Taxes Fundamentals for Roofing Business Owners | How to Employ Your Family

The purpose of this webinar today is to let Chris take what he's learned in the last months, five months of working with our platform customers and his entire life and give it to you today for free.

We're going to introduce you to this system called the four E's. Educate, evaluate, execute, and get efficiency. Here's what you didn't know. You didn't know. And then giving you some evaluation tools to say, how does that apply to me? There's going to be some execution tools. We got some playbooks we put together. The goal is that we get you efficiency. So before we begin, I just. I want to give you some framework, and then I'll tell you a little bit about me. @maytexisfair.com we believe that the accounting model is broken. And here's why. We say that this is the taxpayer roadmap, right? And I love showing this image because this is produced by the IRS to give a visual representation of the taxpayer system. And I say, if that's the road map, where the hell is the gps? Because that looks like a rat's nest to me. Not. Not a road map. And so really, the government, it's a system of confusion. And we know in part of why we said, hey, we're going to invest in Adam and the RBP entire team is because we recognize that systems are vital. So we've been incredibly blessed to work with RBP in the implementation of our system. But the government system is currently under expansion, right? We're hearing budget increases, employee, they're replacing employees that are retiring, and auditing are on the increase. And the fun fact about audits nowadays is the newer auditors aren't as experienced. And so they're more by the book. And they're like, oh, no, you can't do that. The book says you can't do that. So there's less flexibility than there's ever been when it comes to audits and dealing with the irs, which means that puts us, as business owners in the place of how are we going to manage this? Well, the struggle is, like with anything, I got the dad bod because I lack the time, energy, and desire to go work out, right? So we. We only have so much time, energy, and effort in our days, and the result is, when it comes to our taxes is this. Most business owners who are very busy are like, my CPA has me covered, right? I don't have time to deal with this. But the reality is this business owners are CPA. CPAs are business owners as well. And I call most CPAs happy historians, nice people. You like them, you trust them, they're your trusted advisor. But they're not doing anything other than taking your information and putting it in the right boxes. That's important work. And we have to be compliant in our tax filings. But they're not doing anything to change your fact pattern. And the result is taxes are weighing you down. You're struggling. I hate the word small business. There's absolutely nothing small about being in business. It's a mountain that you're climbing every day to bless the lives of your clients, your customers, your employees. And taxes are. We're sitting here trying to climb this mountain every day and the burden of the taxes is dragging us down. And so what we've done is we've created a system. So today we're going to introduce you to this system in the terms of education. Right? We call it the four E's. Educate, evaluate, execute and get efficiency. So today we're providing you with some, here's what you didn't know, you didn't know. And then giving you some evaluation tools to say, how does that apply to me? There's going to be some execution tools. We got some playbooks we put together and I'm very proud of what we put together for our playbooks using the RBP HubSpot system. I'm super stoked. So the goal is that we get you efficiency and that's, that's our hope and dream today at make taxes fair. And I'm not going to read this to you, but we give our clients a clear edge and these are the pillars where we identify areas that we can improve on. Right? Credit optimization, legal, Legal structure optimization. So today we're going to be talking about hiring through tax credits and retention of people and that type of thing. So today's presentation is also not legal or tax advice. I'm not an attorney attorney. I don't play one on Zoom or TV is the joke. But at the end of the day, taxes and legal, there's crossover. So you got to make sure we address that. And then it's educational in nature. So for us to be considered tax advice, we would need to sit down, look at your specific fact pattern and specific information. So just that quick disclaimer. But what's on the docket for today is we're going to talk about tax smart hiring. So how do you hire in a tax efficient way? I'm going to show you. My fiance just recently got hired and her employer missed a $5,600 tax credit, huge tax credit that he just missed because he wasn't aware of it. And then we're going to talk about how to employ your kids. If you have kids or minors really, it could be your grandkids, your nieces, nephews. It doesn't have to be just your children, but we're going to talk about how to do that. So a little bit about me real quick. I've been doing taxes for all. Coming up on 20 years, been in the tax game. I recognize a couple of names from the attendees list and I'm sorry if my voice is cold. I'm in my back office workshop shed and it's a little chilly this morning, so. But yeah, I've been doing taxes for a long time. I love this part of it because we get to help people open their minds and expand their minds and say there's a gotta be a better way to do it. And so grateful for the opportunity to be here with you guys. So we're going to introduce the Workers Opportunity Tax Credit. This is called the wotc. Sounds like a Sesame street character, right? Accountants like acronyms. So Workers Opportunity Tax Credit. This is a tax credit that you can get if you hire within a certain demographic or what's called targeted groups. Who here has heard of the Employer Retention Tax Credit or ertc? Throw that out in the chat if you've heard of that, if you know what that is. Let's see if you guys are awake. So ERTC heard no. Okay. So that was a Covid era. Hey, you could qualify for massive tax credits. This is not that. Right? This. A lot of people have heard when I've done presentations on this WATSI credit, they're like, oh, is this that ERTC thing? There's been massive fraud associated with that. The IRS put a moratorium on that program. So this is not that. So if anybody's out there, I don't want you to dismiss this because you think it's something else. This is a tax credit that is specific to hiring and the hiring groups. So who is a targeted group? Qualified veterans. It's actually qualified disabled veterans. If you hire a qualified ex felon, they went to band camp and they're out of bandcamp for at least a year or no more than a year. Qualified summer youth employee. And we're going to break that down a little bit is qualified supplemental nutrition assistant. So SNAP Foods food stamps type programs, Supplemental Social Security income or a qualified long term unemployment recipient. That's where my fiance qualified. She had gotten laid off from her job or the Business she worked for had shut down, so she was out of work and she had been on unemployment for about six months. She was looking for work and, and struggling to find the right fit, but she ultimately found a, an employer. She now works for an electrician, but she had been unemployed for over six months. So these credits, the WOTC tax credit, if you hired a qualified disabled veteran, that credit is worth anywhere from 3000 to $9600. Huge. The qualified expellent 1500 to 2400 qualified summer youth employee and had them through into the qualified summer youth. Sounds like a site supervisor. There's a lot of things you can do with a kid as a gopher during the summer, right? Qualified long term unemployment. So you can see there's no real set amount for this credit. It very varies by targeted group. It varies by the role and even the qualified veteran is 3,000 to 9,600. It varies by how much time they work for you. So it's a kind of a sliding scale. The more hours you give them, the more they work for you and stay employed by you, the, the more the tax credit could potentially be. Okay. And I, I see a comment made. The roofing industry is already, already has a few felons. It's Americans forgotten sons. So it's that second chance, right, you're giving. And I, I talked to a guy once and showed him this credit and he's like, well shucky darn, that's me. And I was like, oh really? And he's like, yeah, I'm a, an ex felon. I was like oh, okay. And he's like, yeah, did something really stupid at the age of 18. And that's part of why I started my own business, right. I was having trouble getting, getting work. And so here he is today running a very successful company employing lots of people and he actually looks for people that he can hire that also had had a lapse in judgment, did something stupid. And now he's like, hey, I want to give them that second chance. Right? And that's what this credit is all about. It's giving people an opportunity, right? The workers opportunity tax credit. So real talk on a couple of things, it has to be W2 employees. So if you're utilizing the 1099 model, this is a contractor. At the end of the day they have to be W2 because this is a, this is a W2 position. And clearly if you interview 100 people during the year, not everybody is going to fall into one of these targeted groups. Right? Or you might hire somebody Maybe a qualified, an ex felon, but not a qualified ex felon, meaning they just got out of, you know, serving their time within a year. So there's parameters that you have to be aware of that not everybody is going to, to qualify. But if you don't know about this credit and if you're not screening properly, there are people that you just flat out missed again. My fiance started working for somebody, he didn't know about this there. The time frame for him to claim this has now passed because he did not have standard operating procedures in place to be able to properly screen and then properly submit. So he missed that window, missed a $5,600 tax credit. So if you could, if you could, to back up a little bit here, if you could properly screen and let me ask you this, if you could spend maybe an extra 12 hours a year on implementing some SOPs surrounding this and you could potentially capture 9,600$20000 in tax credits, do you think that would be worth it?

Put a 1 in the chat if you think that'd be worth it. Put a 2 in the chat if you think 12 hours for $9,600 is not worth it. Should all be ones 100.

Perfect. So at the end of the day you don't know what you don't know until you know it. And then it's like, okay, I'm aware of that now, what do you do with that? Right? So that's the whole idea behind this is letting you know what's available and then at the end of the day saying okay, is that worth my time? Is the juice worth the squeeze? Is what I like to say in my opinion. Absolutely. Because if you can say, okay, here's what this is now what do I need to do? So step one is you got a screen, you have to screen. So I'm so sorry, if you, if you've already hired somebody or recently started, they've actually started the job, you missed the boat. If you're like, well I'm going to fire everybody and rehire them, sorry, that doesn't work. You have to be able to identify and these, these things have to happen in sequential order. Now legitimately you have got to talk to a gentleman and his HR person was sitting at the table, was at a dinner conversation at a conference I went to and I was telling them about this and his, his daughter in law is his HR person. She's like, he always hires and does everything. Like before we even get the background, check it out. And she was just really flustered by it and I said, okay, homeboy, slow down. Sometimes it's good to pump the brakes before you speed up, right? You need to sometimes slow down before you speed up. So with this, you have to do these in sequential order and, and you legitimately could have all these happen on the same day. In all likelihood, you're probably going to have filter and find out that they're part of a targeted group first. And you do that by implementing that into your screening process. So what is your application on? Your application, can you have them check the box for are they part of one of these targeted groups? This is where I'm not a lawyer comes into play. I'm not a lawyer, I don't know employment law. And you got to tread lightly and not discriminate or ask questions in a way that is discriminatory. So what I recommend is whoever processes your payroll. So if you're using ADP or paychecks. I'm sorry. No, I'm just kidding. They're okay. But they have a. Typically payroll companies have a process where you can screen for these types of things. So check with your payroll provider or if you have an in house HR person, their job is to now bird dog this strategy and say, okay, how do we ask in a compliant way? That's not going to get us in hot water for discriminatory practices, hiring practices. How do we ask, are you part of one of these targeted groups? You can do that in a compliant way. This is where I say I'm not a HR person or an attorney, labor law attorney, so I can't tell you how to do that. But you do need a screen for that and integrate that into your application process. Once you write you've made them a job offer, you need to make sure that you have that targeted group there and then offer them a hire date. Say, oh, your job offer is made. If they accept it, say perfect. Your hire date, your start date is this hire date and start date of these. So you have to document these dates and this is part of the submission for the process. So it's A form and IRS form 8885 50. So you need to make sure that you fill out the form and then you need to submit that form along with the employment stuff, all the stuff you gathered when you hired this person, their i9 copy of Social, all that stuff that you need to submit to the state workforce agency, swa. That's fancy for your department labor, right? So whatever your department of labor is in that state that you're hiring that person because the Department of labor is going to go in and confirm, oh, that person was receiving unemployment benefits. Oh, that person was a registered or Department of Defense. Right. They can see that. Disabled veteran or is part of Stan follow up. Right. I put on one of my other presentations. Ryan Reynolds used to be my favorite Canadian. You've replaced him. So can everybody still see me?

We got you back. But there was a little bit there for about 30 seconds explained. So if you just rewind your brain 30 seconds, you'll be good.

Got it. So, IRS form, you have to complete the certification process. So it's the IRS form 8550. So you have to fill that out, complete that IRS form. And there's instructions that go along with that form. And we put together a playbook that kind of gives a little bit of information there. And they have to submit that form with the documentation I9 the the information that you use to hire the person to the state workforce Associate Agency, which is your Department of Labor. So I had a, I had a client, they came on board and they were like, I told them about this and they're like, ah, yeah, we did this. It doesn't work. It's bogus. And I was like, wait a second, what do you mean it's bogus? It's an IRS form. It's not bogus. It's a program that the IRS has. So what do you mean by that? I dug in a little bit deeper. Well, here's what happened. They were hiring like 30 to 50 people a year, growing their company. And there's no limit on this. You could be Amazon or Target or Walmart and, you know, big, big players. And they get these credits because there's no employer size limit. They didn't have SOPs in place to submit to the state workforce agency, the, the Department of Labor for their state. So they weren't following through on that process. They did not have a standard operating procedure in place to say this needs to happen. We need to submit and make sure that this credit is claimed. Because once you send that information to the state workforce agency, you have to bird dog that and follow up to make sure that you get the certification back from them for that employee. So that's again, where is this worth 10, 12 hours a year of your time or the time of one of your team members to follow up on this to capture fairly large credits. Right. Because again, Those credits are 3,009, 600 for a qualified disabled veteran, qualified ex felon. You know, these are the ranges of these credits. And so it can be substantially. Had the employer of my fiance, had he known about this and done the work probably for about two to three hours worth of work, he could have had $5,600 because she's full time with him, she's going to be working for more than 400 hours. So at the end of the day he could have gotten that credit. So at this juncture, I always say welcome to fabulous vagueness. Right. What stays in ambiguity? So if we don't action, if we don't take action to get those certifications and to do that process, what are we going to get? So we put together a playbook content.make taxes fair.com forward/Watsi. And we'll provide these links to Adam and Bettina and the team at RVP to publish later. But that's where you can go to. We're going to post a video replay of this presentation for the WATSI that you can go back and review. If you're the owner of the business and you're like, ah, shucks, my person that handles this should really have seen this. We're going to post the, the video there that they can watch this and then ask questions and ping us. But there's a playbook that gives you step by step instructions on how to go about this. So I want to pause here and say execution is everything. Knowledge is not power. Knowledge applied is power. So what questions everybody have? I can take some Q and A I'm tracking.

One question that came in the chat was we have to get this certification for each employee.

Correct. So that that certification process needs to be submitted to that state workforce agency for every eligible for every hire that you make. And it has to be done within 28 days. The playbook references that. But from the date that they start, you have 28 days to submit that to the, the state workforce agency. So my client that was like, ah, this is bogus. This isn't. They were not. When I dug in deeper and talked to their person that was in charge of that, they were submitting them like two, three months later. So they were not submitting them within the 28 days, which is why they never got the certifications back. So there's a time. Yep. Is this valuable? Are you guys, is this.

It's one of those things. It's like I think that everybody in a room, right. It.

It.

I mentioned this earlier, right. That like small business owners think small. That's what makes them small. It's not that their business is small, it's mindset is small. And I Kind of opened at the top of this conversation saying that, you know, the ab your network is your net worth. And a lot of small business owners think about doing taxes. They don't think about planning their taxes and planning a tax strategy, right? We have a marketing strategy. We go and find out from the Joseph Hughes of the world. You join my course or you do webinars or whatever, you get a marketing strategy that you pull from, you know, the sexy online world of marketing. And then you get an Adam Benjamin or a Ryan Groth or, or a Rodney Webb or a Chuck Fokey and you go and get a sales strategy, right? And then, you know, you, you get some business coaching, right? So you come to platform or whatever and you're doing beginning business coaching. But just like you have to have a strategy for all these, all these motions in your business. You know, the, the amount of dollars flowing through roofers hands, right? If you want to start a yogurt shop, you're going to spend $200,000 to sell $32 worth of yogur. And roofing, you're going to spend a thousand dollars to sell a $15,000 roof at a 40% gross profit on your third day in business. We're very spoiled with the immense opportunity in roofing, but where we get clipped is in the back end, right? In the logistics and the insurance, in the chargebacks and the taxes. And so what I want to affirm to everybody that chose to join today and everybody that watches this after, because we're going to make sure we get this to everybody, buddy, is that this is part of playing in the big leagues, right, is to, you know, there, There are big CEOs that take a lot of flack when they try and become presidents because they didn't pay enough taxes by, you know, according to the a average taxpayer, right? They'll just like, oh, he doesn't pay enough taxes. And then their response is, and that's because I'm smart. You created these laws, these laws exist. Why does this law exist in your mind, Chris? And everybody feel free to put, you know, questions in the Q and A and stuff, but I kind of want to like ask you, like, why do you think this exists? Chris?

Well, so tax law is this, this specific? The watsi is what you're asking?

Yeah, like why does this specific thing exist? Because sometimes people feel weird about taking tax credits. I, I because they don't do it enough. So they must have some reason for not doing it. I'm just gonna assume that maybe they're trying to stand on some moral high ground.

So, so there's this, I like to call it the red light, green light concept in the tax law, actually, because taxes are about the law, right? The, the Congress critters get together, they beat each other up and you know, there' aisle, you can get political about it, but you can see where, you know, they're, the taxes are trying, they're trying to drive certain incentives or certain behavior in this way. This is an economic stimulus type thing. It's been around for years. It's currently set to expire in 2025. They're probably going to extend it. They've extended it every time this is expired. They might tweak it or modify or say, hey, we're going to expand the targeted pool, whatever. But this is a tax credit that's designed to incentivize employers to hire and put people back to work. So people, when I work with people and they're, oh, well, my accountant, the, you know, they're great, but they never really wanted to be in the gray area or they never really wanted to push the envelope. And I say, I'm going to stop you right there. Anybody that says, oh, I want to be in the gray area or push the envelope, you don't understand the rules. There is less way, way, way less gray area than you think there is in the tax law. It's, do we know the rules and are we playing by them? Yes or no. So this is one of those areas where if you know the rules, you know the parameters, you can say, hey, I'm going to do more to keep more of my money in my pocket so I can bless the lives of my clients, my employees, my, my family. That's what this tax strategy is designed for. And who knows what a credit I should modify.

That was going to be. My next question was the difference between a credit and a deduction.

So in the, in the chat for the attendees who, who put a 1 if you want a credit, put a 2 if you want a deduction, which would you vote? If you had the choice between a credit and a deduction, which one would you want? See if you guys are awake. This is taxes. So I want to make sure everybody's with us. A credit is a, well, let's start with a deduction. So a deduction, if you have a million dollars gross income, right? And then you have labor, you have, you know, your expenses, your mileage, your materials, those are deductions, those are your expenses. So all a deduction does is reduce your income and it reduces the amount that you're taxed on a credit. I love the heart thing that you know when you. We love our deductions. Deductions are good. Expenses are good, right? Because that's what keeps the machine of our business running at the end of the day. A credit, let's say if you have a million dollar GROSS, you have $900,000 of expenses. So you're taxed on a hundred grand. Let's assume a flat 10% tax rate. I wish, but it's not reality. Let's keep the numbers simple. You have a $10,000 tax bill if you have a credit of $9,600. If you hire a qualified disabled veteran, your $10,000 tax bill is reduced by that $9,600 credit. A credit is a dollar for dollar reduction of the taxes of your tax liability. So we love our deductions, but if you give me a choice between a credit and a deduction, I'm going to say give me a credit seven days a week and twice on Sundays. We love our credits, but to get the credits because they're so lucrative, it's a dollar for dollar value of tax. You got to make sure that you jump through the hoops and clearly there's hoops for this. You got to do the work to get the credit. That's all it comes down to. And if you can understand in a clear, concise way what I got to do to get that, I mean that can be amazing. Some tax strategies are limited by the size of your company or how big you are, how small you are, or this is an even field. Everybody, regardless of the size of your company. But the key is they have to be W2 employees. You can't claim this for people you've already hired or people that are 1099. Grab the playbook and if this is valuable, get that free resource and say let's put it into motion.

So what I would say guys, and for those of you in the room, reason that I would venture to guess that this exists is because if you're a long term food recipient receiver, right. The government is spending your tax money that you are paying to pay for those food stamps. Right. Or to pay for that unemployment. Now the government as to get, you know, to get you to vote for them has to drive down unemployment and drive down the number of people on food stamps. You'll look, you've got, politicians will stand up in November like oh, more people on food stamps than ever before, right? Like they're going to throw that stick at the guy who's responsible. And the guy who's not yet responsible is going to blame them for that, right? And so they got to try and find a lever that they can pull to drive down that thing. And they got to say this. If we create a program and make accountants aware of it, then they will make their clients aware of it and then they'll drive that down. But CPAs are the happy historian. Like he said, they're not in the business of tax planning, they're in the business of tax doing, right? And so they don't necessarily always. Because the market of business owners is going and saying who can do my taxes? And how much do you charge? And you have this big box of accountants, right? Full of accountants who are being one of many, right. And they're all charging, you know, let's call it a hundred dollars again, we wish. But a hundred dollars. And then they try and find ways to ever drive down the price because you're going to go and look by accountants and in your brain you're going to click the sort by price button and you're going lowest price. But this isn't like buying travel, okay? This is tax planning, right? And so then they go from 100 to 98 to $97. And the problem is they have themselves drove themselves in a race to the bottom. And the only thing worse than being the winner of a race to the bottom is being second place. So then they drive harder towards the bottom. So they go from tax planners to tax doers because doing taxes is something they can do quickly. There's softwares that make it ever easier. And just the simple information disparity between what you know and what they know allows them to move faster from knee to taxes done. And so Chris is one of those people who decided to be one of one and go put himself in a box outside of that and say we're not in a race to the bottom. We are going to teach coach, consult. And I'm not trying to sell Chris. This isn't like a webinar to sell you guys something. I've always said I don't want these webinars to be salesy. But he. The unique thing about Chris and about make taxes fair is they decided to go jump out of the box where it's the race to the bottom in the business of tax doing and say we are tax planners now. That means that they don't have H R Blocks level of budget, okay? Or whatever, Liberty Tax Service or whatever. Like they don't have that. They're not like Your local accountant who's just going to local BNI Group trying to land more tax doing people. And Chris is in this tax planning business. And so when you don't hear about this from your accountant, it's because they're not financially incentivized to do so because you're only paying them X. Right. And so then this is the same rule that exists for all these other programs, right? Ex felons, right? Most. Like I know a lot of business owners who are ex felons. Dave from dope marketing is very vocal about it, right. And he's Nick Fallon. He had to start a business because he could not get a job doing anything other than washing windows. So then he started a business washing windows. Then he started to try and figure out how to target customers. So then he got into data and targeting data that became his company, a type data. Then he used that data to target people with postcards. So then he used that to grow his kids power washing business. Then he got so good with postcards and solving the problems there that he built a software that he then turned around, sold to the market. But he's an ex felon, right? But he had trouble renting a house. And this is all stuff he said publicly. I'm not like throwing him under the bus. But he couldn't buy a house, he couldn't get a mortgage. Right. He actually had to write the state to even get the ERTC tax credit and the paycheck protection program because they didn't want to give him access to a program that was given to every other citizen who owned a business just because he was an ex felon 10, 15 years ago. And so he actually had to write the government and say, look, I've done three businesses, I've got dozens of employees. Like, like, please let me take advantage of this program because you guys are shutting down this whole country right now. So the government has to try and find a way to give you an incentive to give people a second chance. So they're saying inherent in hiring this person, you feel there is risk. We're going to offset that risk by giving an incentive. The same thing goes for the veterans, right? Like I was in the military, I know a lot of veterans that I was in the military with, when they come out, they don't even know. Like they have their own banking, they have, they don't. They have their own doctors, they even have their own hair salon. Like they get their hair cut at a military place. Like they don't know how to reintegrate into Society. And it's up to the government that gave them that job and gave them that Stockholm syndrome, that institutionalization of the military to say we need to create incentives and opportunities to get them reintegrated into society. And employers are going to have to teach them how to work in an environment without a $700 billion budget every year that gets signed before spend it like now they're in the invisible hand of capitalism world, so they have to be trained and retooled for the capitalist market. So these are tools that are there to help create the social structure that society has voted for. And you as a business owner have the opportunity to create the better world, right? By helping disabled people, by helping veterans, by helping ex felons who made a mistake reintegrate into society in a better way. And to help people who have not found their calling in life to find their calling. And you get a financial incentive to do so in beyond a deduction, but a credit, which is an even better thing. And Chris is here to make that kind of stuff happen. So I encourage you all to go to this link. I posted it in the chat. I also fixed your landing page, Chris, so that the words weren't black on black background in the form. So your HubSpot. So that's there and, and the videos we made available. But you should be taking these notes. So can you go back to the slide that shows the four step process? Just so everybody has that note, right? Because this is not the playbook. I downloaded it, there's more to it. But again this is the summary of it, right? You guys want to make sure that you're instituting a process to do this and it's a simple matter of going on upwork. You could hire a lawyer. I've had to open up employment numbers and basically I have employees all over the country. So I've had to open up employment in all these states. Like if I hire one employer, one customer or one. Sorry, if I hire one person from Utah or California or Nevada or New Mexico, I have to spend a couple thousand bucks basically opening up the account there. And then my, my seat, my bookkeeper has to then register the payroll deductions to go to that state. We have to process an entire submission for that one state because we found that one awesome person like Chad in Utah.

Right.

And I have to do it in two countries because Michael's in Canada, Bettina's and not, you know, so then there's like the differences there. So it's a process to get. You can go on Upwork and you can just hire and you can just search employment, lawyer. And for 500 bucks, you could probably get the application that you need with the right word tracks on there to essentially say, are you part. We do not discriminate against you for this, but are you one of these four key groups? Right. Because, you know, at the end of the day, you're trying to help create the social atmosphere that Americans have voted for. So thank you so much, Chris, for being here.

I'd like to say something fun. You know, if you work with somebody and you, you're. And they're like, well, why are you asking me this? You can tell them, hey, I'm going to empower you and tell you, if you're one of these targeted groups, there could be a tax credit. So everywhere, if you're applying at other places, bring that up to them. Be like, hey, there's this tax credit called the WATSI that I was told about. And I just happen to be one of those targeted. So you can help people, like, not come from a place of shame, but a place of, oh, hey, at the end of the day, you know, you could get a tax credit for me and you know, here's how what that is, go ask your accountant. But, you know, that could help empower them to be more confident about getting out there and getting that job. Right. Comes from a place of if you can lift, which is our goal on that. And I have one more.

Yeah, you had a whole second strategy to get into about hiring our kids. Yeah. Alice is already playing on the keyboard, so I mean, let me get them on the books as soon as possible.

Yeah. At the end of the day, we like to say friends don't let friends overpay the government. So if you found this valuable and if you, you know, one share, share your friends and business owners and be like, oh my gosh, the amazing team at, you know, RBP brought this because Adam and the team have many other webinars that are just valuable. And I plug you guys all the time to roofing contractors and say, look, you guys should go check these guys out. But especially this because that that is in the replay is going to be there for free to. For you benefit and your friends. So friends don't have friends. Overpay the government. Share this with your friends. I'd like to share with you one more strategy about hiring your kids. And great. Oh, real quick, somebody asked the question, is this the watsi? Is that a annual credit or one time. It is only for the first year of their Wages and there are hours requirements. That's part of that sliding SC is the credit can increase or decrease based on the amount of hours that they work for you, but it is only for the first year. It's not a recurring tax credit. So wanted to chat about hiring your kids. So why should you hire your kids or minor dependents or people that are, you know, grandchildren, nieces, nephews, how you can leverage this reasonable pay, all that. So hiring your kids, this is a deduction optimization from our clear edge framework work. But how the tax is calculated, this is for everybody. The, the tax formula is this, you take your gross income minus your adjustments. So retirement contributions, etc, that gets you to what's called adjusted gross income. And then that you, from there you deduct either the standard deduction or the itemized deductions and that comes up with your taxable income. You apply the tax rate and there you go, you've got the tax liability. Right. So how much you owe in taxes? Well, this strategy leverages the standard deduction for the kids. And here's how that works. The 2024 standard deduction is 14,600 bucks. So basically for if you're single, your first almost 15 grand is tax free, right. You could take 10, 15, $14,600 and still be in the 0% tax bracket because the standard deduction is what drops them down to their taxable income being or, or negative. Right. So if you, you have somebody that makes less, like let's say they make 12 grand, well, they're going to owe zero taxes. Well, the tax rates are these, you know, there, it's a progressive tax rate. So 10, 12, 22, 24%, so on and so forth. So if somebody makes $50,000, not all of that 50 grand is taxed at that 22%. It's like layers of a cake. So each layer is taxed at its own rate and that's after your deductions. So for example, if you as a parent or you as an aunt, uncle, you could employer again, niece, nephew, grandkids, whatever, you could hire somebody off the street and pay them, they don't have to be a minor child, right? You could, if you pay them 12 grand and you're in the 24 bracket, you're going to see tax savings of 2, 800 bucks. If you're in the 32% bracket and you pay them 12 grand, tax savings are 30, 38 dollars. Right. So there's, you know, a little bit here, a little bit there, and the person, that child, their tax is A big fat zero. This is an income shifting strategy. You're shifting income from a high bracket to a low or zero bracket. Fun fact. You could pay a child, you know, if you have a 16, 17 year old that's doing more meaningful work and you're like, hey, during the summer your happy ass is on the job and you're working full time for me. Right, let's get you to work. Well, you could pay a child more than the $14,600. Just realize that next layer of income is only taxed at 10%. So if you're in the 32% or higher bracket, if you're in the 37% bracket, well I'd rather have money taxes being paid at 10% than 37%. And those are just the federal. If you're in a state where there's income tax for your state, you know, you don't have, you don't have. We're not accounting for the state income tax. So the, your structure impacts the, the tax savings. So if you're a sole proprietor or an LLC tax as a partnership, you can pay a child ages 7 to 18 and there's a reason why I say 7, we'll talk about that in a second. But you can pay a child 7 to 18 years old their pay. That $12,000 is not subject to payroll tax, Social Security, Medicare. If you're a C Corp or an S corporation or LLC taxes and S corporation, sorry, but you're going to run their pay through payroll. That child is going to have to pay Social Security and Medicare tax on that. So your legal structure can erode the tax savings a little bit. There are other benefits. People are like, well why would I want to be an S corp or taxes and S corp. Then there's several other benefits. And that's our next topic I think on the 17th is we're going to talk about the power of an S Corp and why it's a tax saving strategy. Right. So we'll get into that in a whole different topic. But all ages, that, that affects all ages. If you're an S Corp or a C Corp, your pay is subject to Social Security and Medicare. But at the end of the day I say seven years old because the court tested AIDS wage. That means that somebody was paying like a, a five year old kid to do work in their business and it ended up at the tax court and the tax court said that's cool, we're not going to allow you to deduct those wages because what can a five year old do? Meaningful in your business, right? What can a 7 year old do that's meaningful in your business? So, so you know, you have to be mindful of can a child do reasonable tasks and duties? Now there's a shift in the world that's happening. There's no court cases with this. But you know, I have a client, she's like, well my kids are super cute. And I'm like actually they are not all kids are super cute, but hers are. And she's, they're models. They put them in all my social media posts. I'm like, that is true. You do. So there's kind of a shift where people are like, well they're the, in a digital age with the world shrinking and, and getting broader at the same time, you know, can we pay them as models? You, you can be that, that's not court tested and that could be challenged. So you have to really be reasonable. So here's the right way to do this strategy. The right way is to come up with tasks and duty. So cleaning. Can they clean your office? Can they go like a child? That's, can they go around, you know, 14, 12, 13, 14 year old, could they go around a roof, you know, a job site and run the magnet thing? You know, we just had our RO replaced not that long ago and I got a flat tire because.

Oh my gosh, Chris.

Yeah, I know, we, we, we called and you know, he dealt with it. He was, he was. But you know, you could have a kid go around with a magnet thing and, and clean up the job site and make sure that all the nails are picked up and that type of thing. Right. So you know, there are things you could do in your business organization, right? Helping to shred paperwork or file paperwork, marketing efforts. Right. Come up with a defined task list. And I actually like AI, like chat. GTP is a really great way to interact and say hey, I do this in my business. This is my niche. This is where I'm thinking about using my kid and have AI kick out some job duties and things. What are some repasts that I could have my 9 year old, 10 year old, 12 year old do? Right. There's going to be an ex. You got to lay out a clear expectation of time. I love this image with the stop clock with the dollar sign. Right. You have to an expectation when they're going to do the work, especially if they're in school. Right. So if they're juggling school like which they should be, that's their job is to be in school and learning Right. You need to say, okay, hey, you also work for me. So when are you going to do the jobs, time the duties and things that I want you to do? You have to keep a time card. You document the work and even though they're not of legal age, like to sign a contract, kids go and get employment. They, they, they sign on and get paid. They, they enter into agreements to be employees at other places, McDonald's or Burger King or whatever. Right. So document it, make it formal. Have a agreement with your kid. But let's say this, let's say you, you have a child that you decide, hey, I'm going to wait till the age of 7 and can you reasonably pay a 7 year old up to the 14,600? I would argue no. Right. You, you need to be reasonable and say, hey, let's work them up in their job duties. But let's say your first year you're able to justify $4,000 that you pay your 7 year old. Cool. You could fund a Roth IRA. You could say, hey, they to, to qualify to contribute to a Roth ira, which, that's the tax free. Right. You fund it with after tax dollars, which in this case their tax is zero. So you fund their Roth IRA with, with after tax dollars that they were not taxed on 3200 bucks that year. And then hey, instead of mom and dad paying for their back to school clothes, how about the kid pay, you know, hey, you want to pick your own clothes and you give them the money and they get to pay for it. That's good parenting. You're teaching them, hey, your budget is for this semester is $250. So now you're teaching them to shop and budget and it's their money. And then if you, you know, gifts for, you're like, hey, is this like your best friend? We go to Target. Or you know, really nice. You get them a nice toy or is this like a dollar tree friend? You know, they get to how much they're spending on their friend's birthday party gift, right? So it's, you're taking the money that they earn that they're doing a time card. You're teaching the value of money. You're shifting from a tax bracket that's high to a low zero tax bracket. It, and it's good parenting too. You're teaching them how to be responsible and money. You could also go and say, hey, we're going to Disneyland. So you're buying your own ticket abuse of this is to have the kid pay rent, right? Well, they My roof and paying for the grocery bill. In a reasonable world, what child pays rent to their parent? No, that would get shot down by the irs. So, so make sure it's for the, the, the money that they're earning is for, for directly their use and not the benefit of everybody in the household. But let's say you do this for, you know, every year you increase their wages because you're increasing their job duties and saying, look, now year three, they get to, you know, they're doing sports or band or doing a field trip or something and you're like, cool, that's your thing. And you can do this, your, you can pay for this yourself. Do you really want to go on that trip? Well, it's going to cost you X dollars. So you, your budget is. I didn't put this in there because not everybody does. But you know, tithing that's a great, if you're religious and you tithe or give charitably, you know, it's a great way to help them understand, like, hey, here's what you're doing with your money. So it's a shifting tactic. You gotta do this to be able to, you know, shift your income and protect your deduction. You can't pay them 50 bucks an hour, can't pay them 100 bucks an hour to inflate and get it to that, that maximum really quick. You have to establish what is a reasonable wage for the work that they're doing. What would you pay somebody else to do this work? So you have to establish some reasonable, you know, reasonable. There's going to be a playbook for this one as well. Boring topic alert. I'm sorry. You got to do the work. Got to do the work. You got to do the record keeping. You can't just come up at the end of the year and be like, oh, well, this happened. You're going to get shot down. Right. Protect your deduction, protect your, the integrity of this. You know, somebody said they have five kids. Yep. Get those wheels turning, right? Shift, reduce your tax bracket, get your tax savings, give your kids. If you were to fully fund a Roth IRA from the ages of seven to 18, fully fund it, which I think it's like almost six grand, is what you can put into a Roth IRA every year. And then you left that alone from the age of 18 to age 60, assuming about a 7% rate of return over that, you know, time frame, your kid would have between 1.5 and $1.8 million tax free. You talk about legacy and building your business and why we do things in our business. What a powerful way to teach your kids some budgeting, some life skills. Talk about money. You know, I. I bump into people all the time that I wish my parents had and taught me about money and budgeting and all these things. It's not. And they don't teach it in schools. So you can take the reins, bless the life of your child in ways beyond so that your legacy, both from a financial standpoint and from a budgetary and life skill standpoint. All through the tax code kind of dope, huh? So avoid pitfalls. Don't fall into the trap. You got to do the work. You can't pay them to do laundry. It can't be for personal services. It's got to be stuff related to your business and tied directly to your business. That's where creating that task list, the, the documents and all the things that you do to say, okay, here's what we're doing to, to, to legitimize it. And I just want to tell you, you know, people that think they're being like, the super spy. I'm so cool, right? Play by the rules. Because this is how we think we look when we're, when we're like. But this is how we actually look when it comes to an audit. We're stuck looking super goofy saying, well, we didn't play by the work, but didn't do the rules. The rules. And what does Adam say? You. There's no substitute for the hard, boring work, right? I still want that. When you put it on a T shirt, I still want that. So talking about audits and the red lights. Green lights, right? There's red light, earn money. You have to pay taxes. But then there's green lights that say, hey, instead of, you know, we can go through this stop intersection and a bypass. Avoid. Tax avoidance is legal. Evasion is not. This is tax avoidance, right? You can avoid taxes and pay less in taxes. And again, welcome to fabulous vagueness. What starts in ambiguity stays in ambiguity. In the spirit of full disclosure, content.maketaxes, fair.com forward slash. Kiddos, the landing page is there. The playbook is not. It is tax season, and I am here on April 3rd. So the playbook will be live by the end of this week for you to download. So when that goes live, just check back in a couple days, and we will get this. So any questions on this? Because we're. We're kind of on time. Coming up on the top of the hour, but any questions regarding this?

I wanted to show everybody something because while you're doing this, I was doing what I usually do, playing with spreadsheets. If you started age 7 at 3000 like Chris said, and you went and increased it by 1.9 and then started to go up 10 a year, by year 18, you'd be at the 14, 700, which I'm assuming the deduction will probably move up by that 11 years. But just at today your, you would have contributed 108,000 to, to your kids tax free. And if, if that was going into the Roth IRA, you would have put $32,000 into their IRA by 18 years old. And if you are, if you taking kids like Derek, that means that you would have five kids that have been, that have 162,000 collectively saved. And you have put into your family just over half a million dollars into tax free money into, into their, into their hands up for life. While also yes, letting, teaching them responsibility like this is just making the world a better place, man. Like, I'm just, I'm just super impressed with this. This is incredible. I'm so glad I found this out when I had a four month old. Now I just gotta wait six and a half years to do it. But yeah, that is super impressive. So I just want to give everybody that math insight.

Super powerful strategy. And again, you don't know there's a right way and a wrong way to do it. The wrong way is just, oh, I pay him a thousand bucks a month. Okay, cool. You're, you're going to get slammed if you ever get questioned. Just because the government lies, cheats and steals doesn't mean we can or should. So do it. Do it the right way. Protect yourself from an audit. Go to bed at night saying, hey, if I ever get audited, we're going to come out clean on the other side.