Tax Strategies The IRS Don't Want You To Know

Asked about your American Dream tax and legal planning that is oftentimes hard to understand, frustrating to get clear answers and can we really rely on a Google search? Well, today you get your questions answered. My name is Mark Kohler. I'm a CPA attorney, partner in a law firm for 25 plus years now. I've written hundreds of articles, have thousands of podcasts and videos that are watched and verified and used by professionals around the country. I've got more books on Amazon than any other professional with my credentials in the space. I am here for you. I am the Goat and we are going to freaking rock it. I love saving taxes, I love making money. I love the American dream and we have this wonderful opportunity to build wealth and grow wealth and just, just have a little more flexibility with our time and enjoy what we're doing most. That's what we're going to talk about today. So I'm going to hit some topics here on the tax strategies you should have known about quote unquote yesterday or that are just absolutely critical before you move forward this year. Then I want to talk a little bit about crypto and take your questions. I am so excited to be here with you. Now on this note I want to mention we have a variety of people attending today. We have business owners that are full time large scale businesses with maybe one to five or 10 or 20 employees. We have those side hustle folks which I love, where you may have a day job and a little small business on the side. And then we've got our tax professionals, CPAs, enrolled agents, financial advisors and attorneys that are always looking for the cutting edge tips that will help them with their clients. So welcome all. Be patient with maybe some basic questions as well as some technical questions. I'm going to do my best to wow all of you. Now let's get into some tips. The number one tip in saving taxes and I'm going to throw down I don't know how many. I'm going to freaking rock it today. I'm going to throw down as many as I can. I've got a multiple lists here. I've been just figuring out what I want to cover. But the number one tax strategy that I have been saying for years is that you've got to have a little side business somewhere in your equation. Now I know some of you are like, well Mark, you don't know. I am so busy. I work 50 hours a week already at my W2J job or I've got, I hate having a small business. You're just Trying to create more work for me, people, hear me out. Put your guard down for just a moment. When you have a side hustle, you're generating additional income that is oftentimes tax free for the first 10 to $20,000 because I've got enough write offs that we can chew that up. So now you're making tax free money that can be used to pay off debt and then used to build passive income. I don't want you to have a side hustle to drive a nicer car, have a bigger house. Let's use our day income if you're married or have a significant other. Let's use our combined income to pay our bills and live within our means. But if you have a side hustle that is the gateway drug to being wealthy, because that side hustle might turn into a medium hustle and then a big hustle. And then you get employees involved, you let it scale and you watch it run itself, maybe. Or you sell the business. Or if you're generating enough cash flow, you're using that to plow money into real estate and other investments that is making you money while you're sleeping. Now I'm going to hit 10 write offs for you side hustles that you have got to be thinking about before you file your tax return for last year. Many of you, they now estimate almost 50 million Americans have a side hustle. I've seen estimates as high as 50% of working Americans, certainly one in three Americans before COVID There are so many people running a little side gig just to make ends meet. I want us to shift that perspective and go, if I'm working so hard just to make ends meet, I need to be making more money with my main hustle or I need to expand that side hustle so that I can use some of those profits so I don't have to work too hard in the future. So here are some of these strategies. Many of you have already got a 1099 from last year. You've been driving Uber, maybe delivering doordash, maybe you sold something on ebay or on some sort of affiliate fee, any 1099 you might get. And some of you are like, well, they didn't give me a 1099. You still have to claim it. You will get audited. It is illegal. It is tax fraud. You think, well, they just paid me cash. I don't have to claim it. Who told you that? Whoever told you that. Handcuff yourself to them when you get arrested. People. You have to claim the income you earn as a Small business owner. And it's okay. I want to give you 10 write offs here that you can use to whittle that 1099 down to nothing maybe. Depends on the amount of income and your lifestyle and where you live and how you're doing it. Okay, let's go through it. It's funny, I was just talking to a financial advisor today that inherited 400 new clients and he's been looking at their tax returns and he said, Mark, 90% of the tax returns I've been looking at have no home office deduction. It's crazy. And he's like, well, I. And he says, I talked to this accountant who was like, well, yeah, well, my client has a day job. They work for a brokerage and they have an office there. So they can't write off the home office. Have you ever heard of the admin office exception which has been on the books now for almost eight years? People, there are so many ways to write off home office properly and ethically, honestly and aggressively. Do not listen to an accountant that tells you the home office is a bad write off. So we're going to do home office. Now. By the way, I've got videos, articles and books on all these topics. I could unpack home office for the next half hour. We're not going to do it. I'm going to give you a list. Number two, cell phone. Such a great write off the IRS rule. As long as I can show I have a separate phone for personal use, maybe even a phone plugged in the wall at home, or I use my significant other's phone for personal. Your phone can be 100% write off. And when I say cell phone, I'm talking about the case, the charging cords, the phone service, anything related to that phone. That is going to be a write off in your side hustle. Now if you say, well, I use it for my home phone too, my personal phone, then let's cut it in half. We're going to take 50% of your cell phone costs. Number three, I want to write off auto. Auto is such a great write off. If you use your auto 50% or more in business and you have to kind of look at your mileage and what you're doing, 50% or more on your auto, you can take actual, which means you're depreciating the car, you're writing off fuel, repairs and maintenance. The rest of the time we're doing mileage. And mileage is great, but you can write off mileage on multiple cars that might be in your household. You write off mileage on your rv, write off mileage on your motorcycle. If you use it for business, it's a frickin write off. Number four, dining. Oh my gosh. I love writing off dining because with a side hustle you're gonna meet with potential contacts, clients, partners, vendors, maybe even with your significant other on occasion. We're not gonna write off Little Caesars every other night, but when you go out to a nice restaurant, what do you do? You talk about business. So we're gonna, we're going to write that off. Dining is a great write off. Do not shy away from it. Number five, travel. Love travel. I was just talking to my son Dylan here. We're headed to Miami for The Grant Cardone 10X Conference here next month. So excited to go. He puts a great conference together. That is business training. We will be riding off that trip. When you go to conferences, when you go to travel and look on your in on your rental properties, meet with customers, meet with clients and partners and vendors. That's a write off. You can write off 100% of your travel and only 50% of your dining. So you got to be on it, which I just love. Number six, I want to throw in kind of these equipment and tools based on the type of business you have. Equipment might entail cameras, tripods, fans, lighting. I'm just looking around my studio here. It may involve drones or anything that you might be shooting social media video with. Also you might be in more of a kind of a construction or service type business where I'm writing off everything at Home Depot. Tools and supplies and equipment and air compressors and toolboxes and all sorts of goodies. So whatever your business is, you're going to be buying equipment over and above what you would be using as or calling typical office supplies. We want to be writing off equipment. All right, the next one that I think is so critical, I'm going to put it right in here now. So I'm going to say family members, I know some of you have kids, some don't. Some of you are single, some of you are married. But the point is if you're helping any family member out financially and it's easy when you start talking about kids, kids under age 18 and over. Age 18, if you have a side hustle and your family is helping you at all, quit paying taxes and giving your kid money for T ball, music lessons, dance lessons or school clothes, pay them for helping you in the business. And it can be very, very legitimate to pay kids as young as 6 7, 8 years old who are doing office cleaning or stuffing envelopes or helping out at the rental properties, picking up garbage or mowing lawns. When you get your kids involved, you're going to take a write off for giving them money. I love it. It's a great write off. And if they're under age 18, you don't have to issue a W2 and they do not pay taxes on the first $13,000, approximately the standard deduction this year in most states. Some states have a lower standard deduction. Lots of strategies there. I've got additional reading material but I want to put family on the list. The next is I want to put medical on the list. Medical is a big deal and a lot of people don't realize you you can write off medical expenses. They think it just happens. Young people are like, well my medical expense is a write off, right? No it's not. You've got to find a way to write it off. The hsa, the health Savings Account. You don't have to have a small business, but the HRA is a way to write off unlimited medical expenses. This is co pays, deductibles, eyes, dental, physical therapy, chiropractic, acupuncture, anything, prescription drugs that all falls under what is called the HRA or health reimbursement arrangement. You have to have a small business to do it and a lot of people miss out on that write off. It's just so, so, so powerful. Now next on our list is I want to just kind of get into. I'm going to stick with the insurance issue because health insurance is a write off in a small business. Also any other insurance policies you might be paying for your business. We want to be looking at your expenses like accounting, legal, insurance. These are all things that are going to come into play in a small business that a lot of people don't realize. Well, I don't pay for my employees so I can't write it off. Oh no, you can, you can. So we're going to look at kind of professional fees and make sure that we're getting a write off for all of those. The last thing I'm going to just throw out for fun and these are top 10. I've got a 25 point strategy checklist of my ultimate tax strategy deductions on my website for free. You can get over to marjay kohler.com click on my download my ebook and it's free. And I know just all you're signing up for is my weekly newsletter where I send you more strategies and there's 25 over there. But number 10 and oh my gosh, it just escaped me. And what was I saying? My number 10 was, you know what, I'm going to just throw down 10 as real estate. I'm going to use real estate. There's so many on my list. Just trying to think of my top 10. Real estate's an important one because real estate is a tax deduction waiting to happen when you talk about depreciation. And so if you have a small business, are you paying rent to anyone else? Could you own the building you're renting? Could you buy a little rental property, a two single family home or a duplex? And when you partner with others to buy a rental, it's just as buying a rental yourself. Don't think you have to be rich to buy real estate. I want you to take that side, hustle money and be buying real estate. Because the write offs that come with real estate are unparalleled. It is the number one asset class out there for building wealth. And I'll just give you two quick reasons why. Number one, you can use leverage. If I take 100 grand, I can buy $100,000 of stock, or I can use that 100 grand and the bank's money and on a 20% down loan buy a $500,000 property. So I could go buy a 4 or a 6 plex for 500 grand, or I could, even though I only have 100,000 in cash, or I could just buy paper for 100,000. Leverage is such a powerful tool in real estate and the Dave Ramsey's of the world may go, oh, you're using debt to buy real estate. Yeah, real estate that makes money. I'm not using debt to buy a new car. I'm not using debt for student loans. I'm not buying using debt to travel around the country on a cruise ship. I'm using debt to make money. Productive debt is very different than credit card debt. So don't go sucked into that argument. Number two, what's awesome about real estate is you can tweak it with small efforts and increase its value dramatically. Just slapping a coat of paint on a rehab can increase the value exponentially. Going into real estate and finding ways to save money can increase the value where if I just buy paper, I can't increase the value of my Walmart stock. I could shop at Walmart, but I'm not going to move the needle. But if I buy real estate, I could stop by there and put in better lighting. I could Paint. I could do some landscaping. And I could increase the value of the property 10, 20%. That's a pretty powerful strategy. So there's 10 that I need you thinking about right now. A couple other strategies I want to throw up before April 15th. Do not forget, you can contribute to a health savings account. 3850 if you're single, 7750 if you're married or head of household. You can contribute to your Roth IRA and that money grows tax free. 6,500 if you're under age 50, 7,500 if you're 50 or older. You put money in a Coverdell. That's like a supercharged IRA for college savings. Huge. If you're a parent, you could do a 401k, a SAP or simple. These are kind of little retirement accounts that you can add on top of an Iraq in your side hustle. So these retirement accounts are super powerful in a side hustle to just throw money into them and get a tax deduction or Roth growth. I probably should have put that down as number 10. But again, real estate was so powerful people, so many options. There we go. Now, I want to mention a couple things about crypto. In fact, I'm just going to have fun here on Siri. How much is bitcoin trading for? How much is bitcoin trading for

Bitcoin?

U.S. 67. $507. Wow. Right. Well, they estimate again, over 50% of Americans own some sort of cryptocurrency. Well, I want to forewarn you that cryptocurrency is taxed when three one of three things happen. Number one, I think you all know this. I buy a Bitcoin for 40 grand, which just a month ago, it was in the 30s. But if I buy a Bitcoin for 30 something thousand a month ago and I sell it for 67,000 today, I pay tax. Right? It doubled in value. I'm going to pay tax. It's called capital gain. Now, if I trade that Bitcoin for Solana, I'm on my Metamask wallet. I'm in Coinbase, I'm whatever. And I trade my Bitcoin for Solana. Do I pay tax? Well, Mark, I don't because I just traded it for another crypto. Yeah, you pay tax when you trade Bitcoin for Solana. It's like a sale. It's like me selling Walmart stock for Tesla stock. Well, Mark, I still own stock. Yeah, but you sold your Walmart stock. Same point. You sold your Bitcoin. Now you have Solana. So whatever you bought the bitcoin for and whatever you sold the bitcoin for to buy Solana, that's going to be taxed. So whether I sell bitcoin or I trade it, I'm going to pay tax. Well, number three, I could take bitcoin and buy something. Isn't it pretty cool? Now some restaurants all over the country and others are taking the bitcoin as payment. At our law firm, we take cryptocurrency as payment. If you want to pay us to do an LLC for you or corporation or anything. State plan structure. So using bitcoin in a transaction is also taxable because it's as if you sold it. You're like, well, I didn't sell it, I just used it to buy lunch. That's selling bitcoin. So how do you deal with this? I know some of you may be freaking out me telling you this because last year you were doing all sorts of transactions in 2023 in multiple wallets or on exchanges. You have to get a software program to just track it. Now, Coin Ledger and Tax Bit are my two favorites. Coin Ledger, I was just logging into it before I started this live, just to make and I was like, oh, I already have a password. So what you do is you can upload your wallet and your transactions into Coin Ledger and it will prepare the tax forms for you and, and tell you exactly how much you owe in taxes for last year. People, the number one question, literally after your name, address and social, your number one question on the 1040 tax return is did you buy, sell or trade or otherwise dispose of any form of cryptocurrency? That's the first question on the tax return. If you click no, that's perjury. You can go to jail. If you click yes, what do you think they're going to be looking for your transactions? Well, Mark, I don't know how to track him. Get the freaking software. So I would recommend Coin Ledger or tax bit. There's 15 others out there. Upload your transactions for last year and do your taxes. That way you're like, mark, oh my gosh, my taxes. I was going to do them this weekend. Yeah, you might have to extend your tax return. It's okay. When you extend your tax return, you actually reduce your chances of an audit. Now you still need to send in what you think you're going to owe, but it's okay, people, if you extend your tax return on April 15th. So you can do it frickin right. It's okay, Now, I'm going to be taking your questions here in one more minute, so. And I know multiple questions are already in the door here. Last thing I wanted to point out here is I know this tax season is extremely stressful, and for you tax professionals out there, during the month of March and the first two weeks of April, I hold a Sunday night pep talk. So in my program, the Main Street Tax Pros, where I have a certification program of over 70 strategies, I teach business building. I have a tax Pro network where I send you referrals, and I don't take a piece of them. We have so much support for our community on becoming a certified tax advisor. It's the best program in the country. No, no one else has the features I offer in this certification program. And I'm a third of the cost of people out there providing less. So please check it out@markjkohler.com the Main Street Tax Pro certification. I'll be with you on Sunday night if you're in the program giving you a pep talk for the upcoming week. And then we do two, three trainings a week to help you succeed as a tax professional. All right, well, let's get into it. Dylan, my studio director, producer, let's answer some questions. Yes, I like long walks on a beach. Was that the first one? That wasn't it. Okay. All right. Okay, okay.

We've got a question From Adrian on YouTube and he asks, do you ever borrow against stocks for investments? The example would be an sb llc.

Yep. Only in my nightmares would I do stocks on margin. Oh, my gosh. It's called a margin account. I do not, do not want to borrow against stocks to trade because they can have what's called a margin call. And if they have a margin call and I'm caught with my pants down or no chair to sit on, think of musical chairs. It is ugly. The super wealthy can do margin investing, but people don't go there. Just buy freaking real estate. It is so much easier to make so much more money. If you want to use leverage, go play around with a single family home down the street from your grandma. Oh, my gosh. You know what? Last night I was at one of my rental properties, casing in the front door and another door in the hallway. I just had. I had some heavy metal music playing. I was. Had my nail gun out and I was just rocking. And we're increasing the value of this property by thousands every time I step my foot in there. And I just, I love working with my hands. Find a rental property do not do margin investing. Dylan.

Next question is From Instagram by JJZ and they ask, can partnerships 1065 deduct the 401k match contributions they make for their employees?

Absolutely, yes. 401k is a. Wow. That's a deep question. Because if you've got employees in a 1065, that means you have a safe harbor 401k and that means you're making a match of usually 3 to 4% of whatever the employee puts in. Well, they can put in up to 3 to 4% of their salary and you'll match it up to that amount. That is a tax deduction for you and your business. I could talk about 401ks all day long. They're great for small businesses. Get over to my podcast, the Main Street Business Podcast, and the directed IRA podcast. I have two podcasts twice a week that will frickin rock your world on that topic. Thanks, jj.

Next question is from Hard Rider for Life on Instagram.

Man, I'm loving that. Are we hanging out this weekend? Hard Rider for Life. Bam.

They ask, if your kid is receiving an FAHSA, what's the most you can put on their 1099?

Well, if they're receiving an FAA HSA.

FAHSA.

I've never even, by the way, I write books on this, I've never heard of an fahsa. Is that a company fahsa? Oh, you mean a flexible spending account. An fsa. FSA hsa. Okay, so all right, the question is, my child was getting a flexible spending account. What's the most you can put on a 1099? All right, now this is a great question because I can tell this listener is onto something that is super important. Okay, if I own a small business and my kid's 18 or older, because you would not do this with a kid under age 18. So if this caller is asking about paying my child that's 18 or older in my business, that's what this question's about. If you own a side hustle, small business, large business, whatever, and you've got kids 18 or older, if they're serving on the board of directors, helping with social media, helping stuff envelopes, go to workshops, come by the office, whatever you can, 1099 them. Let me see what the limit is. 3 billion. No, I'll say 2.8 million. You can pay them whatever they earn. You can pay them whatever because they're working for you. So you're going to give them a 1099 for the services they're providing. You might pay one kid five grand, you might pay another kid 50 grand. Now, whether or not they have a flexible spending account at their day job or whether or not they're putting money in their HSA health savings account, which means they're not a dependent of yours, the questions you ask are really convoluted there. But you can 1099 your children for whatever freaking amount they earned that you can justify. Now, I don't want you to pay them more than they earned because that comes out of your pocket. Now here's another point for those of you asking questions that you're like, man, I just want to. I need a tax advisor that knows what the hell they're talking about. Please go to. I make no money on this. You can interview 10 different accountants if you want, but go to marchacoler.com to my tax pro network. It's right at the top in the menu bar. When you click on the Tax Pro network, you're going to see hundreds of certified tax advisors that meet with me weekly that speak Mark Kohler. So I'll give you my best answer right here based on limited facts. Go there and interview. Find a tax advisor, young or old, male or female, east coast, west coast, big firm, small firm, don't care, speaks English, speaks Spanish, speaks whatever. Go to my network and find an accountant that can help you. They're not going to be. You can check their pricing out from low to high, anywhere in between. Dylan, next question.

Next question comes from RJ on YouTube and they ask, can a sole propriety proprietor or S corp have a solo 401k and 401amoney purchase pension plan to double up on contributions per year?

Yeah, you can. The weird part is a 401A is provided by nonprofits. So this means this caller is working for a nonprofit and getting a 401A and then they're going to do a side hustle and do a 401k right?

Dylan?

I think that's what they're saying. Let's go to the whiteboard. I want you guys to see what I call the trifecta. Now, we do this for all of our clients. For any of you that want to do a consult with one of my tax lawyers, we do consults with clients across the country every day. I have 14 tax lawyers doing four calls a day minimum. They'll meet with you on Zoom and build a plan for you affordably. Our comprehensive consult to build a plan is around 1700 bucks. And if we don't save you that on that call, I want to give you your money back. I'm going to talk to you, find out how they didn't save you. I've never had to give my money back, and I would if I wasn't going to wow you. But for you, everybody, you need a trifecta in your own world. Okay, so in this situation, someone's getting a W2, and it's coming down to their 1040, which is also your revocable living trust. At the end of the day, they're on this W2. They're. They're getting a 401A, which means they're working for a nonprofit. No one owns a nonprofit, so maybe they work for United Way or whatever. But this client or caller here also has an S corporation and a side hustle, so they're making some money. All right, that's cool. They're going to also fund a 401k, which is called a solo 401k, just for small business owners. Can you do both? Yes and yes. And it's freaking awesome. You want some better news? You can also do a Roth ira. You can do all three people. This is how they get rich, get richer. I am behind the paywall. I am teaching you strategies that only the rich know. But the rate for me per hour in Wall street is over $1,000 per hour. That's what tax lawyers make. With my experience, it's off the chart. But I'm dedicated to the small business owner. I love Main Street America. You're going to see me in 2025 in an RV going across America into small business owners and to town halls, helping the small business owner. And I love you. So these strategies and you being here today is going to change your life. You've got got to start soaking this up. Please sign up for my newsletter, attend my workshops, come check out my podcasts. It will impact you in ways I can't even describe. Dylan, Next question. Whiteboard off.

Next question comes from Scott John on Instagram, and he asks, can you write off a home office if you rent an apartment?

Yes, Scott, you can. Absolutely. Let me tell you guys a funny case. It was in San Francisco about 10 years ago. A woman was a tattoo artist and she had a flat apartment and she was a renter and she rented this apartment and she ran her tattoo business out of her apartment. Now, does she get a home office deduction? Absolutely. Whether she's renting or buying the home, if it's used partially for business, think of a hair salon, a tattoo artist, a financial advisor, whatever. If you've Got an office in your home, you get to take a tax deduction. Now, if you're paying rent, you're going to be able to write off a portion of your rent. If you own the home, you're going to write off a portion of the mortgage interest, the hoa, the property taxes, blah, blah, blah. So the interesting part about this case is this woman tried to write off 90% of her apartment. And so she was writing off the bathroom, the kitchen and whatever. And she was like, hey, when I'm in business, everybody comes over to my place. They're hanging out in the kitchen, making sandwiches. They're using my bathroom. I sleep in the front room. This is not my home, it's my business. And tried to write off 90%. Well, of course, the IRS is like, it has to be exclusively used for your business. If you're sleeping in there and using the bathroom in the kitchen, those are your personal spaces. You can't write that off. Now, they did allow her to write off about 40% of the apartment, which was pretty aggressive already. But see, the moral of the story is pigs get fat and hogs get slaughtered. She was too aggressive. So I want you writing off home office, but let's not go over the top. So be careful. But yes, you can definitely write it off when you rent an apartment. Next question.

Next question comes from Will Wright on Instagram. And they ask, I'm moving from Vermont to Tennessee soon, which doesn't allow LLC domestication. What's your advice on transitioning my entity, also selecting to a new state without changing my ein credit history, etc.

Well, this is a gray area for those out there. What they're talking about is if, talking about is if I, in fact, we had someone just walk in the office just here a moment ago before the studio started today and is moving their business from Tennessee to Arizona. So Arizona allows for domestications. So I can dissolve in Tennessee and domesticate in Arizona. So it's kind of like my entity just moved from one state to another, but I kept my tax ID number, the IRS doesn't care, and I'm off to the races in Arizona. Well, in this example, when they go from Vermont to where, where they're going to Vermont to where I couldn't remember the second state, they were saying they don't allow for domestications and that that happens. There's a handful of states. If I had my paralegal on the line, Christy Rice, she would tell me, just don't allow for domestications. Here's the workaround. What I do is I set up a new LLC where you're going and I don't get a new tax ID number. I have. And this is, you know, in fact you could definitely, if you want to check all the boxes and do this right. It's called a reg. D368. A368 type D reorganization. So what you would do, I know I don't want to sound too technical, but basically what you're going to do is take your entity in the one state you're at now and set up a new entity in the state you're going to. Did you figure out where they're going from to Vermont. To where or to from? So where to Vermont? Tennessee. They're going to Tennessee. From Vermont, Vermont to Tennessee, Vermont to Tennessee. So what you would do is set up a new Tennessee entity owned by your Vermont llc. And I'm going to keep the same tax ID number because it's a wholly owned subsidiary. And then I go to Tennessee, I can dissolve the parent company and just keep my Tennessee entity with the same tax ID number. And it would qualify as a reorganization because I have uniformity of ownership and uniformity of business purpose. Nothing changed. I just had two entities. I got rid of one and I lived with the one in Tennessee. Now, I know that was a complicated answer, but if you talk to one of my tax lawyers at my office, we'll do the transaction for you. We'll set up the entity where you're going and do it right. People playing around on LegalZoom when you this is new and something you don't do every day, you're going to jack it up. We literally have paralegals that provide a service fix my legalzoom entity.com and LegalZoom is great. They do a great job if you know what to ask for. And we'd like to have a relationship with you as a real lawyer that you get the same lawyer every time that's helping you affordably around the country. Get that consult. Let's get your entity moved. The bottom line is no new ein new entity in Tennessee. Close down the one in Vermont. It can be done. You just gotta follow the right steps. Next question.

Dylan, Next question is on YouTube coming from mutant P and they ask what percent of side hustle income is the lowest, safest amount to not get audited?

I hate this question. I would say 2.5 million. Make as much freaking money as you can. Don't worry about getting audited. Seriously, Mutant pee people, are we going to let the IRS dictate how much money you want to freaking make. Because I'm afraid of making too much money because the IRS is going to audit me. You know what irs? They're not going to. My last phone call with the IRS was one of my most pleasant phone calls in the last month. They're not there to screw you over. They really aren't. Go make money. Take valid write offs and kick ass. Seriously. Don't stop making money because you're afraid of something. Don't stop in making money because your mom or dad or family isn't supporting you or you've got a terrible spouse that is terrible and mean to you or because you're worried about the IRS or you're worried about this. You go out and be the best you can do and be and make freaking money. I'm going to write off everything we can under the sun. Now, you want to know a strategy here? Don't do a schedule C. Don't, don't do a single member llc. Graduate to the S Corporation. You reduce your chances of an audit by 1500%. 15 times less likely of an audit to go to an S Corporation and make as much money as you freaking can. So Mutant P. Don't ever say those words again. You go out and kick ass. Make as much money as you can. Scale up with the right entities as you grow and we'll be there with you. And if you get audited, bring it. Bring it. Because we're going to not take write offs that aren't legitimate anyway. I'd love it. Next question.

Dylan, Next question comes from Tina on Instagram. She asks weird question. If part of your small business is is social media and I have to continually buy a lot of makeup, is makeup a write off?

Oh, I love this. I actually had this question of me with my internal team the other day. They were like, mark, can we write off your new clothes or some hair and makeup? I mean, this doesn't happen naturally. I mean this takes a lot of work. So. All right, here's the deal. It's a gray area in the area of YouTube personalities nowadays and social media. Okay, here's the, here's the rule. And believe Elton John and Liberace cleared paved the way for us. So back in the 70s, Elton John would go on stage with these just crazy outfits and glasses and big shoes and outfits and yada yada yada. And he took a tax deduction for this clothing and said, I'm an entertainer, I had to buy that. And the IRS said, disallowed. You can't write off clothing. So over the years and starting with those cases, entertainment there was, it became an entertainment exception where if I'm an entertainer or I'm an actor or an actress, then I can write off my hair, makeup, nails and clothing that I use as an entertainer. Well, when those laws were passed and those cases won, the Internet did not exist. The Kardashians did not exist when those laws evolved. So now we're dealing with people, even me. I've got 400,000 subscribers on YouTube. Do you think I need to look good on YouTube? Sure. Can I write off my hair and makeup and clothes? Am I an entertainer? Do I get to that level just being on the web and on Twitter and Instagram and TikTok. There's not been a case yet. Now you can be a pioneer and you can say I'm going to write off all my clothes, hair and makeup. Because now if you were, if I was doing your tax return and you showed me that you're making 100k a year and you're seriously making bank on your social media and that is your occupation and you gotta freaking look good on camera for you for social media. I'll take the write off if you're like, Yeah, I have 4,000 followers and I made you know, 982 cents last month on you know, my YouTube ad rev. Now I'm not writing off to fricking clothes because you got a day job. But if your number one job is being an influencer on social media and you gotta look good, I might bite. I might take that get with a good accountant on my network. Next question Dill.

Next question comes comes from banks on Instagram and they asked Spanx.

I love Spanx. Amazing.

Oh, they asked start an LLC but never did anything with it for the past two years. Do I still need to file a 941 and a 940 if I have no income or employees, I will also throw out that somebody else asked if they need to report anything to FinCEN.

So I'm just kind of you betting two different questions. Questions for any of you out there that have an LLC or a LLC taxed as an S Corp or an inc. You know, ABC Inc. ABC llc. Now if you don't pay yourself a salary, if you don't have employees, you do not have to file the 941 and the 940. Those are payroll forms. You only have to file the payroll forms if you have payroll. Now I'll tell you if you have an S corporation there's at least one employee and that's you. So you're going to be doing the 941 and the 940 if you have it. LLC taxed as an S Corp or an inc taxed as an S Corp. But first and foremost, if you have an LLC that's not doing anything, you do not need to file payroll forms. And you can't even do payroll in an LLC on yourself anyway, so you're okay. Now, part two, we have what's called FinCEN and the BOI, which is the Business Owner Information Report. And FinCEN is the new sheriff in town and we are so excited about this. This was a law that was passed three years ago and it went into effect this year in 2024. This is the Financial Crimes Enforcement Network. Financial Crimes Enforcement Network. It's the sister to the IRS or the brother. I don't know who the sister or the brother is. But anyway, FinCEN and IRS both are organizations under the Treasury Department. Now, the new law says that every freaking LLC, unless you get an exemption under 23 exemptions and good luck. I don't even imply I'm not even in one of those. For all small business owners, essentially you have to report by the end of the year your social who the owners are and who the managers are. Your home address, your picture of your driver's license, the ownership percentages, everything. You've got to report that on this boi. This was just challenged in Arkansas Supreme Court a week ago and people are talking about, well, Arkansas shot it down, but only for the people, the plaintiffs in that case. The Supreme Court has not chimed in on this. This, this is the law for 2024. And if you do not file the report, every LLC for you and me, small business owners, the penalty is $500 a day or two years in jail starting January 1st. So you've got all year to get this done. We're already filing hundreds of these at our office for clients. So if you want to get to kqslawyers.com or mainstreetbusinessservices.com, we'll take care of you. It's down in the description, but everybody has to do this until the Supreme Court says otherwise. So get it done. Everybody has to. But don't worry about the payroll forms. Dylan.

Next question comes from Gene on Facebook and they ask, as an S Corp, is the employer contribution 25% of salary and owners draw combined? If I want to max out my Roth is the minimum salary, I can have 69,000.

Okay. I wish I had my calendar. Do we have an extra one laying in here? I don't think we do. Okay. All right, let's go. Whiteboard. Deal. All right, so everybody, this is a great question. The first question was if I have an S corp and I do a solo 401k, all right, you as the owner. So let's say this is you down here, 100% revocable living trust. 1040, you get to put money into that 401k first with your deferral or your contribution we'll call it now it's around 20 grand or so this year. I'm just going to say let's keep it simple. It's 20k because some of you are still doing it for last year. Let's say it's 20k approx. Then the company can do a match and the match is 25% of the W2 that you take out of the S Corp. So you get the match plus the contribution. Pretty powerful. You can also do a non deductible contribution and you can get up to at least 70 grand or more inside this 401k and take a tax write off for it. It's crazy. So, well, I should say a non deductible would convert to a Roth, but I'm going to say this is called the Backdoor Roth and we have our wealthy clients all day long doing this. So you get two pieces, A and B. Now next you can add a Roth IRA to the mix. And the question was, well, I make too much money, right? No, there is no income limit because you're going to use what's called the Backdoor Roth strategy. Backdoor Roth strategy. And if you just Google that or YouTube it and put the name Kohler, you're going to see videos and articles from me on how to do the Backdoor Roth. There's no income limit. Do not worry. You do not make too much money to do a Roth. So you can actually do all three pieces. You can do a contribution, a match and a Roth. Incredible. And this is all part of the mega backdoor Roth strategy that I've been teaching for years. So I know that sounded technical, but it's an option for some of you that really want to put away a lot of money.

Dylan, next question comes from Vic on YouTube and he asks, I have five rentals in an LLC. Soon 10, can I set up a separate LLC or LLC to pay myself to manage these rentals and then set up an HRA to deduct all medical expenses?

Okay, so if we go to our whiteboard, this is part of our trifecta. I didn't even think you were going to go to this question. So there's so much here. So let's just assume it's one LLC with five rentals. Okay, one LLC with five rentals. Now, I don't know if this client has a W2, if they have a side hustle, if they have an S corp. These are all going to be questions that are going to play into the strategy. So I'm not going to worry about it. I'm just going to answer this question in a vacuum. Was it J.J. says Vic. Okay, so Vic says, can I set up an LLC over here and let's get rid of all this. He says, can I set up an LLC over here and have it manage my properties? And he says he's going to buy five more rentals.

Oof.

Vic, you've got. You've got to meet with one of my tax lawyers. It'll save you thousands of heartache down the road. How many LLCs do you need? I was gonna even go there. That's where I thought you were gonna go. And what state are you in? And I'm not saying you need an LLC for every rental, but you gotta have a strategy for 10 rentals. Definitely don't want them in one LLC. And I definitely don't want 10 LLCs. You gotta find a balance. So that's an asset protection question. Also, I wanna make sure your revocable living trust owns your llc. Do not worry about the mortgage due on sale clause. Banks want you to have protection. So the LLC is going to own the properties on title. And how many LLCs? I don't know. Mortgage. Mortgages are going to be okay. We've got to have lease agreements in the LLCs. There's so much asset protection here, I could take an hour. All right, but Vic is saying, well, I'm going to set up an LLC to manage all my rentals in. My LLC is going to pay a fee for this and then I'm going to create a health reimbursement arrangement and write off all my medical expenses. In this process. Now if you're not married, now, I'm assuming, Vic, you're married because basically what you do is you hire your spouse and give him or her an hra, which includes you. That's kind of the backdoor strategy if you're not married. This is going to be a C corp, so we can do an LLC with a C election, then we can add the HRA can you do this? Absolutely. Do we do it all the time? Yes. Does it look exactly like this? It depends. It depends on the client, what they've got going on, their future, their plans, their marital status, their income. Is it the best strategy? It again, I've just got to look at your whole picture, but I want to answer, yes, you can. You can do this management company with a fee for an HRA. Please work with a professional. Check out kqslawyers.com and meet with one of my attorneys. You'll love them.

Dylan, Christy from YouTube asks, what are the first one or two things a new CPA should be asking their new clients?

Oh, wow. How are you? How do you feel? What are your plans? Heaven forbid a CPA gets to know you. Was it Christy? Christy, I love your question. One of the biggest things I try to teach in my program is for CPAs to build a relationship. We literally have a Main street life coach that teaches at our conferences, Patty Campbell. She teaches on all of our trainings on how to build a relationship with your clients. So powerful. So Christie, if this CPA is not trying to build a relationship, I'm concerned. Number two, they should be looking at your prior returns and coughing up. They should do an onboarding. I teach all my CPAs. They should do an onboarding. Comprehensive consult with over 40 strategies. I give them the checklist. They come up with anything they can think of to write off, get better write offs. We're looking at asset protection and privacy and estate planning and wealth building and get out of debt. The there's so much. So my CPAs are trained and enrolled agents and accountants as a certified tax advisor and you don't have to be a CPA to do this. Some of you that want to build a business in the accounting world, join my certified program. We'll get you as an EA and a certified advisor within months. Love universal accounting and what we're doing with them. So Christy, there's so much they should be asking. Do some onboarding. Sorry. Do some discovery calls. So what I teach my network is to do discovery calls. Go to markjcohler.com click on the Tax Pro Network and sign up for two or three discovery calls and meet some accounts. They should be very, very much Mark Kohler esque, asking you questions and building a relationship. I hope that helps. Christy. Maybe one more question, Dylan. Or two? Two more.

All right, next or second question here. Jessica asks on Instagram nurse wants to buy a home and start an assisted living facility. Can I claim real estate pro Status for tax write offs while running the business? Or should I rent it out and not manage it at all?

First name again?

Jessica.

Jessica, no and no. So let me just say this, Jessica, first of all, I love what you're doing. I have so many clients. I've helped over the years build assisted living homes where they get the license for just the home. You may do four beds, eight beds, whatever rooms you may align with an investor who buys homes for you and your license allows you to run beds in multiple homes. So many different variables. The assisted living business is incredible. And with you being a nurse, I love where your head is at. But you're not going to be a real estate professional and that's okay. That's okay. Buy the home, own it. Okay, here's what it would look like on a trifecta. You might buy the home over here in your LLC and your trust owns it. And then you in your S corp run the operations. So you are doing the assisted living operations and you're paying rent to yourself. This is called a self rental. You don't have to be a real estate professional under the self rental dash four election. It's an incredible loophole. But all of my CPAs enrolled agent tax advisors know this. So you'd be a self rental, giving your operational entity access to use this building for the assisted living. It's an incredible write off. And you don't have to be a real estate pro. Then you're going to go out and call me and Dylan and go, hey, I'm building another home. Do you guys want to be a partner? Yeah, we'll own 50%, we'll set up the home. You can own 50% and you're going to pay rent from your S corp. Yep. Done, done, done. And I have clients that build up a whole portfolio of assisted living homes and some they own, some they don't. And you run the operations through your S corp. So Jessica, I love where your head's at. You're overthinking it. Don't worry about the real estate professional. Kick ass at what you know, make some money. Talk to one of my lawyers and get in a consult. Last question, Billy.

I wanted to ask this question because this actually came up in the main street tax pro call today and I thought that this was really fascinating. So Got Soul 91 asked, should you purchase a Cyber truck or a Tesla under its own LLC or under your own business?

There's a third option under your own name. So let's stick with the trifecta. So if you're going to buy a cybertruck. By the way, I'm on the list for a dual engine cybertruck. I've got my number and I, I'm about a year out still. Okay, so let's see. Can we draw a cybertruck, right? Or super cool, whatever. So here's my cybertruck. Here's the goal. You want to write off the cybertruck. There might even be an electric car tax credit for business owners. There's no income limit, so this is a great deal. So not only are you getting the tax credit, you almost. You also would be getting depreciation. And they're just, the write offs are great. So the question is really three options. So let's say you have a business and one of the rules is you're going to use this cybertruck in your business for 50% or more for business. The other 49% is personal use, at least, at most. Okay, so at most, okay, so that now unlocks the ability to write this off. So the first test is you got to show it's at least 50% business, which means that's not commuting, that's not going to the lake, going camping, that's business meeting with customers, clients, running errands, blah, blah, blah. All right, so number one, we've got business use figured out. The IRS really doesn't care who owns it. The entity could own it. You could set up a separate LLC and it could own it. So we'll call this number two entity, or you could own it directly. So I'm going to say. And I'll put it in red. Dylan, what do you think of that? Let's put that in red. So you have option one, option two, or option three. Well, I'll tell you, from a tax perspective, it does not matter. I don't care. From a tax perspective, the IRS doesn't care. All they want to be able to prove is that you used it 50% or more for business. You got to be able to prove that and you get the write offs. From an asset protection standpoint, this is the worst because if you own it personally and there's a lawsuit, you're just relying on the insurance policy. So if you could own it in the entity, that would be great. But the problem is there, if you're doing financing, the interest rate can be more. It can be a pain to close in the name of the entity. So this is ideal. But it can also be a pain if you're not going to buy the car with cash because you've got a loan involved. So this one setting up an entity just for your cybertruck. Freaking a one in a thousand I've done. It's just so not common because it's just now if you have a luxury vehicle like you've got a Ferrari or a McLaren or some crazy Audi and you want to have a collector's type llc, I'm sure Jay Leno owns a lot of his cars and entities. That's cool. But that's not you and me. I just don't go there now, especially for a one off cybertruck. So if you can have your entity own it, that'd be ideal. But it's still okay if you own it and just have good insurance for IRS purposes. Doesn't matter for asset protection. Ideal. So hope that helps. All right, well everybody, I'll be here next week. I will. Don't give up. Build that side hustle. Build that side business. Buy rental property. Invest. Get out of debt. It's not a get rich quick scheme. The American dream is not get rich quick. It's hard work with an incredible payoff. And I just love it. And I love you and I love the community. Please continue to watch. Hit the bell icon Follow Share and when I go live, you're going to get a ping. Please get over to my website, markjkohler.com you can get to the law firm from there. You can get to the TaxPro network from there. And for you tax professionals, you can look at the certification. You can do a free demo, meet with one of my salesmen and just go through a demo. It'll rock your world. Our satisfaction rating is off the chart. Please everyone, be back. Come back. I'll see you next week. For Alive. Sign up for the newsletter and keep living the dream.