Think Twice Before You Trust Your Banker

You, your business, your wealth, your side hustle, people. You've got to be careful trusting the banker too much and giving them too much information. Now with the SBB bank crisis and others, I know all of us are a little concerned about what to do with banks and we'd like to sometimes take all of our money and put it in a mattress. But we can't go to the other extreme. We need banks in our lives. We just need to know how to deal with them there. And I'll give you a spoiler alert to my message today. They're on a need to know basis. Now I'm a tax lawyer, small business tax lawyer. I love my Main street clients around the country. We've got a law firm, we're trading certified tax advisors around the country. We've got a trust company where I've written books and podcasts and YouTube channel. All that to help spread the good word that the American dream is alive. We can build a small business, build our wealth and control more of our, more of our financial future. But we got to use banks along the way. So today I want to give you some things to worry about when you walk into the bank to set up accounts and how you should better manage some of your accounts to protect your wealth, make doing business easier, frankly, and leave you with five tips, takeaways of what to do based on, gosh, the whole SBB crisis and the in some of these banks that are really struggling, we've got to have a plan. And so I'm trying to be a little politically correct here too. I don't mind swearing a little bit or getting mad or throwing down a hammer on the gov or some political party. But I'm going to do my best here to just make sure you and I, no matter where you're at in the country, no matter what political persuasion you are, we all need to control our wealth, make more money and save it, and just live life a little bit more to its fullest. And that's what I'm all about. So I'm here for you. Please type any of your questions that are related to this topic today in the chat. I'm not going to go too far off the topic. We won't be here long. I want to get right to it, but I want to talk about your small business. Some of the efforts you might be doing, trying to do banking and, and transact whether it's credit card issues as well. I want to talk about that. Please ignore any posts in there that have anything to do with some bitcoin scam or whatever. I am not posting in the chat. I'm just looking for good quality questions. None of you should give any of your information out to anybody trying to scam you or call me or DM me or whatever. Just ignore all that garbage. Hopefully someday we, Facebook will find a way to get rid of it. All right, welcome everybody. Glad you're here. Let's hit it. Now, here's why banking matters. And I'm going to go to the trifecta. I want to use the whiteboard to try to help explain some of this. And many of you have seen my trifecta before where I, I show how we'd like to organize a client's life from a structural perspective. Are we able to go to the whiteboard? Okay, because I want to make sure everybody, all of you, can understand this concept. So when I talk about the trifecta, banking is a huge part of this, so pay attention. The foundation of your overall plan is your revocable living trust and frankly, your personal bank account. So this would be your personal bank account. Now, if you're married, you might have this times two. You might each have your own whatever, it's fine, not a big deal. And then we're going to divide your life in half. And over here is going to be your operation side, and over here is going to be your asset side. Now, the concept a lot of people freak out about is, well, Mark, I want it simple. I don't want that many bank accounts. And as I start to diagram this, some of you might have some concerns. In fact, take me off whiteboard. Let me point this out. Pay attention. Wouldn't it seem easy if I didn't. If in my bedroom I didn't have chest of drawers or cabinets or any sort of armoire, I just could walk into my room and just throw my clothes on the floor. Wouldn't that sound great? Super easy. Some of you might have a teenager or remember when you lived that way. Some of you may be living that way now. Well, it seems like it'd be super easy. All my stuff's right there. I don't have to buy cabinets. I don't have to put things in it. I don't have to fold them after doing laundry. But guess what? Those drawers, those cabinets, that armoire sets you free, right? Because when you need to find your socks, you go to your sock drawer. When you need underwear, you go to your underwear drawer. When you need a T shirt, you go to your T shirt drawer. By having more drawers and cabinets, you make Your life easier and you don't. And we grow up realizing that actually furniture in a bedroom is a good idea. Maybe between age 18 and 21, we sometimes figure that out. Okay, bank accounts are the same way. I don't want you to have one bank account in your life. And you're running your business, you're running your Apple Pay and your Venmo. You're picking up rent in your rental property, you're saving for taxes here, you're trying to save for the future, all in one freaking bank account. Sounds like it might be easy, but no, it is a train wreck. Right? We don't want to do that. All right, back to the trifecta. So over here, some of you might have an LLC for a little side hustle. Let's just say I'll put side hustle here. And some of you have already graduated to a little larger operation as a small business owner, or you have your S corporation and. And some. Which is where I want all my clients that are making more than 40 grand a year net in their small business, we're going to transition and make that LLC an S corp or whatever. And the same, you may have business partners. Like you might have a partnership, like in. Like my law firm. I have a law firm and I have a partner, Matt Sorenson. Here's his S corp, here's my S corp. And yeah, size matters. So anyway, you might have partners with their own S corporation, your S corp, and then you have a partnership up here. All right, now over here, I might have an LLC with a rental property. And these might be my Arizona rentals. And then, oh, I've got my Florida rentals over here. And so I have two LLCs, because I want to keep separation in this situation. And then, oh, over here, I have a Roth IRA and my brother's traditional IRA. And we took our two IRAs and we formed an LLC and we go out and buy and sell notes. Or we might be doing a little crypto, or we might even have another rental property over here. And so things are adding up. Right? Okay, so if I change the color, where does banking come into play? Now, this is a trifecta. This is a very kind of common structure. I want to get my clients organized. Well, here we have bank account, number one, your personal bank account. And let's say if you're married, you're going to share a bank account. And then, oh, I have a bank account here. Number two, for those of you that are running an LLC for your side hustle, or if you've graduated to the S Corp. Then we'll keep the same bank account. When you transition, you keep the same ein. Same bank account. Oh, but I have a partnership, so that's going to be bank account number three, because we're going to collect revenue, pay bills out of that llc. Now Matt Sorenson over here, he's going to have his own bank account. That's cool. And then, oh, I have an LLC for these rentals. Okay, there's bank account number four. And then, oh, this LLC for these rentals, bank account number five. And these different LLCs are going to collect rent and pay mortgages and all that. Oh, and then I have an LLC over here for my Roth and IRA structure. So that's bank account number six. And then, oh, I want to make sure I'm saving enough taxes from the revenue I'm making in my small business. So I'm going to open up a bank account over here. And. And this is my tax savings account where I'm just going to put a little money every month for future tax savings. Some people ask Mark, how much money should I take out of my side hustle and set it aside for taxes? Because no one's withholding from me. So that's a good little bank account to have. And then finally, we've been listening to Dave Ramsey and we're like, we got to make sure we have some cash reserves. So I have another bank account over here that's just cash reserves. Now, could we even have more here? Oh, yeah. I'm going to have my kids have a bank account and I'm paying them out of my business, and so I got to run money over there. So there's number nine and, oh, I have two kids. So there's number nine and number ten. Boy, if I'll tell you right now, if I showed you my Wells Fargo app with all my accounts, you'd see this sort of thing. Okay, now, is this a bad thing? No. So the rest of this conversation, when I talk about telling your banker what they need to know, here's an important point. They don't need to know all of this, only you. You're going to go in and maybe set up a new bank account. Let's go blue here. And you're going to go in and set up a bank account here for another side hustle, let's say, or another operation. Maybe it's a single member llc. Maybe it's just a dba. And you're going to go open a new bank account. This would be number 11. You don't need to tell your banker about the other 10 bank accounts. You keep it simple and I'm going to give you a list of things that you want to walk in there. But. But asset protection is all about keeping separate bank accounts too. Because you don't want to commingle your money that you're using to go get groceries and underwear with your rental property, with your S corp that you're getting Venmo for providing some consulting. You start putting that all in the same account and you get into a lawsuit. Lawyers will plow through it all. They'll get anything any of those entities own because you haven't respected the separation. So back off whiteboard, please. So we're. Thanks. Patrick, my studio producer, he's awesome too. We. So what we want to do is realize that bank accounts are there to we need to use and then we're going to put strings on it. We're going to be very careful. So when I go in to open a bank account, I want to give you some of the things that you really want to just be clear about giving them is simply the articles of organization or articles of incorporation. Keeping the purpose simple. I sell online, I do this, I do that. Some bankers are like, well, what do you do? You don't need to know. I clean houses, you know, or. And if you start mentioning the word crypto or maybe you've got, you're doing a marijuana project or anything that sounds a little hazy, the bank's gonna go reap, reap, reap. And call New York, right? And they just freak out. In fact, I have an example of this. I was, it was about two months ago, I was going in to set up a new bank account for an. My Roth and my Health Savings account. So my Health Savings account and Roth, we're doing an llc and I'm, I'm going in to set up the bank account and I, I go in and I'm like, here's the articles, here's the ain, here's the operating agreement. And he's like, well, Mark, who's the owners of this? Doesn't matter. Doesn't matter. There's the articles, I'm the manager. There's the ein. Set it up. I'll be back. And it was all I could do because I've been there before where I'm getting sucked into a two hour conversation. I want to see the operating agreement. We better call Chicago and make sure it's okay that your Roth IRA owns part of this llc. And you know, no one's Going to lunch. Lock the doors. This guy's trying to open a bank account with an IRA. I mean, it's like DEFCON 4. I'm like freaking A. And you know what the problem was? I opened up my mouth, I said too much. Keep it simple because they're going to make your life hell trying to do it. I could go buy a cell phone faster. You know how bad that is, right? I'm going to be in line at the DMV or the bank. Choose one. So we don't want to go there. So you go in with your articles, your ein and a copy of the operating agreement. Maybe I don't even like to take the operating agreement. I, I want the articles, the ein and the minutes. And when we set up an LLC for you at our office, we give you what's called a bank packet. And the bank packet is exactly what the bank needs. And if the bank starts to give you crap and says we need more, say, okay, I'm sorry, if you think you need more, I'm going across the street. Because B of A. Chase, Wells Fargo, whatever name, whoever you want, they don't need all this. Do you want my business or not? Remember, you're the customer, you're the captain of the frickin ship. They work for you. So keep it simple. And if they start to push, say I'm going somewhere else. Now for those of you that love credit unions, there's a little bad that comes with the good. If you're a firm believer that credit unions are, you know, a gift from God, you're going to buckle up, have to buckle up for more disclosure. Because credit unions just have different rules, different laws and they drive me nuts. Not that I don't love the fact that they're for the people, owned by the people, right? But oh my hell, online banking can be more challenging with a credit union. Just know what you're getting into there. So now next, when a bank tells you no, I had my daughter and her husband. It was really an interesting story. About a year and a half ago, they were going in for a bank loan and they went into the bank, sat down with the little banker and they said, we want to buy our first house. And they, they were doing a rehab, little rental property and personal home. Love. They were doing such a great job. I was so excited. And they went into the banker and the banker's like, yeah, well we got to have two years of bank statements and pay stubs and this and this and this and this and totally blew their dreams. They Were just so dismayed. They walked out and said, well, I guess we can't get a house for two years. And they came and told me. And I'm like, whoa, whoa, whoa. Who said this? What bank or where? Well, the problem isn't the bank, the banking system. It's that bank. I want you to go into a different bank tomorrow. I'll make a call for you and tell them you're coming over. Went to a different bank within 15 minutes, had an application filled out. They rolled out the red carpet. They got the loan they wanted. People, just because your bank says you can't do it doesn't mean another bank can. A lot of people walk into a bank and they'll tell you, well, this is the rules with. Amongst all banks. You know, this is the way they do it, and this is the way we do it. So you either do it here or you're screwed. You say, you know what? I'll take that under advisement. And you walk out the door and you go shop it. Whether you're trying to get a loan, a certain type of credit card, a certain type of bank account, and again, be careful telling them who the owners of the LLC are. If you have an IRA or a 401k involved, keep them on a limited to no basis. And if they start to give you crap, you tell them you're going somewhere else. If they want your business, they'll start to figure it out. All right, now let's go back to the trifecta. If we could. Everybody, I want to point this out, and I'm going to put maybe another color here. I'm going to do it in green. Green for money. People, I really want to encourage you to have a tax savings account that you're setting aside a little money for taxes, a cash reserve bank account where you're setting aside a little money for an emergency. And now we still have credit cards. Dave Ramsey will say, cut up all your credit cards. I say, hell no, keep your credit cards. Use them for $50 once every three months, pay off. We do not want to rack up our credit cards. But your credit cards give you credit. And your credit is going to help you buy these beautiful little rental properties up here. And we need to buy rental properties. We want to build wealth. And so if I can buy rental properties, I'm going to need. If I want to, I'm going to need my credit. And a credit score is a good thing. You're going to need the bank, and so don't discount it entirely. But these accounts for kids. And all these different structures are just really, really important to have money set aside in different drawers, if you will. Okay. If you can pull me off a whiteboard. Okay. Now one last thing here on this topic. There we go. The five things. What to do since the Silicon Valley bank I don't Meltdown that the government came in and saved thanks to the investment bankers making a run on the bank. Thank you very much. I want to give you five things to do and lead it off with this. Don't worry about something you can't control. And if the country is going to go into a major bank crisis, it is. You can't change that. I don't even think a senator or a House of Representative or even maybe the White House can stop that if it's going to get that bad. It's going to get that bad. Run your life with these five next tips that I have and don't stress yourself out so much. And then we're going to get into your questions here. Number one, if you're holding more than 250 grand at any one bank, you may want to move that money around some. You may have heard under the FDIC insurance policy of the federal government, if whatever you have at one given bank is protected up to 250 grand by the federal government. Now if you have three accounts at one bank for $249,000, you still only have 250 grand protected. It's not the number of accounts, it's the bank itself. So if you had 750 grand, you might want to put 250 at a local bank here. 250 over your Wells Fargo and 250 over your Credit union, something like that. So you've got your 250 grand in different pots of gold, if you will, at different banks, that's going to be step number one. That gives you a little bit of comfort if one of those banks is going to have a meltdown. Number two, get out of debt. Please get out of debt. If we have a banking crisis in this country and there's another major recession, having credit card debt is disastrous. Down in the description below. And you can go to email me markj kohler.com and say send me the snowball. Send me the snowball and we'll send it over to you. We have a spreadsheet on how to build a snowball. I have a little video. There's no cost to this. And I walk you through how to build a little debt snowball and be out of debt within a Year and a half, nine times out of ten. It depends on your commitment level and how much debt you have. But your debt Free day is an exciting, exciting day. And I love what Dave Ramsey's done to change the lives of millions of Americans getting out of debt. And I challenge you to do the same. Get out of debt. Number one, move your money around. Number two, get out of debt. Number three, continue to save. Continue to save. Your money is protected up to this 250amount from the federal government. I want you funding your Roth IRA every year. And right now, between now and April 18, you can put in six grand for last year if you're under age 50 or seven grand if you're 50 or older, you've got three weeks to knock it out, approximately. Get it done. And if you say, well, I make too much money, put it in as a traditional ira, don't get the write off because you make too much money. And we'll convert it to a Roth on day two. So called the backdoor Roth. Every one of you, I don't care if you're five years old or 95 years old, should be putting your six grand in your Roth IRA or traditional converting it to Roth on the day two in the next three weeks, all of you, no matter what your income level, I don't care if you have a 401k at work, you can still fund a Roth. Everybody, at any age, no matter what your income level is, get to direct. At ira.com, you can set up a self directed Roth IRA on your phone to invest in real estate, notes, crypto, the stock market, whatever floats your boat. It's so simple online to go through that process. Number four, when you do invest, this is me. I like hard assets. I like gold, I like silver, precious metals. I like real estate. I, I like cash. I am. If there's going to be a problem with banks, there's going to be a problem with Wall Street. And if you want to put your money in stocks on Wall street or ETFs or bonds, that's great. Knock yourself out. I would recommend hard assets because in an increasing inflation period, those hard assets are going to be more protected from bank crises, Wall street crises, and your real estate isn't going anywhere. Real estate's a safe bet. And then number five people put your quit spending so much, please. I know that sounds crazy. I've been looking more closely at my spending habits. I want to be careful on what I spend, not going over the top. The term is called austerity. Meaning I'm going to only spend for what I really need. Sell some crap in your garage you don't need right now and fund your Roth ira. Sell some crap in your house you don't need right now and pay off a credit card. You will feel so much better. Trust me. If I can just. Just trust me that you're going to feel better in life. Funding your Roth and paying off a credit card rather than having a four wheeler you ride once every three months in your garage or a piece of crap boat or an RV you take out once a year. Really think about what you need. Sell the RV and go on outdoorsy three times a year. I love it. I'm renting an outdoorsy rv, one that I couldn't afford or wouldn't want to pay for, and I can rent it for a weekend for 750 bucks and be done. Walk away. Why am I going to spend 50 grand or more on an RV when I can rent one for 750 bucks? New version, use it, drop it off, gone. And then use my money and capital to stay out of debt and fund my Roth ira. Rent a boat, rent an rv, rent an Airbnb rather than buy a cabin. I mean, there is so many good ways to save money rather than drop money into these assets that a lot of times don't appreciate. Not that a cabin could appreciate. All right, that's my advice, please. Don't worry about a bank crisis. Worry about a personal financial crisis. Take care of yourself. All right, well, I'm going to go to Patrick in the studio. He's going to start bringing up some questions here and we're going to see where we go. Patrick, what's our first question? What do we got?

All right, this is from NMA DBZ20. I have my IRA brokerage, Savings and checking accounts all within the same bank. Total assets are well over 250. You kind of already covered this, actually. Accounts around. Let me move to the next question.

Okay, let's just repeat that. M and A. Anybody out there, whether it's your Roth ira, personal money, if it's all at the same bank, you may say, well, they're different branches, doesn't matter. Same banking institution. Whether it's at Wells Fargo San Diego, Wells Fargo New Jersey, and still Wells Fargo. Just simply move the money around, take your ira, put it with a different institution, take you. And if you've got that much cash laying around, I would put some of it in a money market account. Money markets are now paying over 4% and that money's ready to go. If you want to pounce on some real estate or some hard assets, get it into a money market. Look at TD Ameritrade has a great money market account. So get over and check that out. Go ahead, Patrick.

The next one is can I have a management LLC just to manage my rentals so that I can deduct the maintenance costs in the Schedule E to reduce the net income to negative even though the maintenance cost gets added to the 1040.

Okay, a few thoughts, everybody. Let's go to the whiteboard and everybody can hear you, Patrick, right when you're asking this question, okay? Who is the person to ask that?

That is Celadori.

Okay, Celadori. Okay, so we're going to say, and I've mispronounced some of your names. Forgive me. Everybody be ready to go. See John Godfrey out there. A little shout out to John. Love you. Okay, let's do. Here's the issue. This client on this listener said, I've got rental property. In fact, I don't know, you know, I drink my Rockstar and I also use it to clean my computer screen. Isn't that great? Okay. It works on everything. It's like motor oil. I gotta love it. Okay, so if you've got rental property, the question was should I set up a management company to run through and thank you, I needed more of that. Perfect. My screen was so messy, I wasn't picking up. Okay, so here we go back to our trifecta. So if I'm over here with some rental property, the question was, should I set up a management company? So that would be an LLC management company to write off. So I have an LLC that owns my rentals. That's a given all of you, if you're not already doing that, that's a no brainer. And I don't know what state the rentals are in. Let's say they're in Washington state. So I have a Washington LLC with two rentals and our caller says, well, shouldn't I set up a management company? Management company. And I'm going to pay a management fee so that I get a better write off here in my management llc. There's only one time I would do this. If you're doing it to get a loss here, you're going to pick up the income here. And what happens? At the end of the day it all nets on your 1040. And so when it all nets on your 1040, it's a wash. And it was worthless because you're going to pick up the income on this side and you're going to get the write off on this side. You're back where you're started. Now here's the thing, people. You can write off any expense you need here and be the manager of that llc. The only reason I would pay yourself to run your own damn property is if you want to fund a solo 401k. If you want to fund a solo 401k. Now boy, this yellow, I mean this white pad is really struggling. So a solo 401k would be great, but I have to have ordinary income to do it. I cannot fund a solo 401k from an LLC. That's not allowed with my rental property. I have to create management ordinary income to then go do the solo 401k. So be careful with that. All right, let's go off the whiteboard here and get our next question. Thank you so much.

All right, next question is from John Godfrey. What is the best way to protect your small business from bank failure?

Only have 250 grand in cash in your. I'm going to repeat the question John asked. How do I protect my business from a bank failure? Well, the answer is how much will the federal government ensure that if that bank fails they're going to cover your bank account? How much are they going to do? 250 grand. So the best way to protect your business is to not have more than 250 grand in cash in any one bank account, at one bank. And if you say well we can't do that, well then you better choose a bank that's pretty damn national that is going to be very unlikely to collapse. If you're using local banks with more than 250 grand, you're being a little risky. So I'm going to lean on the Wells Fargo's of the world. I mean if Wells Fargo goes down freaking our countries in world are as if SVB goes down, we're going to be okay. So just don't put that much money in cash in any one bank. And if you have that much cash and you need to do it for payroll or operations go to with a major bank. Go ahead Patrick. Next question.

Okay, next question is from Jane Heimbichner. I just tried to set up new bank accounts from the bank. She lives in California, but her LLCs are in Oregon and Wyoming. They said at the bank in California that she has to register her LLC in California. Is that true?

Oh boy. The California Franchise Tax Board. I sometimes worry they're listening to me. The answer is no. And that's technically true and accurate. Let me explain what's going on. Let's go to the whiteboard. So what's her first name? Angela. Okay, can't hear you. All right, so let's say she said she has two LLCs in two different states. In what states did she say

it was? Wyoming and Oregon.

Okay, so she has a Wyoming LLC and an Oregon LLC and two different rental properties. But Angela here's with her little Trust and her 1040, she lives over in California. All right, and so what California says, well, because you're the manager of these LLCs, and, and you're thinking about your rentals, you're now doing business in California. And so California says you need to register in California. The truth is you don't actually have to register the LLC in California. You just need to pay your $800 minimum tax in California, which is Form 568. So you're going to file and pay the $800 minimum tax. And in a sense, you're registering your LLC. You're not going to go to the Secretary of State. You don't need to do that because you're not doing business under the Secretary of State of California. But you've got to pay this $800 now. That's the rule. Now, there's a couple ways around this. Number one is if you are not the manager, so she sets up a non California resident manager. So maybe your sister lives in another state, maybe your mom lives in Utah or Arizona and you say, hey, mom, will you be the manager of my LLCs? She's like, sure. So as long as you are not the manager, even though you're a California resident, you no longer have to pay that minimum tax. So the best loophole here is don't be the manager of the llc. You can still be the owner. You can still have all the money, you can still take all the write offs. And frankly, once you buy the property and you've got your tenant agreement and your property manager set up, who cares if you're not the manager? Your mom's going to do. Sign whatever you need. And if you're going to go sell the property, you might change yourself back on to manager. Very, very simple. If you want to make that change, this is actually a good time to say right now we're doing our annual LLC cleanup service where we knock off $50 to $100. And if any of you want to go get your LLC cleaned up, change the manager, get all the right pieces for your LLC or corporation, call the Law office. The message will be the link will be down below. Go over to the law firm and get your entity cleaned up for a discount. Now the other method, and I'll just be honest, is don't pay the 800, don't pay California. The worst thing they can do is try to assess your LLC with a fee. They have not been piercing the veil of the LLC and coming after you, the owner. They're just going to maybe assess the LLC with a fee. But if you're not registered in California anyway, and what I do when I set up these llc, I don't go into a California bank because if you go into a California bank to open up the bank account, they're going to go, you're not registered in California. And then the bank's going to make you register in California. Now you're paying 800 bucks a year times two. So I, when I'm on a trip, I'll stop in Oregon and open my bank account or go with an online bank. We love Titan Bank. They're an online bank that sets up banking nationwide online for LLCs. If you want to again contact our office, that's Kkos lawyers. We can send you a link, get you a little expedited service. We love that. Call up the law firm and just say, hey, can you give me the link to Titan bank and we'll hook you up. But I like Titan Bank. They do a great job with online banking. So if you live in California, don't set up your bank account in California, don't register in California and if they get pissed, close the LLC down and set up another one. Whatever. But if you don't serve as manager, then it's completely legit and you're fine. Okay, next question. Patrick,

Next question is from Angelo Cass.

Hi Mark.

Please explain the home office and home garage for business use write off methods.

Okay, let's have some fun with that. Let's go whiteboard. Okay, everybody. Home office is a great write off. I love it. Every one of my clients should be using it. And for those of you that have an LLC with a rental property, even Angela in California, or you have an LLC side hustle for your Uber driving someone or you have a full blown S corp going for your consulting business. Whatever it is, you should have a home office somewhere in all of this. Now you cannot write off the same home office three times. You got to choose where's the best place to bury this. And so typically in this example, I would want to drop it in the S Corp, usually putting it in your LLC for your rental property is not the most advantageous, but it depends on your situation. This is what my tax lawyers do, is help you figure out the best method here. So you've got your home office over here on the llc. You might have a home office with your S corp, a home office with your side hustle, but you can only write off the same home office once. Okay, so that's principle number one. The next thing is that you have two options for the home office. You can do the actual or the simplified. The actual is where you take a percentage based on the square footage of the office compared to the overall square footage of the house and you're going to get this home office percentage and then you're going to multiply that by the rent. Maybe you're just renting, you don't have to own. It could be times the rent, it could be times the mortgage interest, property taxes, hoa, utilities, blah blah, blah. This is when I have a client with a pretty larger home office or a garage or they're storing inventory. They got a pretty large situation going on. You're going to get depreciation and all this. It's pretty sweet. But every one of my clients at least does the simplified, which is $5 up to 300ft and that there's no depreciation recapture, it's clean. You get to write off fifteen hundred dollars. Now that's annually. That's a fifteen hundred dollars write off in one swath once a year, the end. And you might use that over here on your LLC with your rental. You might use it here in your S corp or in your side hustle. But if your accountant isn't talking about writing off the home office, you got the wrong accountant. Get over to markjkohler.com and I have a tax advisor network and these are all tax advisors that have been trained under my tax advisor program. They're incredible, great people. We meet twice a week. We're constantly training. 80 videos for 30 plus hours of training and 800 questions. Get over to markjkohler.com and go to the tax advisor network at the top and you can find an advisor that believes in the home office. There you go. And file an extension and just work on your taxes in the next couple of months. There's no rush. You don't have to file by the 18th people, just file an extension. All right, next question and pop me off.

Next question is from Nick. If I have just barely enough to max the mega backdoor Roth and after tax 401k but want the option to withdraw contributions to purchase a home next year should it all remain in the 401k or roll it into an IRA.

Okay, Nick. All right. So if Nick says he barely has enough to do the mega backdoor Roth, we're talking pushing close to 60 or 70 grand in a Roth structure. And if you're looking to buy a house next year, I would keep that money outside of your retirement account and just put it in a money market account making 4 or 5% and get ready for your down payment. Don't overload your Roth 401k or Roth IRA when all you're planning and doing is trying to take out those Roth contributions later. Roth contributions come out penalty free and tax free out of a Roth IRA. When they're buried in a Roth 401K, they're a lot harder to get to. So I would recommend you do it just an hour if you've got that much money. Nick, either you're throwing down 50, 60, 70 grand into Roth IRAs and 401ks. You need to consult with one of my tax lawyers for just an hour, pay for an hour and say, guys, help guide me through where I should be putting this money for the next 18 months. We're not going to tell you what to invest in, but we're going to give you good financial advice on where it's going to be most accessible and give you the best tax write off and keep it simple. So, Nick, I want to know more facts, but I'm a little hesitant to say throw it all in retirement accounts so you can pull out part of it next year. Not typical. I wouldn't go down that route. So next question.

All right, the next question is from Billy. Does your company offer bookkeeping services and tax prep?

My company does not. But my Tax Advisor network is packed with incredible. Can you put the whiteboard on again? Mark J. Kohler.com get over the Tax Advisor Network. Several of them are providing great bookkeeping services, payroll and tax prep. So I'm Our accounting firm is going through a rebuild. They've been swamped for a year or two and they're just coming up for air and we can't put more on their backs right now. And so the Tax Advisor network is just been a huge godsend to so many of my clients and they're all trained by me. They teach the same concepts I'm teaching you right now and get over to the network and you'll find a bookkeeper there for sure. Next question.

Right. The next question is From Merrill Torado. Is it wise to put your 401k in your trust?

Yes and no. You really don't put your 401 in your trust. What you're doing is, here's our trifecta. Down here is your revocable living trust. You're not putting the 401k in your trust. What you're doing is making the 401k beneficiary the trust. So you're like, who is the beneficiary? Now I'm going to say this. Your number one beneficiary should be your spouse. If married, it makes life on them super easy. If something happens to you, they can handle the 401k, use it in a more effective and efficient way with ease. If you're not married, you make your the beneficiary, number one, your revocable living trust. And but at all times, if. Okay, let's start over. If you're married, your spouse is number one, your trust is number two. If you're single, your trust is number one, period.

And

there we go. And. Or because you can have all sorts of beneficiaries down here that can divide up the 401k later. So you should never put kids up here as contingent beneficiaries. We don't want to do that. We want to have your trust as number one or number two, for sure. Great question. And it's, you're not putting the Trust in the 401k, you're just making the trust the beneficiary of, of the 401k. Next question.

Next question is from D. Should you own a property through a land trust and then have the LLC be the beneficiary?

Yes. And I'll diagram that for everybody. So down here is your revocable living trust. Don't forget that D. You're still going to have your rlt. And then some people want to have a land trust, I'll call it lt, that is on title to the rental property. On title. And then the beneficiary, I'll put B is the llc. Now, some of you may go, well, and then the owner of the LLC is your revocable living trust. And then you are the trustee and beneficiary of your revocable living trust. Now, a lot, some of you may go, oh, my hell, Mark, this looks like a lot of unnecessary work. I'm not a big fan of the land trust. It can work in some states easier than others. Number two, when you're doing transactions with seller carryback financing or subject to deals. The land trust can be a really good fit. But I can't remember the last time I set up a land trust for guys. If there's a strategy that freaking works, that rocks Homeland's world, I'm doing it. And I just don't do that many land trusts. I just if they have to be for a transactional reason, but the benefit, the LLC is what's really giving you asset protection. A land trust is not there for protection, it's there for transactions. So I'm going to just. That's how it looks. Yes. That's how you would make it happen. If that's what you want to do. Next question.

Okay, our next question is for. From. From Jorge Almenderas. Mark, I have a primary home under my name and want to transfer to a trust and then buy another primary home. I don't want to trigger the due on sale clause due to interest rate at 2.5%. Can you help?

Yes. Let's do the diagram here. So Jorge has a revocable living trust in his home, is over here owned by him personally. All right. And remember, Jorge is going to be the trustee and beneficiary of his revocable living trust. And we want the trust to be the owner. It's going to give us maybe some privacy in some situations. But really if something happened to Jorge, we want the trust to be the owner. So there's no probate and everything goes to the family the way it should. I'm going to repeat this for everybody. Do not, and I repeat, this is a banker issue. Do not worry about the due on sale clause. In 22 years, I have never, ever, ever had a client have to transfer the home back to their name after transferring to their own trust because they were threatened with the due on sale clause. Do not worry about it. Your bank has already sold your mortgage four times over. They don't even know who owns your loan and they have a servicer taking care of it. Just freaking transfer the damn home into your trust. We have a paralegal at our office that can take care of that for you. Keep it simple and you're going to do a warranty deed and just transfer it into your trust. Now the thing in your question that actually concerned me more is you said, I have a primary home and I'm going to transfer it to my trust and buy another primary home. Well, you can only have one primary home. Now if you're saying, what's this one going to be? Are you going to turn it into an airbnb you're so loaded and you're so set up with retirement that you're going to set this up as a second home and just sit on it. Typically what I would do is you're going to move this up here and put it in an LLC and which is owned by your trust and then buy your new primary home. And soon as you close, deed that to your trust. So the fact you're buying a second primary home is definitely definitionally incorrect. You can't have two primaries, you only have one. So the question mark would be what the freak are you doing over here? So is it going to be a rental, a second home, whatever. So maybe get a consult with one of the attorneys to help you through on that strategy. Maybe a couple other questions.

Yeah, I have two more questions and I want to give some books away. Okay, the next question is from Brenda Smith. If you cashed out a 401k through QDRO at the end of year, but your deposit didn't clear until the next year, what year is the ordinary income tax due?

Well, I'm sad that you cashed out a 401k even under a quadro. Not a good thing if you're beyond the 60 day rollover period. So it is what it is. Um, I would caution many of you not to generally do that. Brenda maybe had a very dramatic situation where she had to access that money, but it would have to be again, DEFCON 4 life threatening before I would ever want to recommend that. But Brenda, forgive me for saying that to everybody else, but they've got to know that's very. Paying penalties and tax and draining a 401k is not high on my list. Frankly. You, you're not going to have a choice of when it's taxable is going to depend on the 1099 issued by the 401k TPA, that's the third party administrator. They may have. The money was sent before December 31st, so they're going to 1099 you for last year. They may 1099 you for this year because you didn't receive the money till January 2. The answer is whatever they put on the 1099. So if you want to get proactive, I would call the TPA for the 401k company and say, Are you sending me a 1099 or not? What the hell, where is it? And if you haven't received it yet, you can't just put your head in the sand and go, oh, I didn't get the 1099, I'm okay then because you can't trust someone to always follow through on the proper 1099 either. So call them up and make sure they haven't sent you a 1099 and they don't plan on it. If they're not and they're going to send you a 1099 for 2023, then that's what you want to do is stick with that. Next question. Final.

All right, our final question is from Sammy Bulley. I have my own C corp in New York, retail business. I do not yet have any health insurance plan. So for me, I cannot open an HSA plan. Right. Only retirement plan is Roth ira. Any other retirement ideas?

Yeah, Sammy. Okay, so if Sammy's got a C corp in New York, I would suspect he's doing a C corp because he's in the five boroughs. For those that don't know, there's a city tax in New York that applies to Queensland, Brooklyn, the Bronx, Manhattan and Staten Island. Those are the five boroughs. And if you have a corporation in those five boroughs, the S corp is not recognized. So you have an extra tax when you have an S corp and it makes the salary split a little more challenging. Depending on your income, though, I want to say this is that your an S election still may benefit you. And I want you to think about having a consultation with Devin Muns. He's one of my tax attorneys in my office and he was really good at running a spreadsheet on the C versus S election in New York City because there's a break point where the S makes sense and then there's a point where the yes does not make sense. So you want to talk to Devin Muns. So that's point number one. Number two, if you do not have health insurance, you cannot fund an hsa. You have to have a high deductible plan that was in place last year. I would highly encourage you to look at a high deductible plan this year because I love funding the hsa. So without the high deductible health care plan, then you cannot do an hsa. So that's off the table. So you've got two things you can do right now. Believe it or not, there was a new law passed last year that you can still fund a solo 401k for 2022. Now you can, you can do the company contribution part or the match, if you will still and set up a solo. We are setting them up still for clients around the country right now for 2022. Call the office and say, I still need A solo for last year and they'll quote you, get you set up. And this is a self directed solo 401k. So you're going to be able to do essentially 25% of whatever your W2 is coming out of that C corp. So run the math and that's about what you'll be able to put in the solo 401k and plus and I'll put it in red, you can do your Roth IRA for last year, so you can still do both. So I would fund your Roth 6000 or 7000 and if you make too much money, you're going to do the backdoor Roth method. Make sure you Google how to do that. We've got articles on all over website. So you can do the two things, the Solo 401K and the Roth. This has to be done by April 18th. You can actually do the Solo 401K up until September 15th. So. Well, no, you're going to get a six month extension on that. I think you'll have till October 15th on the C Corp Solo 401K. So I would lean on those two options. Get a consult with one of the tax lawyers and they'll point in the right direction. Okay, if you take me off whiteboard, people, we want to give away some books here. I've got my three books right here in front of me. What your CPA isn't telling you. The Financial Freedom Business Owner's Guide to Financial Freedom and the Tax and Legal Playbook. And so we got three winners. Want to give those away? Tell me their names.

All right, our first winner is. Is Jane heimdickner.

Jane Heindickner. What your CPA isn't telling you.

Okay. And our second winner is James Tyree from Facebook.

James Tyree is the Business Owner's Guide to Financial Freedom.

And our third winner is Jorge Alamandaris.

Jorge is the winner. Now for those three winners and you get the Jorge, you got the tax and legal playbook. Put me on the whiteboard. Go to email dianearkjkohler.com Diane, is it 1n or 2n's?

2n's, 2 ends.

D I a n n e markjkohler.com Tell her your name. We've already identified your names and we're going to get you your free book in the mail. In final, can you throw back the. Take that whiteboard down. People, I just want to say thanks for watching this. You're the captain of your own ship. In summary, we need banks. We can manage our bank accounts. We can stay out of debt. We can fund our retirement accounts. We can buy rentals, buy gold, buy silver, buy hard assets and just manage our own financial future more carefully. We can't manage the federal government. We can't manage all these banks in the country. If they're going to fail, they're going to fail. Keep your deposits under 250@ any1 institution. Keep living the American dream. Save money, stay out of debt. Sell crap you don't need, and you're gonna be just fine. It's slow and steady wins the race. Slow and steady. There's no get rich quick scheme that I'm teaching. Just slow and steady. And I'll be here every week trying to help you build your dream. I want to say thanks for being here and I'll see you again next week for another live broadcast. Please get over to my YouTube channel and subscribe because I'm dropping another video tomorrow on how to build a debt snowball. And if you subscribe and hit the bell icon, whenever I drop new video us, you get alerted and you can share it with family or friends when it comes through. So thanks everybody. Have a great week.