Live Open Forum Q&A with Mark J. Kohler

Am I live? There we go. I'm live. I want to welcome everybody. Thank you for watching a YouTube live Facebook live times two. My name is Mark Kohler and I've got a great plan for this little live presentation. It's all about you. This is your chance to ask a lot of questions about tax and legal which can always be kind of the cloak and dagger of mystery and deception where scam artists take advantage of people and accountants. Accountants really do have a good heart but they have sometimes a hard time explaining things in English. So I'm all yours. This is live what is February 27th at about 4:10 Mountain. So this is not pre recorded. I'm all yours. I'm a CPA attorney. I've got some books we're going to give away here and we're ready to rock and roll. Going to make sure my phone's off and I've already got questions here for you. So I'm really excited about today's broadcast. Kind of a new, new look here. Hope you like it. You're liking this too. Kind of fun. I'm here at the news desk so we're gonna make it happen. So that's what we're doing for the next 30 minutes. If you're a small business owner, if you're filing your taxes and you have a question, please type it down below. Please share this and I shoot a new YouTube video every week and it's free. And I try to create content and shoot that video in a way that it impacts you immediately with savings or strategies that can help you in your life right now. So please get to my YouTube channel. I mentioned that a couple times during this broadcast because I've got almost 80, 90 videos there that are anywhere from two minutes to 10 minutes max. Every topic you can think of about building wealth and saving taxes and starting your business. So we're going to get into it. I'm all yours. And I'm going to give away a book here in a little bit. So hopefully you find this really helpful. And if you can't stay for the whole broadcast you can get back and watch it later. So it'll be in your, in your feed, wherever it's at. Alright? Todd asks and I want to know where people are from. Why can't I know? I want people where their city, state or country. So Todd, Todd M. I have no idea where you're from. It makes me feel special when I we have more Cosmopolitan show with people all around the country. Okay. Todd says, what about your employer? What if your Employer matches your contribution to a health savings account. Can you self direct and invest those funds as well? Yes, but it's a two step process. And you guys know me, I got to go to the whiteboard. So I'm going to try to stand up as needed, right? Sit down as needed. Try to make this fun. Let's say at your job you're putting in some money into your hsa. Now that's a health savings account. And I love these, these are really, really good. To save taxes, you get a write off. If your employer puts in money, you don't even pay taxes on it. Your HSA grows tax free and it comes out anytime for any medical expense. Really good stuff. Now let's say your employer puts in some money and this is separate from your health insurance. Totally separate from your health insurance. You can have an HSA somewhere else while you have life insurance. You can have an HSA somewhere where your health insurance is completely different. So your employer puts in some money and you put in some money. Now if this HSA account, it might be sponsored by US bank, some Wall street structure. And so once the money's there anytime you want, you can transfer it and you have to transfer it to a health savings account and I'll put HSA that you can self direct. So one of the ideas I thought was kind of fun. I was going to do it this week with this coronavirus everywhere. Have you heard or probably seen that it's almost impossible to find face masks for protection when you're traveling or out and about. And one of my team members at the office said I found, I think it was 120 of them, but it's like 2 or 300 bucks. And I'm like, man, I should have my HSA buy some face max and then I could resell them on Craigslist or ebay and double or triple my money. Could your HSA do that? Yes. So that's what self directing is. This HSA that your employer might have is going to be all ETFs, mutual funds, not even individual stocks. You know, that's what they're putting in here. And you're lucky if you're going to be making 3 to 4% because they're going to make a cut on this. But once your money's there, Todd, you can move the money to a different hsa. And where do I want you to go? Directed IRA. Directed IRA.com and if you get over there, we have a special starting next week where you can get a discounted account set up Immediately move your HSA money over there and invest in what you want. One of my HSA accounts, I own an llc and it owns a rental property. And your HSA can do that. So, Todd, do it anytime you want. Set up a directed IRA account. Okay, ladies, I'm going to go to my next question. We'll see how it goes. Quay says, how the heck do I find an accountant that can help me with small business? Well, Kwei, you found me. I'm right here. I think there's two things for all of you out there that if you're listening and going, man, my accountant doesn't talk about this stuff. Take the information I'm sharing, and it doesn't mean you have to fire your accountant, but create a little punch list and go, why am I not writing off my home office? Isn't there a better way to do my auto? How do I write off my kids and my business? Why am I not doing an S corporation? And if your accountant doesn't want to strategize with you and they get offended that you're studying tax strategies, follow, fire them and go out and interview someone else. Quay, if you want to check out our firm, let me just give you a phone number right here. You can go to 435-865-5866. And I'm going to tell you, talk to Mackenzie McKenzie. She's my new client administrator. She does the onboarding. She'll tell you our prices, send you maybe an engagement letter, let you know what's going on. But you can always get my content, my books, my YouTube channel. I love the Tax and Legal playbook for just 28 different chapters on tax and legal strategies, all sorts of books would give away here, too. So check that out, Kwei. Andrew says, do I have to have a Revocable Living Trust RLT in order to use ADAPT Domestic Asset Protection Trust? Boy, you guys are getting into some hard questions right off the bat. Okay, so Andrew brings up, boom, drop the paper. Okay, Andrew brings up what's called the rlt, or Revocable Living Trust. Now, if you've got real estate, you got a business, second marriage, kids, anything like that, you might have to deal with probate, which means the government and lawyers could take some of your money if you die and you don't have a plan. So what we want you to do is consider a Revocable Living Trust. Your trust owns your home. Your trust owns your businesses, which is an LLC with your rentals. It owns your S corp, your life insurance. Everything drops down into Your revocable living Trust, even your 401ks and IRAs. Now Andrew brings up the domestic asset protection trust called Adaptation. I have a whole chapter on DAPs in here. DAPs are a type of asset protection strategy really in about 12 to 15 states for protecting your primary residence. Sometimes we'll put a business or rental property in it, but you don't have to have an RLT to do it. But 99% of the times, Andrew, you do because the trust is still your foundation for giving away your assets when you die and avoiding lawyers in court. So what we normally do is come up here and create a dapt. And the DAPT would own a home, a farm, a ranch, a second home, a beach house. And that DAPT is more protected in a lawsuit, big time. So we kind of take this asset and we isolate it, adapt. We charge like 1500 bucks, maybe two grand. Get through the whole process. They're very affordable. Don't let someone talk you into something more expensive. But adapt you can have independent of the revocable living trust. But I usually like the DAP there. So if you die, Andrew, it all goes into your RLT and then out to your heirs. So what do you do it? Okay, we've got a question from Austin in Colorado.

He says my dad pays my kids a little bit for labor on the farm. Not enough for 1099 yet. Can I still contribute that for them to a Roth ira? How will the IRS know its earned income?

Okay, Austin, this is tricky. Austin says his dad pays his kids on the farm. So I'm talking about the grandkids. Big fan of Yellowstone Little shout out to Kevin Costner. So let's say, let's say grandpa has an S corp and he's paying the kids working on the farm. He brings up 1099. Austin, there's a lot of facts that if we were in a consultation would want to know. You have to have earned income to fund a Roth ira. So if they're working for grandpa, usually hiring you to work on the farm, so he 1099 you and then you pay the kids, you would file a schedule C and wipe out the income by paying the kids. And if they're over 18, these kids are going to get a 1099. If they're under age 18, you don't have to give them anything. We just file a 1040. Income in, income out, no taxes. So what I want to try to do is find a good balance here of paying the son and then paying the kids, usually in a two step manner. So that's first. I really recommend a consult on this. But you can have a Roth IRA for your kids, but you, again, you have to show earned income. And. What was his first name again? Austin from Colorado. I wonder if you could have a loss in your business and still fund the Roth. So, Austin, good question. I'm going to ask you. If you really want to get this done, schedule 15 to 20 minutes with me or one of my tax lawyers. It may cost you 100 bucks, but it could save you thousands. Seriously, thousands. So call the office and let me give you the law Firm phone number. 435-586-9366. And if you call either law firm or the accounting firm, they can hook you up. All the accountants are swamped with tax season right now. But, Austin, the key question is, could you 1099, someone write off all the 1099 with expenses and have zero income but still fund a Roth because you did have earned income, do you have to have profit? And I don't know the answer to that. So I'm so sorry, Austin. Man, I don't usually get stumped, do I? Guys, this is tough. Okay, we got sky and Salt Lake City, Utah.

All right, how many side jobs or small business attempts can I have to deduct against my W2 job?

Wow. So sky has a W2 day job and several small businesses on the side and asks how many of those can I have that have losses to write off against my W2? Well, sky, the technical answer is unlimited. There's no limit on the number of small businesses you have. Now, realistically, I don't know if you'd want to have more than two or three because you really gather the attention of the IRS computer system. So I'd watch out there. The bigger question is how long can you have those losses without the IRS getting ticked off? Usually I don't want my clients to show a loss for more than two years. And the IRS rule is for hobby losses that you've got to show profit in the third year. So what I would do is think about running those losses through a business where it's not a Schedule C. That's number one. Number two, make sure these businesses either make money in the third year or you close them down. And really make sure your accountant is aware of what you're trying to pull off because I don't want you to get in problems with an audit. So, Sky, I love it. Keep moving along there. Now I'm going to go. Can I right here to the paper. This is Sydney. Sydney B as in Victor says, I really love your channel. It's enlightened me a lot. Thank you. I wanted to ask if it's possible to write off an expense for my startup. I made payments to develop, to dev shop overseas to build software for my startup. When I write off these expenses I made through PayPal, I would still like to write them off. Would love some help. Well, Sidney, you can do it. There's no problem there. What I like to do is kind of think of a timeline, people. Right now, we're in 2020, so, boom, let's say right here, we're in February of 2020, and in 2019, Sydney spent, let's say, 10 grand on a bunch of development for to get her small business off the ground. Now you're in startup mode until you make a dollar. So what I'm assuming with Sydney is that she hasn't made any money yet. So she's just incurring expenses here and here and here, and all of a sudden, she makes money in March of 2020. So all these expenses become a startup cost, or if they're related to a specific item that can be depreciated. So, Sidney, that's where really you want to go. You want to come up with two costs. You want to come up with software that you had paid to be developed and startup cost. And some of you may say, mark, what are you talking about? See, startup costs are like office supplies, marketing, cell phone, legal, accounting, and any just kind of general expense would go into startup software is obviously the cost to develop the software. So let's say she spent 15 grand here over this time period. What I'd want to do is drop, if I could, Sydney. Ideally, I want to drop five grand into startup and ten grand into software. Now, it's not going to end up right on the 05 grand to 10 grand. But I'd like this ratio because you're allowed the first year to write off up to five grand to start up, then you could depreciate or even 179 expense a lot of the software off as soon as you start making money. So, Sydney, keep track of those expenses. Anybody out there that you're starting a small business, track your expenses. I freaking love it. Do it. And we're gonna find a way to write them off. So let's make sure we're on it. Okay, Justin. We don't know where Justin's from. He could be just out there in cyberspace. All right, I'll live with it.

Justin from Facebook says, I know we have to show profit before three years to avoid being labeled a hobby. I have a side hustle that is profitable. But after auto deduction shows a loss, do I need to cut back on auto deduction by third year to show a profit?

Yes, Justin, you do. And think of Justin as an Uber driver. Let's say he's Ubering on the side, making some bank, and with all of his write offs, he whittles it down to zero or negative. The first two years, I'm cool with them writing off a loss. But in the third year, go to 0 or show $10 of profit, and you're going to stay off the radar of the irs. And see, what the IRS is saying is really, they're saying, justin, if you're not making money by the third year, what the freak are you doing? Are you really bad at your business or you're just trying to save taxes? And you can still claim a loss in the third year, but if you get a nasty letter, you got to defend the fact that you're really trying to build a business. So not all is lost, but I'd really like to show zero or some profit in that third year. So reign in the auto. Jerry in Brooklyn, New York. Love it.

Can I take out 401k money to buy a property without penalty? I am 60.

Yes, you can, Jerry. Now, Jerry, I don't know if I do that. I've got some ideas. By the way, Love Brooklyn, N.Y. lived in Queens for a while, and last time I was in New York, I stopped in Brooklyn at the Rainbow Bagel shop. You may know where I'm talking about, Jerry. It's kind of big on Instagram. My daughter wanted to go, but they have all these cool bagels. They taste so good. Brooklyn's the best for bagels. You know what I'm saying, Jerry? Okay, now listen, Everybody. Jerry is 60 years old. He's got a 401k. He says I can make some money doing real estate, right, or he wouldn't be pulling this money out of his 401k. Now, since he is over age 59 and a half, he can pull it out with no penalty. If you're under age 59 and a half, it's a 10% penalty. Then Jerry's gonna have to pay tax. So again, if you're younger, I'm gonna say under 59 and a half, you've got to pay a 10% penalty plus tax. Well, that sucks. We don't want to do that. So Jerry's 60 now. If he pulls it out, he's still got to pay tax on that money. Then he's got to go out and invest it and hopefully make some profit. And Jerry's like, hey, I'm sick of Wall Street. Even though it's kind of rocking, it's up and down, whatever. I want to pull the money out. I'm 60 years old, I'm good. And let's say he's going to pull out 100 grand. Well, he might pay taxes of at least 25% by the time he pays fed and state. New York's not cheap on tax, so he might only have 75 grand to invest. Here's the idea, Jerry. Oh, this is good. Okay, I got two ideas. Number one, self direct Jerry. Either use a solo 401k or an IRA. Whole other topic. But don't pull the money out self directed and go buy the same property you were gonna buy. Over here you can get non recourse lenders that will loan you money maybe at 8% instead of 6%. But that's okay, you didn't pay the tax. Now your 401k owns the rental and all of that revenue goes back to your 401k tax free. Now let's say Jerry goes out and buys this rental for 200 grand. He's going to buy it for 200, he's going to put 100 down as a down payment, the baby's going to cash flow, he's going to pay down the mortgage. That's cool. Pay zero tax. Now let's say Jerry knows that the property is going to go up in value to 3 or $400,000. Alright, now here, this is so cool. This is going to blow your guys mind over the next 3 years. Why doesn't he convert the 401k portion of this hundred grand to a Roth and we keep it at a really lower value based on. Now you're going to have to get an appraisal the second year. But let's say we keep that appraisal down and let's say we, we convert this to a Roth and we do it in three pieces. 33 grand. 33 grand. 33 grand. We do 33. Now this current value, so we pay tax on 33 rather than 100. See where I'm going with this? So I'm going to pay tax on 100 grand, not 33, I convert it to a Roth. Then next year on December 31, I do an appraisal and I put 33 in for 2020 and 2021. With that second appraisal. Now, I'm paying tax on my 33 grand three times. But look it. Now I have a Roth that on the books is valued at 100 grand, but the property inside of it, in another couple years, could be worth 400 grand. What now? Oh, hold up. I got to back up. I apologize. No, I'm good on this. I still have to see the value is the value of the home minus the mortgages. Some of you are saying, well, house is worth 200. Yeah, but there's a mortgage against it. So we convert the 100,000 of the equity towards the Roth, and eventually we whittle down everything into a Roth. Then when he goes to sell the property for three or four hundred grand, zero tax. So what did he do? He only paid a tax on 100, but he avoided all the future gains and he pulled out cash flow as he needed it in smaller amounts. I don't know. That's deep. We call that that Roth conversion chunking strategy. And get the Property in the 401k, convert it to a Roth. When it's more money, sell it and pay zero tax. I don't know. Hope some of you like that. If it blew your mind, make a little comment below. I'd love that. And we'll see where we go. Anybody like it? I get some thumbs up. Thanks, everybody. All right, isn't tax. Taxes are fun. Glad you guys are here. Okay, should we move on Diego in Texas?

Yes, he submitted.

Oh, is Diego calling from Bucky's in Texas? All right, Diego.

No, he submitted a question via email. He says, hi, Mark here in Texas, which allow us to have Series llc. Can each stub or baby LLC have its own ein and bank account? If one of the subs LLC gets sued or files bankruptcy, does that affect the others?

All right, I'm killing trees right and left here. All right, Diego, I swear you asked this question on the Open forum radio show earlier this week, but maybe it was someone else with a version of this. Okay, Diego brings up the Series LLC. Series LLCs are in about, well, again, 13 to 15 states. They work really well to protect the assets of multiple rentals. I've got a table in the back of my book, tax and legal playbook. Get over to my website or Amazon tells you all about Series LLC and what states allow for them. So Diego's here. So Diego's over here. He owns an llc, the llc. Instead of having eight properties in one llc, all of his eggs are in one basket. He sets up three LLC subs. These are called sub series LLCs. Now, when you set up a series LLC at our office, we give you the paperwork to set up as many subs as you want so it's a lot cheaper and easier. And he would put with his eight properties, remember the example. Diego's down here in Texas. He sets up a Texas LLC because that's where the properties are. We're not going to set it up in freaking Nevada or Wyoming. That's a whole other strategy. He's going to put two properties here, two properties here, two properties here. Oh, we got two more. The parent takes them. Now, Diego asked two questions. The big one was the last question. Are these separated for liability purposes? If this one blows up and it's a meth lab, can they get at the others? The answer is no. These are protected from one another. That's the whole theory, Diego. Right. That's why you're doing a freaking series llc, so you're protected. Each little bucket is protected. But you got to treat them as separate llc. Each one needs its own bank account. They're going to have their own name as a derivative of the parent. They're going to have their own lease agreements in those names. The title is going to be in those names. We're going to make sure all of this is very separate. Now, Diego, they don't have to have their own ein. They can, but you're gonna only file one tax return. Sometimes banks are cool and they'll let you use the same ein for all three subs. Sometimes the banks freak out, which is typical of bankers, no offense, Bakers out there. And they're gonna want three separate EIN's. If you do an SS, four for each one, you just say they're a subsidiary of the parent. No big deal. So it's not a hard thing to get three separate EIN's. And if your banks freaking out, you might as well. But you don't have to. The important thing is treating them like three or four different entities. So there you go. Vanessa in California, what do we got?

I have an LLC in California. If I pay my husband to do some work, what would that look like on our taxes? Because we filed jointly, it feels like I'm claiming that income twice.

Vanessa, it does you no good whatsoever. And if your husband's upset, make him sleep on the couch. It's just the way it is. There's no. There's no right answer here. You're screwed. No. Either way, Vanessa and everybody out there, I'll give you the. In fact, I have a YouTube video. Vanessa, this is Why? I want you over on my YouTube channel. Should I pay my spouse? Kohler. Just throw that in YouTube and my video will come right up. Now I'll explain this real quick for everybody. This is really cool. Vanessa has a small business. We'll make it an S corp. She pays her husband, she pays herself. Then she has a 1040. Now, Vanessa, you're not claiming it twice. You get a write off here, but then you pick it up here, so you're right back where you started. So your theory of I'm not really saving anything is correct. You're not really saving anything. I do not pay my spouse, Jennifer, a salary. Except for one reason, which I'll explain in a minute. And it's not what you think. That's totally inappropriate for you to think that, but this is. I have a husband, wife here. If Jennifer wants money, I just give her a draw. I just give her a draw and she can take money. So Vanessa or Veronica? Vanessa. Okay, Vanessa, give him a draw, but don't put it on a W2. That's first option. The only time I put Jen on payroll is if I want to fund a 401k. So if you want to fund up solo. 401k, Vanessa, and you take a salary, you want to pay him just enough to put his money in the 401k. So if your husband says, ooh, I want to put 10 grand in the 401k, then you pay your husband $11,500 and then he pays his FICA. Sorry, $11,150. He's going to pay his FICA of 1, 150. The remainder is 10,000, and then he puts it in the 401k and his W2 is 0. So now you get a write off for paying him and you're not picking it up, and he's got 10 grand in the 401k, that's the only time to do it. So I don't put the spouse on payroll unless I'm doing the 401k and just give him money and call it a draw and make him happy. He wants to get paid for whatever he's doing. All right, let me do one over here if I could. Maria M. Ram says, mark, I have a rental worth 600 grand and owe 290. Can this go into a Roth? Sure. Not yours. I hate to say everybody, your Roth can buy rental properties, but it cannot buy rental property you already own. So what I would say is, Ram, just get your Roth ira, your spouse's Roth, your mom Your dad, your sister, your kids, whoever you got in your circle. Create an LLC owned by all these Roth IRAs and go buy a new rental. You can even get a loan where Your Roth or 401k combined with others. And you can go out and buy real estate all day long. A Single member Roth Ira owned 100% by his Roth. He dumped. He had a Vanguard account over here with 300 grand. He's dumping 200 grand in the Roth and keeping 100 with his stockbroker. No problem. Now he's got 200 grand in the Roth. He's going to use the LLC to do hard money lending by the end of the day. I hooked him up with a hard money lending broker. He's doing six month term hard money loans at 10% with two points. And there's better ones out there than that. But he's getting 10% per annum plus 2 points, which is 2%, and he flips it every six months. So what does he get? He's making 14% in his Roth IRA. Now I get hate mail on my $1 million Roth IRA video because everybody say, how can you make 14%? First trust deed. Hard money lending couldn't be safer. He's praying they don't pay him and then he takes the property back and sells it. So this is really, really common. So Ram, you can do this with your Roth all day. You could go out and buy a property, but you can't buy a property you already own. Sorry. Okay, what do we got? Carlos in Redlands.

Mark, family member wants to start a YouTube travel channel, but we want to make sure that we don't get hit with the hobby loss rules. What do you recommend to avoid that issue?

Make money, Carlos. Seriously. Carlos says, I don't want to be a hobby loss. Well, make some freaking money. And here's the thing, everybody. I want you to have a small business that makes money. Take that money and fund retirement accounts and real estate so you can build tax free cash flow for the future. That's it. That's the Mark Kohler secret sauce. I'm not kidding. Start a small business, make an extra 20 grand, 30 grand, 40 grand, and dump it into real estate retirement accounts and invest it in what you know best. Create tax free cash flow, doing time, doing something that makes money. So, okay, who we got?

Charlie from Houston.

Just use an app out there. There's probably 20, 30 apps to choose from, some free, some cost. But if you're a small business owner, you're going to need the QuickBooks. You're going to want to be organized and have a QuickBooks. At least start with QuickBooks online and bottom line and all the accountants know QuickBooks. It's going to save you a ton. That's what you want to be doing.

Eric, Eric, I have two of four bedrooms. I am renting out in my house. Do I have to show a profit to be able to claim in a tax write off?

Yeah, Eric, I don't know if you want to. Okay, let me give you an example. I just had a phone call an hour ago with clients of mine from Hawaii and they're doing Airbnb in Hawaii. That's cool. Now it's a separate duplex, separate entrance, separate deal. They can depreciate that half of the house, treat it like a separate rental. And probably they do. They have an LLC and a separate bank account and the whole nine yards. But option two, Eric, I have some clients that they just rent a room here and there just to make a little extra money to make ends meet. As hard as it can be in this life to. To survive, it's not a separate entrance, it's a couple rooms in the house. It may not be long term. Eric, I'm not promoting tax fraud. But by the time you do the paperwork and depreciate this little portion of your house and claim all the expenses, you're not going to owe taxes anyway. I don't think the IRS wants that paperwork. But there's a point where it gets to be what's called de minimis. It's so small, not a big deal. So, Eric, consult with your accountant. Make sure I'm not off. Maybe there's a lot more zeros involved. I don't want to again, promote any scenario where you're living off the grid, under the table, black money. I'm not saying that. But just renting a room in your house here and there to make ends meet. I just. I just don't think it's worth all the reporting requirements to end up back at zero, so. Okay, before I. Rosalie, let me do another question here. Iron Alien says, how do you convert a Series LLC into an S Corp? Now we've got this series llc. It was here on the floor. Where did we put it? Okay, now I've lost it. Okay, so here's what I do. Iron. I don't think I can remember in the last five years when I converted Series LLC to an S corp. I can maybe remember one because the client had an S corp with three different restaurant locations. And so we wanted three different sub Series for each restaurant location. But the parent was the S Corp. And we did a Series LLC S Corp election. Very, very rare. Let me tell Everybody the main 98.9% of the time what you're doing with a series LLC is protecting your rentals. That's what I'm trying to do. So Series LLC is, are for rental properties. S Corps are for operations. And rarely am I going to use a Series LLC for an S Corp. So just keep that in mind. What do you got, Rosalie?

I have G. Michael from West Valley City, Utah. Okay, if my self directed solo 401k owns a house, owns a maintenance LLC. Can the maintenance LLC service the house?

No. No, it can't. And this is a good example right up here on the board. I'm sorry, G. Michael, and I'm a fan of George Michael. You might be under the radar. I know a lot of people want your autograph, but I'm just throwing it up. Okay, sorry, G. Michael, that was bad. Okay, in this example, let's say that this is G. Michaels, call him GM. He owns this Roth IRA. Or it could be a 401K, could be a SEP, it could be an HSA, whatever. But this retirement account owns the LLC that owns the rental can G. Michaels Company over here that does maintenance. So this is an operational entity that's doing business. And it's a for profit business that G. Michael owns. Can he service the rental owned by the LLC that's owned by his IRA or 401K? No. Your LLC has to hire third parties to do all the property management maintenance. And here's the thing, guys. I'm so sick of a lot of different real estate groups and clubs out there that say you should never buy real estate in your 401k or IRA because you don't get the write off and you can't maintain it and manage it. It's going to cost you more. Sure. But who cares? Because here's why you're doing it. Either G. Michael, he's got to take his Roth or 401k and go out and figure out how to make 15% and freaking wall Street. Or he can go buy a rental and sure, he's got to hire a third party manager. Sure, he might have a little higher interest rate. Can he still break 15% or more on overall ROI? You bet he can. Now, if he owned that rental in his own name and did some sweat equity, would his ROI be higher? Sure. But we're not comparing a rental against your 401k. And you we're comparing a rental against a 401k and a mutual fund. Which one do you think is going to win? Darn right the rental property is going to win. Every freaking time. Now, there's risk involved. I get it. But. But you're going to be careful. You're going to be cautious. And with all the ups and down of real estate, the real estate market. Go to the national association of Real Estate website. Appreciation of real estate alone has outperformed Wall street S&P 500 over the last 50 years. That's because Wall street does this and real estate does this. But on average, real estate's better. Now, does that mean you don't invest in the market? No. Go ahead. Have some cash flow. Have an ETF or a mutual fund. Buy some gold, buy some silver. Be diversified. But don't give up entirely on real estate because some bozo told you it's too risky. Learn something. Get off Netflix once in a while. Get off Prime. Study. Learn. All right. Okay, last question. Last question. Really? I'm having fun. Okay, maybe I'll take one of these. Okay, now, I'm gonna give away a book here, so don't go anywhere. Oh, in the winter? Last week. Two weeks ago. Really? Three weeks ago. I've been on the road. Sandy Johnson was the book winner from last event. She won the Tax and Legal playbook, and I signed it and sent it off to Sandy. So I went to Mexico last week. I was a little disappointed. I was hoping to hit my target weight. I was eating every street taco I could, and I came back totally fine. I mean, what's Mexico come to? I can't even get a virus and lose some weight when I come back. But, oh, well, so what it is? Got to do a cleanse on my own. I thought Mexico would do it for me. Okay, last question. Susan in California.

Susan from California. If my kids turn 18, can I still claim them on my health insurance and hsa? I can't. I asked because the insurance allows me to have them till 26.

Okay, Susan, you blended about three different rules all in one. Okay, so let's do this piece by piece. First of all, you can keep your kids on your health insurance policy till they're age 26. Don't do it unless they're paying for it. Susan, I'm not kidding. I dropped both of my twin girls at age 21 onto their own insurance plan. They were able to get Obamacare. My policy premium went down by a ton, and they were paying 30 bucks a year. I'm Serious. Allison, my daughter had a $6 a month insurance policy that was better than my insurance because she was poor. So don't think you got to keep them on your insurance policy till they're 26. The only winner is the insurance company. That's point number one. Then she says, I want to contribute to an HSA as a family. See, now, Susan, if you're married, I don't care if you have kids, you still get the married contribution, which is 7,500 this year. I don't have my little thing in front of me. 7,500, I believe. And whether you're head of household or married, so if you do have kids, they have to be dependents on your tax return. Now, in order. Now that brings up a third point. That's why I said she was blending a little bit. You've got to look at the rules of when a child qualifies as a dependent. They have to be going to school full time, They've got to be. You got to be providing for their income. A few things like that. Just Google when is a child dependent and you can look at the rules. And as they turned 18, 19, 20, 21, 22, they still may be on your insurance policy, but they're not a dependent. If they're not a dependent, you don't have head of household. If you don't have head of household, you have a lower HSA contribution. Crazy. All right, before I do my drawing, I'm going to do one more question. I'd like this question of Terry J says, if I convert my LLC to an S Corp, will I have to get a new EIN number? No. The reason I'm asking is because of business credit. I would hate to start over building business credits credit again. And that I have already established. Terry, why I loved your question. And for everybody, this is an important point. Setting up an LLC does not save you taxes. An S corporation is going to save you FICA and give you more flexibility for saving taxes in the future. But an LLC is wonderful because it's flexible. I can start with an llc, get my ein, start building business credit, get a bank account, start managing it with QuickBooks, and then if I make enough money, I can convert it to an S Corp, not have to change the ein, and not lose my business credit. Now that's for an operation, an operational business. If I'm buying long term rental, I'm always going to go llc and I'm going to finish off one of my Kohler diagrams here just to bring it closure and blow Your mind here. I'm hoping so in this example. Here's my master plan. You're going to have an LLC or an S corp, or an LLC taxed as an S corp. And you can start as an LLC and convert to an S corp when the time's right. You're going to have a management company that's a sole proprietorship to hire your kids under age 18. You're going to give a 1099 to your kids over 18 and over and just 1099 them. Down here is your revocable living trust. Someone else had a question earlier that I could set up adapt to own my home. Now I've totally isolated my home and created more asset protection. Over here I'm going to have life insurance. And up here I'm going to have an LLC and I'm going to buy rental property. I may even have a partner who knows. Over here I'm going to have my 401k that I'm going to fund with my S Corp. I could even have an old 401k or another 401k at work. You can have multiple 401ks. I could even have a Roth IRA. These retirement accounts are going to set up their own LLC and do hard money loans or real estate or buy super bowl tickets. And look what's happened. You've created several buckets of wealth. You have real estate in your own name. You have real estate and other investments in your retirement accounts. You've got a machine to create extra wealth even if you have a day job. And then down here you've got your estate plan. And you also have another bucket of wealth with your home and possibly cash value life insurance. I got a way to write off my kids. I'm going to build an hsa and I've got all sorts of tax strategies. Is that sweet? Well, I'll be here next week. No, I won't. I'm speaking where? Oh, okay. I'm speaking next week for three days in Salt Lake. So I will not be here. But we'll do another live event in two weeks from today. Make sure you subscribe to the YouTube channel and click the bell. I'm going to shoot a video every week. I do it over the weekend and every Monday, Tuesday, you're going to have a new video to watch. Great one this week on mortgage interest. Right? It was mortgage interest. Good one. My video editors are sick of it. They watched it 90 times trying to get it just right. So make sure you watch it. They put a lot of work into it. Little shout out to Caden and Janae. They do a great job. Also, my newsletter, newsletter every week. It's free. Subscribe@markjkohler.com or the law firm or accounting firm. And We've got our 5th annual Self Directed IRA Summit in February, Phoenix. And in Phoenix, we're going to be talking about all this self directing. We're going to go to topgolf on Saturday night with a VIP ticket. We're going to have food there. It's going to be great. Come out on April 17th and 18th. Now, you can get to that by my website or sdirahandbook.com or at the newsletter. So thanks, everybody. Keep living the dream, don't give up. And I'll see you in a couple weeks.