Year-End Tax Tips Q&A with Mark J. Kohler

Action. Hello. Are we live? We are live. Wow. I'm making notes about what we're going to talk about. This is great. Welcome everybody to today's year end tax strategy Q and A update. I'm writing down some of the tips I wanted to go through. I've got 12 tax days of Christmas that I'll be doing on my social media starting on Saturday with 12 different tips to make your Christmas a little brighter. Who needs a partridge and a pear tree? You need to check from the irs. So that's what I'm going to work on for your 12 days of Christmas. But today we're going to do Q and A. I want to hit some of the 12 tips that I have and answer your questions. And I already had a question that was quite complicated. I kind of loved it. And, and man, maybe we should just jump into it. So I'm going to field our first question today and then I'm going to get into the 12 tips and I don't know how far we'll get through it. We're going to do this about what, 30, 40 minutes? Okay. If you haven't listened to my live broadcast before, I'm an actual CPA and an attorney. Four best selling books, more YouTube videos, and more podcasts than any other tax lawyer in America. Helping you, the small business owner, the investor, the person with the side hustle. I'm here for you. So I'm hoping you can follow my weekly newsletter that's free, check out the podcast, check out the YouTube videos, and this weekly open forum that I try to do with a deep dive into certain topics and Q and A on a regular basis. Rosalie, am I missing anything? Were you? Am I good? Okay, now I am going to give away a book today. For those of you that share this broadcast. Rosalie goes through, randomly picks a winner. I sign it here on the air today and you get it. I don't know if I need to hold up a newspaper, but this is not recorded. This is live. It is December 12th at 4:15 mountain time. So we're here, we're going. So please type your questions below on YouTube and on Facebook and I'm all yours. So thank you for being here. Okay, the first question was from Hannah. I'm trying to look where she's from. No city or state here. Hannah says thank you for offering this open forum. My question is, I inherited my mother's IRA from several years ago. Oh my gosh. Now guys, this is one of the coolest strategies out there. This is a blow your brain strategy. So I'm just going to answer a question and then I'll hit a few tips. This is unbelievable. You want tax free income the rest of your life. Hear this out. So Hannah says, I inherited my mother's IRA several years ago. So her mom died. I'm sorry. I created my own beneficial IRA and I self directed. So that means she's got this little IRA bank account and her mom dies, goes into the ground. Sorry, a little morbid here. And then daughter here. Hannah. I'll put Hannah inherits. Sweet movie by the way. Hannah inherits the IRA and she can invest it in whatever she wants and she can make money and she can grow this IRA over her entire life. But she is required to take a distribution every day, every year. It's called an rmd. And she has to calculate how much is this IRA worth? And based on her life expectancy, she has to take out a required minimum distribution every year. She says after how many years do I need to liquidate the entire IRA and just take it? Hannah, that's the beauty of this. Never. You have this remain this check every year coming out to you for the rest of your life. That's how this works. And what's cool is she's self directing it. So let's say she goes and buys a little property, hire some a contractor to fix it up and she sells it. If this is a Roth ira, she pays no tax on that. Let's say she goes and buys a racehorse and wins the Kentucky Derby. Money goes in here. Let's say she invests in a small restaurant down the street, money goes in here tax free and she can pull out money every year tax free. She could drain the whole thing tax free. That's right. She just inherited. Now I'm assuming this is a Roth ira, but if you inherit a Roth ira, you just inherited a tax free atm, you can invest it in whatever the freak you want and it comes out tax free the rest of your life. My grandpa, my grandma's passed away, but I'm telling you, I would have done this with my own mom. I'm making sure that I inherit a Roth IRA from her. I will give her the money to open a Roth IRA and make me the beneficiary. Because once I inherit it, I can invest out however the heck I want and pull up money tax free the rest of my life. Hannah, keep doing it. You're rocking. Love it. Okay, we got a question from Matt, a Navy vet from Pennsylvania. Matt, thank you for your service. So let's see what his Question is, and then I'm going to get into my first. After Matt, we'll get into my first year in tax. Tip. Okay, what do we got?

Matt from YouTube says, I purchased a home in 2019. What should I expect when filing my taxes? Extra money. What should I be able to claim? Thanks.

Okay, now, Matt, I'm going to actually pass on your question for just a moment. You need to tell Maria, is this your primary residence home or a rental property? Home. I need to know. Reply to Maria and then we'll hit it. Okay, now here's the first tip. Now, I'm going to try to hit 12 of them here, but this is the first and probably the biggest reason we have phone calls with our clients right now. Number one, you've got to nail down your S Corp payroll. Now, I know this doesn't affect everybody, but let me explain. Let's get rid of this. We're gonna have fun with this. Okay? So this is gonna be my tax tips and we'll come back to this. Okay? So number one is S Corp payroll. Now, let me explain. This involves quite a bit. So let's just assume here what's going on. Mark Kohler 101. I want your operations over here. I want your assets over here. Assuming that Matt in Pennsylvania bought a rental property that's going to be over here. Assuming he bought his own primary residence, this trust down here is going to own his primary home. So this is his primary. Let's see that pen's dying. Let's go here. Now, he's going to have this pen. Works great. I'm good. Kaden, this LLC will own his rental. Now, for all of you out there operating your business, let's say you're selling online, you've got a side hustle, you're electrician, a plumber, a contractor, an attorney, a cpa, an architect, a doctor, a dentist, all of this operational income, realtor, broker. You're going to start out as a sole proprietor, and then you're going to graduate to the S Corp. The reason why we do that is if you make 100 grand, you've got to pay FICA 15.3%. The F word. FICA. I don't know what F word you think about, but I think about FICA. I hate FICA. That's 15.3% times 100 grand of profit. That's 15 grand. Then you got to pay your state and federal. We're going to funnel that through an S corp and you're going to take a W2 for. Let's say 40 grand. The other part comes out 60. You still made 100. Listen, everybody. You still made 100 grand. But I'm going to split it. And that split is based on a per client basis. I've got a matrix. And we help you choose the right split. Whatever. We help you decide. If you get audited, we'll pay the penalty. In 20 years, thousands of S Corps, we have never had a client audited for taking too little of payroll. But I know some accountants out there that freak out on a 60, 40 split. I'm sorry, but we'll stand behind it all day long. I've got IRS agents behind it. We love this. 60, 40. What, did I just save 15% on 60 grand? Now, why do I bring this up? This is a $9,000 savings. That's nine grand. You could take grandma and grandpa and you and the kids on a cruise in the Caribbean and go on every shore excursion you would want for nine grand. Maybe you won't have a balcony view, but that's okay. You can still do a lot on that cruise ship. Now, here's the deal. Why is this a year end tip? Because you got to nail this payroll in the next four weeks, period. You screw it up, you can't do this for 2019. So if you want an S Corp benefit for this year, you've got to nail your payroll. So you got to call your accountant and go, well, I saw Kohler's payroll matrix. I think I'm taking too much salary or oh my gosh, I'm not taking enough. We've got to nail that because it lays out a strategy for a lot of their deductions. And you got to do it in the next four weeks. If you don't even know what this is, if you've never even heard of this and you're going to net more than 30 or 40 grand, get on my YouTube channel, watch every video I have on S Corporations, get to my book on Amazon, the tax and legal playbook, and read the chapter on S Corporations. Every dentist, doctor, realtor, contractor, broker, restaurant owner, pizza delivery guy, whatever. You're an S Corp if you're making more than 40 grand. That is my first tip. Now, why this plays into it is you might have an LLC that you backdate into an S corp for 2019. You can still get this. But if you're a sole proprietor for 2019, tough luck. I'll get to tip number two, but this is something you've got to do right now, and that's tip number one, is nail down your payroll. This plays into your 199, a 20% deduction. It plays into your health insurance deduction. It plays into your 401k strategy. If you're going to do that. All of this is based on your S Corp payroll. That has to be decided on in the next three to four weeks. Technically, you have till about January 15. Get on it. Okay, Matt, did we find out what kind of house Matt bought?

Yes, he's a primary home and first home purchase with VA loan.

Okay, Matt bought his first home. So in our master diagram, where do we put this? Matt is over here with his family trust. Just for fun, I'm going to assume that Matt is married. So Matt has a trust. He bought his first primary residence and since he's in the Navy, he's going to be probably getting that W2, working for the government and all that good stuff. So his question is, is there anything he should be looking at under the new GOP tax bill? His standard deduction if married is now $24,400. This year he's going to have to pay a heck of a lot of interest and give money to charity and pay some state tax to override that 24,400. So I'm going to go out on a limb and I'm probably going to say, Matt, there's not too much to track. I'm glad you bought a home. I want you to pay down that mortgage as quick as you can. Use some strategies there. But the mortgage interest deduction is probably not going to be as much as the standard deduction. Now, if you've typically prepared your own taxes, you're going to want to play around in turbo, maybe get a consultation with the tax advisor and just make sure Mark Kohler isn't crazy here. But I would bet $10 if I was in a room with you right now that you're going to take the standard deduction because of how you described that it's your first home and you're in the military. Other people out there if you want to, if you. Sorry. If you have more expenses in mortgage interest, property taxes, state tax, charity donations, you may tithe quite a bit, then I'm going to take these deductions and over and above the standard deduction. So, Matt, I don't think you have a lot to worry about. I'd pay for maybe a 20 minute consultation with a tax advisor in the next two and a half weeks just to make sure you know what's going on. And really this isn't something that you need to stress about before December 31st either. But I'd figure this out so that you have a plan for the upcoming year. Okay, Kent, we have a question.

Yes, Ken. Ken from your Facebook, Mark, can you help me with my tax plan?

Sure. So Ken just threw me a softball. He's like, mark, can I, can you personally, Mark Kohler help Kent? Let me say this, Kent. My schedule is pretty darn packed this week. I've already stayed up until 4am twice and midnight once working. I have been slammed. If you want to work with me personally before year end, you're going to have to beg, borrow and steal to get that to happen. But everybody listening. I have five tax lawyers that have availability between now and the end of the year and they're cheaper than me per hour. And every one of them, Christy, Devin, Jerem, Kevin and Lee, they have all been personally trained by me for years. They are awesome and they're cheaper than me. So Kent, make an appointment with them. Number two, on the accounting firm side, I've got 10 CPAs, personal tax consultants and partners. Rick Taylor is a former IRS agent. Lidell and Brian have over 30 years of accounting experience. We have over a hundred years of accounting experience in our accounting firm. They're cheaper than me per hour because I'm a senior partner and I'm dual license. I'm a little more expensive. But Ken, I want to save you 10 times whatever you pay me. Make an appointment to talk to me in January, February. Let's nail down your plan for next year. But please call the office now. Any of you out there that want to call our office and get a consult, this is not an infomercial. But I'm just going to say let's just give them the main number. Is that all right? So 1-888-8010-0010. That's our main number. You can talk to either a tax lawyer or a cpa. If you got some legal structuring or some, you know, you need to set up an LLC or a corp and you got some rental properties, I do the tax review with a lawyer because you can knock out two birds with one stone. If some of you just want to look at your tax return and hyper focus on that and you know your estate's done and all your entities are tight, I'd go with the CPA. Okay, Jorge. Or is that George?

George. George from YouTube. In New York, there is a new law that states that all members of an LLC must be difficult divulged something to that extent Are you familiar? If so, what is the workaround?

Okay, so in some states you have to disclose who the owners are of an llc. So let's go back to our diagram here and let's say you have a rental property and you're doing low income housing rentals and you don't want. They're good rentals. You're trying to provide a home for someone that doesn't have a lot of money, but they could be a high risk tenant. And so in this llc, you're the manager and that's usually going to be disclosed on public record, but you don't want to let people know who the owners are. And in the state of Arizona, anybody that's owner than 20% or greater, I have to disclose the members. Now in New York we've got this new law where you have to disclose members. Now, I have not read the law yet on that. I've heard about it, but I haven't fully vetted that issue. So maybe that's a note to self for a New York article on LLCs. We'll make that note. We do a web. I'm sorry, we do a newsletter every week and I'm always looking for good articles to help you. A workaround for me would be to make a trust the owner of the llc. So if I just created a sometimes called a land trust or a revocable trust and usually I'm going to have your trust own the LLC anyway and I don't want your name in the name of the trust. So my trust might be called Purple Rain Trust. So I make Purple Rain Trust the owner of the llc. There you go. That's on the state website. No one knows what Purple Rain Trust is. A trust does not have to be registered with the state. So for those of you that are looking for privacy now, this is a good one. Many of you out there. Sorry, I'm so excited today. I hope this is okay. Are we doing okay, Rosalie? I'm just freaking all business today. No sexy jokes or funniness today. We're just all bizarre. In my book, tax and legal playbook, I have a whole section on privacy planning and I go and this is in Chapter 18, Privacy Measures versus Hiding Assets. Reasons to Implement a Privacy Plan. Four stages of privacy Going offshore and then take away and action items. I also quote JJ Luna, an international privacy expert that's been on our podcast twice. Listen to that podcast. Read this chapter. You can get this book for less than 15 bucks on Amazon Prime. Get it and read it on the privacy and I think you're going to love it. Okay, what do we got? Annette.

Annette from Facebook. Should I wait until I have something to invest in to roll my 401k into a SDIRA or should I do it before I know what I want to do with it?

Okay, so we're going to use Annette's question to jump off into strategy number two. Before year end. For many of you that have a small business setting up, a Solo 401k could be a great deduction. Now, some of you there are just saying, well, I'm just going to do an IRA or I might do a SEP. Now mind you, I have a video on YouTube saying I screwed up and had to do a SEP. So I'm not a big fan of the SEP strategy. It only works for me in some isolated examples or situations, which if in a consult with me or my attorneys we'd bring that up. But a solo 401k is awesome because you can get a write off for $19,000 versus 5 or 5,500 or 6 grand in an IRA. I mean, what the freak? I mean a solo 401k plus match is off the chart. So that's question number two. If any of you own a small business, whether an LLC or an S corp, and you want an extra write off with a Solo 401K, you have to set it up before December 31st. But guess what? You don't have to put the money in until next year up until the date you filed your personal and business tax return. So we're talking this could be all the way till September. So you can get the write off now in 19, create the 401k now in 19, but you don't have to put the money in until next year. We set up two versions of 401ks. They're both solo 401ks, they're a Roth traditional 401k. We have two options. Do it yourself, DIY 500 bucks. Get an hour with a real tax attorney tailoring it to you. 999 shop around. This is a fully self directable 401k. Now let's go to Annette's example so that we're all on the same page. So in Annette's example, she has a self directed Ira and self directed 401k and she doesn't know should I self direct it or what?

So she's asking like she should she wait to roll over her 401k into a self directed IRA or should she do it before she know what she Wants to do.

Okay, let's do this. A net example here. So let's shift. She has a self directed 401k. It's not a 401k from her work. It's her solo 401k. Is that what she said?

No, she said just 401k. So I think it's from her work.

Okay, we're going to do this. I'm going to go to my third tip. Annette, text right back and let us know. Is this your 401k at your current job, old 401k or a self directed 401k in your business? I need to know what kind of 401k you have because I don't want to ramble on. Okay, let's go to strategy number three. Before year end number three, should you put your spouse on payroll? Now, for some of you that aren't married, a good tax tip could get married before December 31st. Why not put your spouse on a plane, go to Vegas, hit the Elvis wedding chapel and get married before December 31st. Nine times out of ten you're going to save more taxes filing jointly than separate or single. So that could be a great tip. Now, for those of you that are already married, you already have the ball and chain. I'm sorry, you're already happily married. You're going to say, should I put my spouse on payroll? That's a big question. And a lot of people say, well, yeah, I need to pay my spouse. He or she helps me in the business. You can pay your spouse out of your draws. If my wife needs money tomorrow, I just give her some of my draws. Doesn't mean she has to get a paycheck. So here's the trick. The only time I put my wife Jennifer on payroll is if I'm going to fund her 401k because she still gets Social Security under the spousal benefit rules. So she'll get Social Security. I don't need to pay her a W2 and pay FICA just so she can get paid. I'm going to just give her part of my draw. But if I'm going to put her on a W2, it's so that I can fund her 401k. That has to be done before year end. So I'm going to put that down as strategy number three, pay spouse. Now, I'm going to come to paying your kids here in a minute. But pay spouse could be an important tip. Do we have an answer from Annette yet? Okay, Annette, I need to know what kind of 401k you have or I'm going to go to Chico's. Question number four is dissolve. I'm going to call it prepare for next year. Prepare for next year. Now, you know what? I want to just digress for a minute just to have fun with this. When I was writing up my 12, we have a net. Okay, one second. Just before I put together my top 12 year end tax tips, I thought, what else is out there? And I looked at Google tax tips before year end, blah blah blah. And I looked at all the big articles out there from the big financial magazines. They were a joke. Harvest your losses. Put money in your IRA bundle. Pay more for stuff that you're going to need in January. Okay, fine. This wasn't even in half of the articles I read. Guys, these are my top four that saved my clients thousands. You're in the right spot here. I say this humbly. I want to help you, the small business owner on Main Street America. And that's crap out there. You're hearing from Wall street. So be careful going to a major Wall street news channel to get your year end tips. Prepay. Sorry. Prepare for next year. Now what I mean by that is I had a text from a client two days ago said, mark, make sure you dissolve that entity for mine before year end because I don't want to pay for fees next year. Then I had a text this morning from a client that said, let's make sure my entity is set up January 1st, so I'm ready to go for next year. See. So right now in December is the busiest time of year for us because we have clients closing entities, we have clients opening entities, clients doing payroll, clients paying kids, clients setting up 401ks. Guys, if you don't do this crap right now, you're SOL in January, February, and I don't mean statute of limitations. So get on it. All right, Annette, what did we find out?

She said it's an old 401k from her employer. She is allowed to roll it over. She wants to self direct.

Oh, Annette. See, I would go into a consultation and ask, do you have a small business? And there's so much to talk about here. Okay, so let's just talk about Annette and a couple. I'm just going to make some assumptions, all right? I don't know if Annette has a new job, if she has a small business. Is she married or single? This is why a consultation helps a ton. Does she have kids who are. What's she doing over here? And on our operations side, I Don't know. But she has an old 401K. Now this is a really good thing to understand for all, and I bet you there's many of you watching today, you had an old job five years ago, 15 years ago, five months ago, and over at that old job, they gave you a 401k. When you quit your job or you're fired or you move on, you retire, whatever. When you leave employment, the old 401k kind of stays there and they keep taking fees out of it. So you want to get it out of there no matter what. That's point number one. So if you've got an old 401k laying around, your only choices to invest it are your old employers choices. They gave you sucky spit on it. You don't want to do that. So number one, all of you roll it out to an ira. That's number one. And in an IRA you could convert it to a Roth. You could buy stocks, bonds and mutual funds. You could roll it out to a TD Ameritrade online app ira, I don't care. But get it out of the old 401k. Now Annette says, well that's cool. But I don't just want to buy Facebook stock. I want to give hard money loans. I want to invest in small business. I want to do real estate. I want to buy super bowl tickets and resell them on StubHub. All right, that means she wants to self depend direct. And we see clients making 15% or more per year in their self directed IRAs and 401ks. If some of you think that's heresy, go to the YouTube channel and type million dollar Roth Kohler and I'll explain in part one and two how I see clients create million dollar Roth IRAs all the time. So Annette's on the board. Annette gets it. So what she wants to do is option two. She's going to say, you know what, I'm just going to go to a self directed ira. And in a self directed IRA she could go invest this how she sees fit. So that's her self directed ira. Annette, I don't know what's best for you. I don't know what your lifestyle is like. I don't know what ideas you want to invest in. If you just want to do stocks, bonds and mutual funds, stick with a regular TD Ameritrade online IRA. If you want to self direct, go to directed ira.com directed ira.com There you can set up a new IRA before you're in for around 200, 250. Is that 200? 250 bucks Directed IRA. You can set up a new Directed IRA account, roll it over there, no penalty, no tax and you can start investing it the way you see fit. A lot of times we'll set up an LLC for you and you'll go out and just do business. Now third option, I'm just going to last opinion, maybe Annette has a small business and according to tax tip number two, she says I'm going to set up a solo 401k. So she with her small business, whatever it is for, it could be an LLC or an S Corp. She sets up a Solo 401K. Now she's funding it with her current business, getting a write off. Option three, she can roll her old 401k into her new solo. Skip the IRA, Annette. Just go to a freaking brand new self directed 401k. Cheaper than an IRA. Even you control the checkbook of this 401k. So that is option 3. I've got videos on this. You can go to our website, kkoslawyers.com go under services and look at our 401k plans and you can see what it's all about. I think I got six videos there for free. You can watch. All right, chico, what do we got?

Okay, says hi Mark from LLC that holds rental. Which is better membered managed or manager managed. And why?

Okay, so this kind of goes to. Who's our friend in New York that we were talking to a minute ago? Was that. No, Matt was in Pennsylvania, right? I can't remember the New York person. It was George. That's right. So George was in New York saying I don't want to tell people who the members are. My llc, that's kind of relates to yours, Chico. Everybody listen, when we set up an LLC at our law firm, we're doing this over 20 years, we always set up a manager managed LLC. Now the reason why is because in 47, 48, 49 states, I don't have to tell people who the owners are. I can change ownership anytime I want and I don't have to file anything with the state. And the far, far, far majority of states, no one knows who the owners are anyway. So I want to always go manager managed and make your family trust the owner of the LLC secretive. No one knows. So there's no tax savings here. It's all about privacy and efficiency. So that's what I do, chico. Alright, what do we got? I'm going to go to my tip 5, 6 and 7 here in a minute. But we got a question. Hajj, okay. H A G A J. Haj.

Okay, so he has a question. He's from Entrepreneur Facebook. Do you have to expense everything on your taxes if you are looking to apply for business credit cards?

Okay, so repeat that. Do you have to spend everything on.

Do you have to expend everything on your taxes if you are looking to apply for business credit? Credit card.

Okay, let me do my best to answer Haus's question. I'm going to repeat it one more time. He wants business credit. Okay, I have a whole chapter on business credit here in tax and legal playbook. So you're going to take your LLC or your corporation and go get a Dun and Bradstreet number and build up your paydex score which is like your personal file by FICO score. So Haj wants to go set up his credit. Okay, cool. Now when you go do that, you're going to want to show a legitimate business operation. Revenue, expenses, tax return, bank account, all that crap. Right Haj, you want business credit, you have to show you got a business and you want a legitimate business. No, and no offense. Your question is should I expense everything in my business? Yeah. Hell yeah. That has nothing to do with business credit. If you've got a business. I want to write off everything and I want income. Your business needs to look legit. Now maybe what Haj is saying is, well, I want to show that my business has a lot of income. Well, so you're going to pay more taxes to try to get better business credit. I do not recommend that. So I've got business credit advisors and they've been on a lot of my shows before. I had a coast two different contributors to my chapter on this and never have they said pay more taxes so you can get better credit. Don't do that. Haj, email me. Maria will send you to one of our business credit advisors and they can help you get going. I don't make any money on it. I just want you to get to the right person. So Haj, everybody listening? Hopefully that should be a big help. Bearfield. That's a cool name. Bearfield.

Yes. I made 30k in the past through LLC and trucking and spent all of my money to do hard times. What can I do?

Spend all my money doing hard time in prison or doing during the hard times I paid off. Spent all my money. He probably didn't spend his money in prison doing hard time. I've done soft time but I've never done hard time so anyway, okay, so let's see here. Bearfield, I'm gonna. I need a clear piece of paper for Barefield. So listen everybody, this is good. Barefield says, I got an LLC, says he brought in 40 grand, but he spent it all. Maybe he had some hard times and whatever. I'm just playing around. Barefield, don't be upset. So he's got 40 grand of income but a bunch of expenses. So he netted zero. Now that's what I'm assuming. Now if you say Barefield, that you brought in 80, spent 40 on expenses and netted 40, we got a different situation. In fact, let's do that. We've got option one and option two. In option one, he brought in 40 grand, but he spent it all. Cool. Zero income on the business, no taxes. In option two, he brought in 80 grand, spent 40 on expenses and netted 40. See, this is why a consultation is helpful. Because I'd say, Bearfield, what happened? Give me some more facts. Married, single, day job, small business, blah blah, blah, blah, blah. Right? There's a lot to know, but I'm just going to assume he netted 40. So if he netted 40, he's a good candidate for what? An S corp. So I'm going to take his LLC and backdate it into an S corporation. We charge 100 bucks for this. Very affordable and simple. So now his LLC morphs into an S corp. I dated an S Corp, 11:19. I take his 40 net and I split 20 in payroll and 20 in K1. I just saved $3,500 in taxes. That's why if any of you are an LLC and you made more than 40 grand this year, I want to backdate you into an S corp. And that could be a great fit. Okay, so now we're going to get into. Let's just review our tax tips, okay? Sorry, this is so noisy. On the microphone, everybody. Okay, our tax Tips were payroll, 401k, pay spouse, prepare for next year. Let's hit a couple more. So pay attention. Sorry about that. Okay, strategy number five, pay the kids. Now if any of you are single out there, no spouse and no kids. Live the dream, baby. We're all rooting for you, okay? Have fun this weekend out there doing a little white man overbite. You just get out there and rock it, okay? But for everybody else that has kids, you know, it's expensive and you need a write off. So what we do is we can pay kids over age 18. This was a phone call I had this morning. So any kids over age 18. And I'm going to put 18 and over. That's what that sign is. 18 and older, we're going to give them a 1099. Any kids under 18, we're going to do called outside labor and we're going to do no W2 and no 1099. Now, some of you, maybe accountants out there are freaking out, going, hold it. You're paying someone without a W2. You're allowed to do it with your own children. I stand behind it. I've been teaching it for years. And I have a whole chapter in my tax and legal playbook again on paying kids. I've got a YouTube channel on paying kids 18 and over and a YouTube video on paying kids under age 18. It's got to happen before December 31st. If you don't launder the money before, sorry, you don't run the money through the kids pay before the end of the year, you get no write off. And that's really what it's about. You can pay them in one lump sum at the end of the year for legitimate work they provided in the business and take a write off before 2019 is over. If you don't do it, you don't get a write off. So watch my bids. Get a consult with your tax professional, give us a call, whatever, and get this part done. That's step five. All right. Do I have another question? We're only doing one more. Are we doing. What are we at? Holy crap, it's 4:45. I was just having too much fun. Okay. All right. I don't know. Maybe we'll do. Let's see how our Tommy's question is. Tommy from where? Where's Tommy from? I want something fun. Tommy in the Bahamas, sipping a margarita, had a question for us. Okay, Tommy.

I paid over $5,000 out of my pocket to pay back health care subsidies because I underestimated my income for 2018. Can my company reimburse me for the $5,000 I pay personally for the 2018 tax year? And can it be a deduction? I am set up as a single person S corp. Tommy.

I love it. All right, this Tommy. Damn right you can. So let's go through it. I love this. Sorry, I just swore on live YouTube. Are we okay? Am I going to get censored now? See, dam. Dam is okay to say here in Idaho because 20 years ago a dam broke here and this dam broke and flooded the whole valley. I'm not kidding. Go, go YouTube. This is called the Southern Idaho Teton Dam. It Broke and flooded and killed a few people. Whatever. Now what they do every year to celebrate this dam is they have a dam race. It's called the marathon. The damn marathon. And my kids love it because they go, hey, dad, can we go to the damn race? Hey, there's a damn volunteer. Where's the damn finish line? Hey, can we have a damn donut? Only one day out of the year they get to swear like that. So I'm just saying that's it's kind of a big deal around here. So if you're ever here in the summer and you want to swear all day long and say the word damn, you have carte blanche one day a year here, okay? Now, Tommy, sipping on a margarita in the Bahamas says, I am a single member. Oh, I love it. Single member S Corp. And I think he said, he's single. No wonder he's in the Bahamas sipping margaritas. Because if you're married, you know, you ain't in the Bahamas. Okay? So you're here, you own this s corp 100%. And he's doing a salary dividend split. That's cool. So he's got his W2K one going on now. He's. Now think about this, people. He paid this little amount for insurance in 2018, got away with it. And then healthcare.gov figured out that Tommy made too much money and said, tommy, you got to pay back some of the money into the system and what is it? An insurance premium makeup. Right, Tommy, that's really what it is. You're making up for the cheaper insurance you had last year and you got to pay more insurance premiums this year to make up for last year. So let me ask you, Tommy, are insurance premiums a deduction in an S Corp? Yes. For a small business owner all day long. Now, the important point here is you've got to add up all the premiums you paid this year for your 2019 insurance and add to it the premium you had to pay to make up for 2018. That total amount, whatever that dollar amount is, it's got to be listed on your W2 in box 14. Now, I know it's sick that I know that, but I'm just sick and twisted. I'm an accountant and I'm a geek and I love this. But you're going to put that on your W2 in box 14. If it's not on box 14, you don't get a write off. So you got to talk to your accountant, make sure that all your insurance premiums are included in that One number. And frankly, I wouldn't even bother your accountant with this big question. Just do it. Just include the makeup premium plus your current premium all into one. Because that's really what it is, is a makeup premium, and it's going to go on your W2 before the end of the year.

He's from Georgia.

He's from Georgia. So he's. What do you. What do you sip down there? Georgia. Georgia, Kentucky. Is bourbon sweet tea. Yeah, he's having sweet tea down there. So enjoy your Georgia Christmas. So, okay, any more questions? Are we done? Going to do one more. So it's your lucky day. Then I'm going to give you some important little notices. My team's giving me a list here. So this is Kayla. Where's Kayla from? You know what, people, you got to tell me where you're from. This is an international experience. Make me. I feel alone here in my damn Idaho area. So. Okay. All right.

Right. Kayla, from your Facebook, I have an S corp and I trust incorporated the beginning of December. How do I file the taxes if I have only been incorporated for 30 days at year end?

Okay.

Yes.

Now, Kayla, if you just incorporated right here. Now, this is important, everybody. She kind of has the same story Tommy does, but she didn't start it till December 1st. So all year long up until then, you're going to report this as a Schedule C, Charlie, sole prop. So she's a sole prop for the first 11 months of the year, and now she's an S corp for the last month of the year. I can't backdate the creation of an S corp. Now, Kayla, I'm going to go out on a limb and say you probably didn't work with our firm. The only reason we would set you up an s Corp on December 1 is if you had some big money coming in in December. Because the S corp is only going to save you what money you earned in December. So I'm presuming you got some big money coming in December. I'm crossing my fingers. If not you, still, no matter what, you've got to file an 1120s tax return for this one month. I don't know if you need to do payroll. I don't know how much money you're making. I don't even know where you live, Kayla, because you didn't share that. So you're going to do this small tax return. If you were with our firm, and I'm hoping that's the case, my team would have set you up an S Corp. 1120. Let's get set up for the new year. And I'm going to finish on that note because poor Kayla. Do we know where Kayla's from yet? Illinois. She's Illinois. Okay. Thank you, Kayla. Not as warm as Georgia or the Bahamas, but Illinois is cool. You know, I love Illinois, and every time I go there, I gain five pounds. Oh, the deep dish pizza. Right? Okay, so Kayla gives us a good example of why you want to have a good tax consultation before you're in. And maybe Kayla's making some big money in December and it makes perfect sense for her. But we have some questions. Why would you set up an S corp for one month out of the year and have to do a tax return for that? So everybody take a little time. If you're a small business owner with a side hustle, a day job, whatever it is, you should meet with your accounting or tax advisor once a year at least. If you're like mark, I do TurboTax and LegalZoom. What the hell? That's not good enough. You want to live your American dream and make more money, you've got to upgrade your professionals. I've got several books on Amazon that are really good. This is my eight steps to start and grow your business. Eight hour and a half sessions on video, 60 other little videos and downloadable podcasts and webinars. I'm not giving away this today, but you could buy it on Amazon if you feel so inclined. But I am giving away the tax and legal playbook. So for all of you that share this video, Rosalie will choose a winner. And I'm supposed to sign it right now. Okay. Should I date it today so they know it's legit? Okay, so I'm gonna sign this and I'm gonna say merry Christmas. Merry. This is your Christmas present. Your first Christmas present of the season. Merry Christmas. 12, 11, 19.

Wow.

Can you believe it's gonna be 2020? Rosalie will email or text one of you tomorrow and let you know. Now, please share this book. I mean, share. Yeah, share the book. Share the video. On social media. I'm going to be doing the 12 tips of tax Christmas starting on Saturday. So make sure you're signed up on my Facebook to get those posts. And there'll be a video and an article that goes with each 12 each day of 12 days of tax Christmas Tongue twister. My newsletter is@markjkohler.com I gave you the phone number for the firm if you need a consultation. And links to all the websites are@markjkohler.com and. Oh, do have two gifts for the entrepreneur in your life maybe you need to treat yourself and get yourself something. But I have two gifts I'm going to be giving away my new not giving away. I'm selling my new 2020 calendar with all sorts of tips and strategies and tax deadlines. It's a beautiful little calendar but you can build your 10 year plan $24.99. Half the price of Dave's Ramsey's and I think it's better so this you can give for yourself or a friend. That and I also have a box that goes out with all my books and the calendar for 99 bucks. That special is released on my website on Sunday or Monday. So if you that last week before Christmas want to buy the entrepreneur in your life a gift, we will drop ship it to them gift wrapped with your name on it. So look for that as well. Probably you'll see an email about that. Thanks everybody. Drive safe. Don't drink and drive. Have a great holiday season and and do your tax planning before December 31st so that you get more than a partridge in a pear tree. You can do it. Thanks everybody.