it. Goose Creek, everybody out there. If I could set up a trust for your IRA to do investments and not have exposure for liability and keep it simple for tax purposes and the IRS not have an issue, do you think we'd be doing it? We'd be selling them all day long like candy. We got the skills, Goose Creek. But we don't think it works. And someone else is disagreeing with me out there right now. I get it. I know. Listen to our podcast Three to four weeks ago. Trust, Jess. Ham says I'm not spamming. Serious question. When tax credited, section 179 for auto, is there a lump sum payment refunded from the IRS? When to expect the payment, Jess, great question. The 179 deduction, it's not a credit. The 179 is a deduction, but it cannot allow you to go into the negative to create a tax credit or a tax refund. So, Jess, I like what you're thinking, but the 179 can bring your income to zero, but it cannot bring you to a loss that you can use as a credit against other income to generate a refund. So I know what you're thinking. 179 won't let you do it. Now, you may say, well, bonus depreciation put me into a loss. Yes. So think about bonus depreciation instead of a 179 and you're going to be able to generate a bigger loss that you could generate a refund from. But there's no credit. Don't be thinking credit anywhere in this equation. Okay, Darren?

Okay. Sorry, I was just. Eric's the man. I was reading one of his comments. Okay.

Doug Sager says, how much should the owner of the S Corp wage herself in wages to max out the 401k and profit sharing? S corp nets 500 grand. Okay, Doug. I love this. Okay, everybody, you ready? Okay. Doug says he has an S Corp. Or herself. Doug asked the question, but then he says herself. So I don't. I'm just going to go with Doug. So Doug here owns AN S Corp. 100% or it's husband and wife don't care. He nets 500 grand. So let's say he's bringing in 700 grand and he's got 200 grand in expenses and nets 500. He says, how much should the wages be? Now, Doug, this is deep. Everybody. My first question isn't. Doug's asking this. How much should the wages be to Max out the 401k? The first question is not that, Doug. The first question is, how much wage do I have to take to keep the IRS happy? Then we address, what is that going to get you in a 401k? Then we address, is taking more wages worth it? You see that nuance, Doug? So question one is Q1. What do I have to take? Hopefully some of you appreciate this. I can get really technical. What do I have to take in salary? Don't let the tail wag the dog, Doug. Question two. What is my 401k contribution at that point. And question three, should I take more? Huh? Okay, now this is where it gets good. Question one, and I'll go with red on this. Well, first, we know we've got some facts here. Doug is 100% owner and he makes 500 grand. Let's go back to the matrix. What did I say here? I flatline at 20% to stay out of problems with the IRS generally. Let's go with it in this example, if he's got 500 grand in income, flatline at 20%, his salary should be 100 grand. So he's going to take 100 grand W2, which turns his K1 into 400. So he's still going to be taxed on federal tax and state tax of 500 grand. It's just we're only paying FICA on 100. That's the trick. If he didn't have an S Corp. Oh, my gosh, I don't even want to start to do the math on 500 grand because the FICA phases out at 140 this year. Then you've got Obamacare, Then you've got Medicare. I mean, he'd be paying another 15 to 20 grand in taxes. So the S Corp is a good move. The W2 is 100 grand. Well, what can he do in a 401k this year? Now, I'm going to assume Doug is under age 50. So he could put away 19,500. That's Roth or traditional. And then the company match would be 25% of that. So 25% of 100 would be 25 grand. Now, if Doug is over age 50, he could do another 6,500, which would put him at 26,000. So he could do 26,000. It's sick that I know this off the top of my head. I'm a nerd. Okay, 26,000 plus the 25. So if he's 50 or older, look at this. He's doing $51,000 in a 401k. That could be 100% tax deductible. 51,000 in a 401k, 100% tax deductible. Now, this part could be Roth if he wanted. And this part would be deductible if you wanted. Now, here's what's tricky, everybody. Now, I'm assuming Doug has no other employees. This is a solo 401k. If he has other employees, this whole example is out the window. We're going to do a couple questions after this and call it a day. But this is good. Alright, now what we like to teach is the mega backdoor Roth. So if he could do more in a Roth, his maximum this year is 58,000 with company matching. Right. So 58,000 is that. I didn't. My calendar is that 50 and older or not. I'm embarrassed.

50 and under is 58,050 under is 58,640. 500 for 50 and older.

Cool. Corey has a calendar here. If you have my Mark J. Kohler calendar, they sell out every year by January, February. Be on the lookout for this upcoming year. We're going to print more 58,000. Catch up would be 6,500 on that. 66. 5. 64. 64, 5. That's right. So he could do 58,000 or 64,500. All right, here's the trick, Doug. You say, well, I want to take more salary, but the only variable you have is 25% of salary. So to do a nut to get you up to 64. 5, you've got to do 13,500. If I do 13,500 divided by 0.25, 13,500 divided by 0.25, you got to take more salary of 54 grand. Your FICA on the next 40 is going to be 15,000. So look at this. To just put in 13,500 more dollars, you got to at least pay15.5 on 40,000. Yeah, it's not worth the FICA. So what you do is it's called an app. Is it an after tax contribution? Right. Non deductible.

Is the Roth deductible employee contribution or after tax employee contribution.

So you do what's called an after tax employee employee contribution. Write this down, Doug. That lets you do the other 13. 5 and it then you don't get a deduction and you immediately convert it to roth on day two. That gets you up to the $64,500. So everybody, the moral of the story here is, the moral of the story is don't let the tail wag the dog. Let you choose with minimal salary you have to take. And then let us work some magic. Don't just go out and take the biggest salary. I had a client I met today that took two. This was literally today. Literally today they had a $230,000 salary and a $36,000 K1. That's almost malpractice. That is so bad. It was literally today. I couldn't tell them how much they'd lost in taxes. I couldn't do it because it was water under the bridge. So people, this is extreme importance if you're an S corp. Okay? Now, in summary, we'll do one last question and I want to say this, please again, subscribe on YouTube, share the vid, let people know what you're learning here. It's so powerful. It's changing people's lives. We love it. So exciting. I have tax lawyers that watch this and go, this is freaking awesome. Did you learn this at your last law firm? You were at.

I was doing patents.

Yeah, but they're. I didn't learn. They were jerks. Yeah, you learned all right. Okay, okay. You get to choose the last question, make it a good one that most people would enjoy.

Yeah, I like this one. So from China. That's her name.

Oh, her name's China. We're not really going to China.

No.

Okay.

All right, Maybe, I don't know. She says if I run a social media management company that's an llc, should I switch to a corporation?

Oh, I love it. Social media management, social media management business. Okay, so we know that's operational and she's running it into an llc. Question, should I be an S corp? Darren, what do you think?

She didn't have the S on there. Okay, definitely not a C corp. Yeah. But yeah, potentially you could go to an S corp. Now there's going to be a certain point at which you'll want to switch because S corps are more expensive to maintain. You have extra filings and things like that. So usually you want to wait until around 30 to 40 thousand dollars of net income.

There you go. That's the reveal. So I want to see your income, China, at about net 40. This is where a lot of realtors start out as an llc and then they just see how it goes if they can get up to. So maybe you're bringing in 60, you got 20k in write offs and you net 40, make the switch to an S corp. It's really expensive. We charge 150 bucks. That's it. Keep the LLC, keep your EIN, keep the name, don't change a thing. China, just make the S election. We can help you do that. 150 bucks. You're going to have to do a tax return at the end of the year and do your payroll reports during the year. The S corp is going to cost you about two grand a year. Two grand a year. But in this example, if you switch to an S corp, we're going to do 20k in salary, 20k in your K1. That's going to save you 15% on 20 grand. Do the math. That's 3,500. Now, this is hard math. Save 3,500, spend 2,000. Now. Hold it. This is really hard. Okay, let me get this straight. Save 3500, save 2000. I don't know. Would you do it? I know this is really hard. Let's do it one more time. Save 3,500. Spend 2.

It's close.

Spend 2,000. I think it's close. Yeah. How many of you would like fifteen hundred dollars? That's kind of.

That's.

Yeah, that's not chump change.

Extra hundred bucks a month, right?

I know I'm being very. My wife would say passive aggressive. People, if you have an S corp and you're making more than 40 grand, please learn about the payroll matrix. Get a consult with our office. You can wait three or four weeks. It's no big deal. We're not going anywhere and we're going to save you a ton. We're training as many lawyers as we can on a regular basis. If you're a lawyer living in Southern Utah, southern Idaho or Phoenix, give us a call. You may want to join our team. We appreciate the opportunity to work with smart lawyers that want to become tax lawyers and actually do good in the world, you know. Oh, that sounded bad. I probably hurt someone's feelings. Okay, everybody, we'll see you next week. We should be here on Thursday at 4 o' clock Mountain changing lives. Please send in your questions. Excited to be here with you. Sign up for the podcast, sign up for the newsletter. It's all there. The links are down below. And subscribe. We want to help you be successful in your little American dream. Thanks, Darren, for being here. Thanks, Corey. Thanks, Jack. Thanks to all of you in the studio audience. Let me hear you clap. That was it. That was. The studio audience is out of control. Thanks, everybody. See you next week.