How to Make Your Taxes So Simple It FINALLY Feels Easy
Mark Moss argues that waiting until year-end to plan taxes costs you money and forces risky asset sales. He walks through how a $100,000 tax saving invested at 8% returns yields $10,000 in months. His method: review income, expenses, and tax-advantaged investments quarterly with a strategist to keep more and invest the difference immediately.
Chapters
If you make $1 million this year and you wait until tax season to decide what you're going to do with it, then you've probably waited way too long. You know, by then the money may have spent months sitting idle. Some of the decisions that you could have made earlier, they're no longer available to you. Let me show you how I plan for taxes and invest during the year while there's still time to act. Now, I've seen plenty of people focus on the size of the tax bill and they miss the timing problem. Now, in many cases, when you make the decision matters just as much as the decision itself. So let's go. All right. So let's jump right into this and help you make some more money thinking about taxes. Okay. So first thing is that the IRS, your government, whichever, wherever country you're at, they're your partner, whether you want them to be or not, which means that they're going to take 30%, 40%, or 50% of your income, whether you want them to or not. So they're your partner and you have to start thinking about them that way. Now, if you don't want to pay 30%, 40%, or 50% in taxes, then your partner would incentivize you to do some things that they may want you to do. And if you do those things, then you could pay a little bit less in taxes. And so these might be invested in certain types of assets, invested in certain types of industries, giving money to charity, things like this that I could do so I don't have to pay as much in taxes. Now, the important point that I want to make here is that this takes planning. It takes being intentional. And so if you are like most people, and at the end of the year, you go to your CPA and say, here's what I made this year, they're more of like a historian, and they're going to go through what you did, and they're going to try to do the best that they can with it. But if you really want to keep more of your hard-earned income, you have to start thinking long-term. You have to start thinking towards the future. It has to be intentional. So you need to meet with someone this year to discuss what you're going to do next year and what you can do next year to lower that taxable amount. And the reason why this is important is 2 main reasons. Number one is that, again, if I go at the end of the year, I can't do them. If I wait too long, like here we are almost into Q4 of this year, you're starting to run out of time to get this done. And so if I wait too long, then I push out another year and it's going to cost me a lot of money. But number 2, Is if I'm able to figure out how much money I can keep next year from my taxes, I can start investing that money right now. You see, there's a time value of money. And if I can keep the money and I can invest it today, I have all this time to make money. Now, you might say, but I can already do that with my taxes. I can already estimate how much I'm going to pay. And the answer is, of course you can. But the problem is that most of our high beta return assets also come with high volatility. And the last thing that you want is for that tax bill to come due at that time, and your assets are down. Now you may be forced to sell an asset at a loss in order to get the money that you need, which means you have to now sell more of the asset and you lose money. And, you know, one of the number one rules in the Wealth Operating System is we never want to be a forced seller. So what I want to do is plan ahead. I want to understand what is my taxable income for next year? What will I do to offset that or mitigate that? And then how much of that money can I keep? Great. I'm not going to go on to that. If you want a whole video on how I do that, leave it in the comments down below. But let's just assume that I've done that. So now I know I was going to pay $200,000, but now I'm going to only pay $20,000. So now I have this difference, I can start investing that today. And now we can start to think about what this money could be worth over a period of time. Let me break this down for you so we can understand this a little bit better. Let's think in terms of just 15 months, because now I'm again thinking ahead to next year. So in this example here, you can see we're looking at like a 15-month timeframe. And let's say that I've decided I'm going to be able to keep about $100,000 of that income this year. And I can now put that to work. I'm ready to And invest this amount of money. And again, we're going to hold this over the 15-month period. And let's just say that I could get an 8% hypothetical return, which of course in a wealth operating system, we're going to do much better than that. But let's just call it 8% for illustration purposes. Now, what we can see is in this example, at $100,000 at the 8% yield over the 15 months, that's 10 grand. That's a pretty good amount of money. That could be a vacation. It could be a couple of vacations. It could be enough to pay your new tax professional to save you that money. It could be lots of things. That's what it's costing you to not do this. Now, let me make this a little bit even more important to you, because way too many people listen to this and they hear this and they see the $10,000 and they think about the value of that money today. But how much would that money be in 10 years from now if it grew at the 8% per year? How much would it be worth in 20 years from now? Now, what is your timeframe? Do you need to retire in 5 years or 10 years? So start thinking about the value of that money in the future, not today. It may be 10 grand today, but it could cost you $150,000 in future value. That helps you set the urgency a little bit more. Now, real quick, if you want to understand more, that's the system that I teach inside this free training. And the next session, it's only a few days away. And you're going to see the number one thing that sets your target, your implied freedom rate, and what changes when the same dollar starts doing more work. So, what I want you to do is bring 2 numbers. I want you to bring last year's tax bill and your net worth after debt. If you do that, go ahead, come over, save your seat with the link below, scan the QR code that I have on the screen right here. It takes, I don't know, 20 seconds, and then come back and we're going to go ahead and finish the rest of this video. All right. So now let's continue to think about how we're actually going to execute on this, because of course, knowledge is not power. Only applied knowledge is power. So doesn't do you any good to watch this video and not do it. So what we want to do though, is we want to think about how much money am I expecting to make, you know, this year or next year? And when I understand that, then I understand like, what will my expenses be? So I'll know what my taxable income is. And that's the amount of tax that I need to go offset. I need to find investments that can give me tax depreciation, tax credit, things like that. Now, of course, that's a projection. It's a model about next year, but we don't know. And so what we want to do is just like we would do with our normal taxes, if we're self-employed, is we want to think about them quarterly. So every quarter, we're going to sit down, we're going to look at, are we on track to make the amount of money we thought we'd make, spend the amount of money that we thought we'd spend? And are we making the appropriate investments in order to offset that income? And once a quarter, we're going to sit down, We're going to true that number up. We're going to make the investments that we need to make so those things can get going. A lot of times these take months to get into place, right? You can't just do it the day you need to save the money. And so once a quarter, we're sitting down, we're truing that up, we're making the investments we need to make, we're setting aside any money that we need to. And of course, if we plan properly, then that money we're setting aside can also be invested at the same time. Now, another thing that we're also doing, part of this true-up process, is I'm bringing all of my notes and receipts and stuff like that, making sure my tax strategist has all those things. And so again, part of being proactive is I need to think Like, hey, you know, next quarter I'm taking my family to Europe. And of course, I'd love to, you know, write as much off of that as I can. What could we do next quarter on this trip to write those things off? So we're always proactive about it. And my tax strategist might suggest something like, well, if you and your wife had a meeting, a corporate meeting, and had your corporate minutes and filed those, we could say it was a business trip. You know, your kids that you're already paying on your payroll, you could make sure they capture some videos of you or do something else for you. And that way it's a business trip for them as well. Maybe you bring over some of your clients or some— something like that. And there's a way, if I'm proactive and I think about this in advance, that then I can start taking ordinary expenses I would already have and I can start to put those toward the business. If they're true, if they're legitimate, which is why, of course, it takes pre-planning and not post-planning. But these are all the things that we'd do if we're looking at this regularly, quarterly, on a quarterly basis, and we're planning for the future. And now I do want to just say one more time, it's important to understand this. This can only work if it's proactive. I have to be intentional about what I want and I have to be proactive. You can't do this in arrears, which is what most people do with their CPA. Now, part of the reason why I want to do this in advance and into the future is because it takes planning. You can't just offset most of your income right away. And so it might take a while to start building up these investments and making the moves that I need to. And really what I want to do is I want to sync up my tax planning with my investment planning. I want to make sure that the investments, the assets that I'm buying into, are giving me what I need on the tax strategy side. I want to make sure that I have the proper assets, I have the collateral assets that I need to free up the liquidity to then get the tax planning assets that I need. And so these really go hand in hand. It's the tax planning that gives me the investment capital, and I'm investing properly so I can get the tax planning, which then gives me more capital. So I think the important piece that I'm trying to get to here is that these are not 2 separate functions. These 2 work together. They should be done at the same time, always in sync. And the goal is that they both work together To get you more. And so you can understand the timing problem, but you could still lose the benefit if the capital doesn't have the next move, because without one, the money just goes from sitting like before tax season, sitting idle after it. Now, if you want, I have this free training right here. It's going to walk you through the system that I run every dollar through. So I always make sure it has the next move. And the next session that I'm running is only a few days away. It's right here. So go ahead and save your seat with the link or the QR code that I have on the screen, and I'll see you there.
