Description:
Join me for a conversation on key tax planning topics we’re implementing with our clients. We also dive into expected changes in the tax code and how we can be proactive with our clients in creating future savings. Some of the topics we discuss are:
– Deductions
– Depreciation
– Self Employment Tax
– Entity Structuring
– Capital Gains Planning
– Charitable Deductions
– Future Tax Saving
Transcript:
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Mark Perlberg: Okay, so we are going to talk about how to maximize tax savings in 2023, and
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Mark Perlberg: how to Max tax savings, sure how to maximize taxes in 2,023. And you know, obviously, we are all many of these concepts
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Mark Perlberg: we’ll apply to 2,022 taxes, and even though the year has ended, we may have missed out on opportunities with with with prospects who have not yet become client.
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Mark Perlberg: However.
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Mark Perlberg: we are. There are still ways that we can look at your return strategically looking back. When we do your 22.
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Mark Perlberg: And this is some of the things that we’re doing with our clients in 2,023. So here’s a just an overview of the different areas. We’re going to just go to cover here.
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Mark Perlberg: We’re talking about the deductions, the simple stuff first, right? We’re gonna, You know. We we’re gonna take it easy to talk about some of the basics with you guys. Then we’re gonna talk about our appreciation, strategy, self employment tax planning
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Mark Perlberg: into these structuring capital games, planning. shareable dust, deduction in future tax planning.
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Mark Perlberg: So when I say future planning is, and this is what separates us from a lot of people. And what are what you guys think about? Is not only are we going to try to minimize your taxes this
year, but there’s more to it than that. There’s more than just when you read in the bigger pocket lines which are good.
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Mark Perlberg: you know. You may have heard of cost segregation, and all these appreciation strategies. You may be able to get to a $0 tax bracket, but you don’t want to just stop there. You want to think about how can you best take advantage of this year of tax saving.
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Mark Perlberg: And how can you do this and create some action
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Mark Perlberg: to create fewer taxes in future years? So we’ll talk about that as well. Some idea that you can use.
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Mark Perlberg: All right. So first
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Mark Perlberg: first thing we want to talk about is Miss deduction, as I call it.
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Mark Perlberg: No.
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Mark Perlberg: The reason why I call this is because so many entrepreneurs and real estate investors when they get started.
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Mark Perlberg: they never get the opportunity to have a
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Mark Perlberg: conversation with the tax adviser on what they can deduct. and we often see this If we get a client
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Mark Perlberg: who who maybe was self preparing their returns year after year. We’re often going to see that they didn’t know what to deduct, how to deduct it and how to track it.
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Mark Perlberg: So
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Mark Perlberg: some of the things you want to think about. Here is travel right mileage, or maybe getting both appreciations for that vehicle having to track your mileage. I think mileage. IQ is great, or you can use a template to track it.
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Mark Perlberg: And there’s
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Mark Perlberg: you know also. Then there’s a travel for your hotels and say, maybe you can take a vacation time for business purposes, create it to a tax. Deductible business of it. Lots of opportunities there when you understand the tax code.
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Mark Perlberg: Now depreciation. You know there is. Obviously, there’s cost segregation and bonus appreciation which I talked. I’ve spent many, many hundreds of hours discussing with our clients and on our Webinars and Youtube Page.
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Mark Perlberg: and that is a big ticket item. But the bonus appreciation is phasing out in the future years. And now we’re going to be down to 80%.
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Mark Perlberg: And
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Mark Perlberg: also there is, you know, the Home Office deduction. Just. I want to get you this out of your head that the Home Office deduction is risky. I think that it was maybe a risky stage in like the seventies before I was born.
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Mark Perlberg: So we need to get over this urban legend that it’s a risk.
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Mark Perlberg: Take the Home Office deduction. In fact, there is a form that you fill out.
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Mark Perlberg: and the Irs guides you on how to enter it to calculate your home Office deduction. Now, here’s where a lot of you will get confused, though.
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Mark Perlberg: is that you need a place that is solely dedicated for your business activity. So if you work from home at your W to Job.
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Mark Perlberg: and in that theme office space, you’re doing your rentals or your businesses.
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Mark Perlberg: then it can’t be a Home Office deduction, because another recent development that you cannot deduct on reimburse
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Mark Perlberg: expenses from your employer
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Mark Perlberg: insurance costs as well. I cannot tell you how many people forget to deduct the
insurance of their properties and their rentals, and also self employed health care that is, insurance is deductible. Now, if you are full time entrepreneur.
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Mark Perlberg: and then, finally, professional fees, we see this so many times where they forget that our services are a tax deductible cost. And sometimes, you know, when we are saving our client, hundreds of thousands in taxes, we need to charge a decent penny.
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Mark Perlberg: and they forget to write off our fees. Luckily we know what that cost is, and we’ll make the adjustment. So we got one chat here on. How do we minimize your exposure and take the best it is
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Mark Perlberg: of our businesses from a not a nervous attendee. Well, I, wanna when you say exposure, are you talking about exposure to taxes or liability. We’ll talk a little bit about asset protection, liability to give you some ideas. You probably Haven’t heard from other people in the when we get to entity structuring.
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Mark Perlberg: All right, let’s get into the
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didn’t it?
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Mark Perlberg: So here’s the definition here, what you guys would think about on what the Irs defined as a business deduction. There’s some grayness. It’s an ambiguity here, right?
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Mark Perlberg: It must be both ordinary and necessary. Okay.
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Mark Perlberg: Gotcha Gotcha. Well, what’s the ordinary necessary, they decided the necessary expenses, one that helpful and appropriate for your business.
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Mark Perlberg: But it does not have to be indispensable to be considered necessary. So your costs for an appetizer at your business meeting with your spouse
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Mark Perlberg: in. You know we like to purchase 1,000 or clients passes in their businesses for them.
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Mark Perlberg: Obviously your your your multi-family portfolio will thrive regardless of whether or not you tip you pack on those extra calories with the pot stickers of the desert, at the end. But you’re still writing it off on your T.
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Mark Perlberg: So there! There’s a lot of
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Mark Perlberg: freedom in, and you know, in areas where you you probably don’t realize you have lots of t to do this, or
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Mark Perlberg: or opportunities to create these tax deductions because it’s just not common, that entrepreneurs and Gpa
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Mark Perlberg: to to sit down and understand the law, and how they can best use these opportunities.
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Mark Perlberg: Now
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Mark Perlberg: I would say that you know part of this is the child with our industry, as Cpas is that you know most firms are structured, and there’s a culture of just
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Mark Perlberg: getting the return out the door, and not enough energy in our industry to collaborate with entrepreneurs and help them really be and collaborate with them so they can find the maximum amount of opportunity.
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Mark Perlberg: Okay.
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Mark Perlberg: Now, let’s talk about the appreciation. I’m gonna start off very basic here. But don’t worry. If you guys know what the appreciation is, this will not be a waste of time appreciation in a
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Mark Perlberg: deduction for the reduced, the reduction in value
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Mark Perlberg: over time for the wearing tear of an asset like this vehicle. Your you pick up truck. At first it’s shiny and new, and then over time the value diminishes, and you write off the value for the diminishing and the loss of value of that asset over time. Now there are opportunities
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Mark Perlberg: now. Some people here are some of them, and here’s some missed things. Here.
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Mark Perlberg: You got your straight line, depreciation of your house.
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Mark Perlberg: your rental properties, or your home Office, or your office, allow people who are self preparing for get how to write off their depreciation and allow Cpas, who are specializing in real estate for Don’t really know how to calculate the proper depreciable basis, or they just forget it, because they don’t do enough scheduling
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Mark Perlberg: to report the railway code. And what a lot of people admit also is that your Home Office deduction gives you an opportunity to create additional
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Mark Perlberg: appreciation. So a fifth of your personal resident
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Mark Perlberg: is your Home office. You can deduct Well, you can appreciate one fifth of that property to offset your business income.
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Mark Perlberg: Obviously, we have cost segregation. That is the bread and butter of tax savings. We’ve done one of these and what you’re gonna do here is, if you have an all a building in your business, either. It’s an office building that you could rent to your escort.
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Mark Perlberg: or or other entity or a rental property, we break out your real property to different components
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Mark Perlberg: that depreciate faster, and we accelerate the front of that depreciation. We can get bonus appreciation and right, 100% off any property that the preceding 20 years or less in 2,022, that i’m not going to be down to 80% in 2,023
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Mark Perlberg: now and then. There’s also bonus appreciation with the vehicle it’s over £6,000.
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Mark Perlberg: And so we want to strategize the word with our clients on. These are some foundational things here, but we also want to consider the fact that now we’re down to 80% in the following year, 2,024. We’re only going to get 60% of both appreciation
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Mark Perlberg: and we’ll talk about some when we talk about future opportunities here, and thinking
long term it’s going to get harder and harder to generate losses. As you front, load your depreciation, you lose it in future years
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Mark Perlberg: your portfolio gets more and more profitable as you go again, and experience inflation kicks in, and you, you just you acquire more property. So we have to plan.
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Mark Perlberg: We have to play in for the future changes in the tax environment.
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Mark Perlberg: Self-employment taxes. Now for some of you guys who are doing more than just rental investing even short term. Now you don’t have to worry about self employment tax. But what self-employing the tax is is what I call the silent killer of entrepreneurs. So when you have ordinary income here.
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Mark Perlberg: and that could be your
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Mark Perlberg: some examples of ordinary income would be if you have commission. If you’re you run a restaurant
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Mark Perlberg: full sailing and flipping people forget Flipping is not capital gains income any anytime. You have that type of income
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Mark Perlberg: you are going to pay a hefty share of self-employment tax. and that is going to be roughly 15.3% on your first $160,200
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Mark Perlberg: they raised it. It used to be only on your first 140,000 back in 2,020. Now for your first 160,015.3 of that is going to to be deducted is going to be going to the taxman.
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Mark Perlberg: and
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Mark Perlberg: you still have to pay your Federal taxes and your marginal rate
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Mark Perlberg: and your State taxes. This is a very expensive tax. When you have self employment, income is the most expensive income you have. So here’s some ways that we can plan for this self employment tax.
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Mark Perlberg: One is expense shifting. So if you’re going to create deduction. you’re gonna have bonus appreciation in that vehicle, and you have multiple sources of income, and some are. Pass it.
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Mark Perlberg: You want to shift your expenses towards your most expensive sources of income. Your deductions against your flipping income is going to be more valuable than the deductions against your rental properties, because rental properties are passive, and do not generate self employment tax.
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Mark Perlberg: or if you have a side hustle, or you are a real estate agent, or you have another, You’re an insurance agent, or just a general business owner that self employment income is the most expensive, and we want to move income out of there.
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Mark Perlberg: You could also make a past a a stouse, a passive partner.
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Mark Perlberg: Give your spouse 50% of your entity. Make it a partnership. And now half of that is passive, because your staff is not materially participating in the business. If that is the case.
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Mark Perlberg: then the most common one is with the S corporation.
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Mark Perlberg: So this is what we’re doing with a lot of clients as always. And these are typically what we would see here.
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Mark Perlberg: typical
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Mark Perlberg: foundational tax strategies here. And just to illustrate this as this visual here on what you do is let’s say you in your normal situation, where you have a $160,000.
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Mark Perlberg: In this instance you’d be paying $24,480 in self-employment tax. In addition, you’re paying your state tax and your federal taxes on this profit here. If You’re just a sole proprietor, which is what most of you guys default to when you’re starting off.
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Mark Perlberg: So what do we do here? We create an escort. Now, when you have an escort, you pay yourself a salary, and only that salary is subject to that self-employment what we call payroll tax now. But you got your social security, your Medicare taxes
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Mark Perlberg: only a tribute to tributable to the salary that you pay yourself anything that exceeds that salary.
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Mark Perlberg: You do not pay social security and Medicare taxes on.
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Mark Perlberg: So in this instance, where you have a $160,000, we now, instead of paying 24,400 in pay in social security and Medicare taxes. We’re only paying 76 50
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Mark Perlberg: the payroll tax. So
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Mark Perlberg: you’re there’s just one of the main instances where we’re creating tons of savings year after year, just by understanding the advantage of the escort and the impact of self employment taxes.
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Mark Perlberg: Now an escort takes more time and energy to set up.
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Mark Perlberg: You want to make sure that you have enough profit to justify this tax election. You need to see another of of a discrepancy between your reasonable cost that you pay yourself in the profits in the Llc.
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Mark Perlberg: Because this amount right here, and when we say reasonable, comp we have to pay you a salary equal to the fair market value of the work we perform in your business. We have a
whole process.
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Mark Perlberg: but but anything that exceeds that is, that’s where the savings is. But if this number, if your salary is too close to your profit, then you may actually wind up paying more taxes.
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Mark Perlberg: And always there’s capital gains planning here. So, and this should be typed in you guys who are real estate investors and have capital beings, events that may occur. This should be really integral here.
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Mark Perlberg: So no. Some of the things you want to think about here, if you want to. If you’re a first time sorts of rental investor, and we have many clients like this.
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Mark Perlberg: If this is your first time doing this, we may be able to get lots of bones. Depreciation. You don’t have a whole lot of cash for you, and you’re short from now we bring you into a $0 tax bracket 2020
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Mark Perlberg: the year’s already passed. We can’t go back in 2,020 to do a lot. But let’s say in 2,023,
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Mark Perlberg: even with 80% bonus appreciation. We bring you down to a $0 capital team
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Mark Perlberg: to $0 tax price. That’s fantastic. The taxes that came out of your W 2 for your for your Federal State taxes are going to come right back in the form of a refund, something to get really excited about. You can reinvest that back into your business.
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Mark Perlberg: But how can we further take advantage of this, and consider your capital gains or potential capital gains of it? Well, you would, if you’re married, filing jointly roughly Your first $80,000 of long-term capital games is untaxed.
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Mark Perlberg: So
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Mark Perlberg: what you can do now is, you can
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Mark Perlberg: liquidate or sell stock, and not pay any taxes on it. So let’s say you have a You have 65,000 of of
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game
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Mark Perlberg: that potentially in your stock portfolio, and you want more capital to invest.
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Mark Perlberg: Well, you let’s say we do a cost sag. We generate a $30,000 tax refund, but you want to go a little bit bigger here. You can sell some stock you can act. You’re going to get your principal back and trigger some capital gains as offset by your losses from the short term Reynolds. You pay no taxes, and now we have more cash to build your portfolio.
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Mark Perlberg: Well, let’s say you love your stocks, and you’re like. Well, we will, you know. I want to diversify. I love my my, my apple, and my test with. So what do you do? You still can take advantage of it?
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Mark Perlberg: Sell it, and buy it back up at a higher basis.
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Mark Perlberg: That tax-free long-term capital gains is eaten up by the $0 tax credit. You buy it back, and now you’re avoiding future capital game stack when you eventually sell this.
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Mark Perlberg: And then, obviously, if you were selling other stuff. Other Reynolds we got your 1031
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Mark Perlberg: we have. We still can take advantage of qualified opportunity zone, which is a
wonderful opportunity. You can sell your stock to put the gains and qualify opportunities on to get rental income, and then you could get your principal back.
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Mark Perlberg: and you can use your principle for whatever you want, and still pay no taxes on it. Gradually you love that gradient loves the
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Mark Perlberg: anytime. I talk about qualified opportunity. Zones gradually so excited, he woke up right now. He’s very pumped.
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Mark Perlberg: and
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Mark Perlberg: you know so what a Obviously, if if you ever have any potential capital gains, events or things. You’re selling your rentals, or even your primary residence, or maybe some tax plan that we can do.
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Mark Perlberg: And then another thing we’re thinking about here, and this is in particular because of the current tax environment.
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Mark Perlberg: We have a lot of clients that joined us, maybe in 2,000, 22,019and we’ve created massive, massive tag savings. We’ve we’ve got lots of cost segregation study, and it’s really helped them thrive. They use the capital that they gain. They use their tax, they need to re-vest into other properties.
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Mark Perlberg: and they really built a flourishing mail portfolio. But here’s the challenge. Now
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Mark Perlberg: you know as the next. You know it’s great that we can take these W. 2 folks and do this, but a lot of them have quit their w 2 jobs now. and they’re not paying, you know. They’re not used to paying any taxes at all. And now, because we front loaded that depreciation in the earlier year.
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Mark Perlberg: We don’t have the appreciation on those successful property in the current years. 153
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Mark Perlberg: So we run the risk that they’re we’re gonna generate tax liabilities from their portfolio because they’ve been building and accumulating all of these properties over the years.
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Mark Perlberg: And even though they’re still buying, they, you know, maybe 5 10 years by which they’re investing and growing their their cash flowing portfolios. And as we lose that bonus appreciation and it becomes less and less.
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Mark Perlberg: it will be harder and hard to generate losses that we may have positive tax will income. So we’re getting more resourceful and strategic and creative, and how we do it.
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Mark Perlberg: So there are a way that we can create charitable deduction, such as with development. Right? There’s a way by which you can sell.
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Mark Perlberg: You can pretty much, instead of
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Mark Perlberg: of selling your property.
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Mark Perlberg: There are ways by which you can partner with groups by which they will purchase property, and they will donate it for the purpose of conservation. This is not a conservation. It is not a risky
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Mark Perlberg: decision here. There are other ways by which you can do it. Have a land and be part of partnership with the Have land, and will dedicate those properties to not be developed, and those development rights are typically 5 times
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Mark Perlberg: he purchased price, so it could bring down to a net effect tax bracket.
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Mark Perlberg: 20% Federal and State combined. and
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Mark Perlberg: you can do is to offset 30 of your taxable income. And then there are some more sophisticated charitable strategies where we can deduct up 60% of your tax billing code.
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Mark Perlberg: We can not. We can use things such as private family foundations under certain circumstances, and charitable Llc. By which you create an entity where you’re using leverage within your entity, and you can offset the taxation on 60% of your adjust to gross income, which, for most of you guys, is your w to income and or profit from your
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Mark Perlberg: entrepreneurial endeavors, and we could potentially
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Mark Perlberg: eliminate, or the for a 100 of your capital games that go with these sophisticated structures.
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Now these last 2 bullet points here. These are.
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Mark Perlberg: Some of these are going to be involving
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Mark Perlberg: trademarked patented procedures with tax attorneys. They are expensive procedures that should cost anywhere from 60 to $100,000 for some of our clients operating on a certain level.
We can certainly justify this if we’re going to make, create millions and tens of millions or hundreds of billions of dollars.
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Mark Perlberg: tax savings.
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Mark Perlberg: future planning. Okay, we talked about the bonus appreciation phase out selling the stock. If we know that you’re You’re gonna jump into a higher tax bracket eventually, or you’re
eventually gonna have taxable rental income. Consider some ways that we can take advantage of income shifting.
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Mark Perlberg: so not only could we shift some capital games activities into the years of lower brackets. We could also do a role Ira roll over
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Mark Perlberg: if we’re going to recognize the taxation, and that deferred taxes on your 401. Why not do it when you’re at your lowest bracket? And what’s the optimal amount we have to evaluate. How much losses are we going to get from the cost? Sa: Where is your income going? What are your future planes.
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Mark Perlberg: And what do you want to do with these retirement accounts? And then there’s going to be new entity structure and let’s talk about this from a risk
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Mark Perlberg: perspective as well, right? Obviously you may have heard that the Llc. Will segregate your business and personal liabilities, which is fantastic. So if something happens to your business. They can’t get your personal access.
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Mark Perlberg: But what happens if something happens to you personally? What if you are in a car accident. or what? If you have a child who’s a minor, and they get in the next, and or do something. And now you are liable.
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Mark Perlberg: What if you have any liabilities for things outside of your business, for personal reasons. Well.
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Mark Perlberg: your assets are not going to be protected because your Llc. Is owned by you personally.
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Mark Perlberg: so they can have what called a road verse piercing of the corporate veil, and they can take the asset out of your Llc.
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Mark Perlberg: So as a way to prevent that you can use the trust. Put the properties in the trust and structure it right so so you can. You can protect yourself now there, and there may be some additional advanced structure, that we can also reduce your taxes with an irrevocable trust and some a State planning opportunity.
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Mark Perlberg: And then there are also ways that we can create new entities and evaluate your infrastructure to identify active versus passive income. We do self employment taxes and create additional
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Mark Perlberg: moving parts here. But
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Mark Perlberg: when I say income shifting, there’s also an opportunity. I just I don’t like to leave this out. You can also shift income to areas of lower bracket like to that of your family.
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Mark Perlberg: If you’re supporting a family member, whether it be your children or your parents, and they’re in a lower bracket, you can certainly pay them. It’s just that they come out of your bracket to that of someone in a lower bracket
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Mark Perlberg: so as far as next steps. You know it. There’s obviously there’s a lot to think about regarding you personally.
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Mark Perlberg: and
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Mark Perlberg: what we can do, or what you should be doing to reduce your taxes in 2,023, and beyond. We do anticipate.
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Mark Perlberg: we that we are going to need to be more resource with our clients, as the most appreciation phases out, it’s going to be 80% this year that 60 and 40 to 20, and then it’s expected to be eliminated.
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Mark Perlberg: We don’t know what Congress is going to say if they’re going to bring it back to a different degree. But you know right now, you know, in in the past couple of years we’ve been taking advantage of this golden era of 100%, both appreciation when our President was a real estate
investor, and it will add these
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Mark Perlberg: these opportunities phase out, we’re going to be more resourceful.
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Mark Perlberg: and we’re going to be more strategic and more collaborative to keep our clients and protect our clients from from their taxes.
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Mark Perlberg: And we’re also planning now. For how can we minimize taxes in the future so as far as next steps? If you’re interested in talking about how this may apply to you.
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Mark Perlberg: You likely have seen a an application in our client Portal.
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Mark Perlberg: Let me let me know if you haven’t seen that, and you’ll complete that survey so we can
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Mark Perlberg: assets your need and the value we can provide to create tax saving
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Mark Perlberg: additionally.
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Mark Perlberg: you’ll you’ll we’ll review that we give you some feedback. We don’t get a chance to work with everyone who wants to run with us simply because we don’t have capacity and certain
times get clients that are a little bit too far outside of our school. But I am a member of the American Institute of Certified Tax Planners.
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Mark Perlberg: I know hundreds of accountants. I’m. Very close to some very successful ones. So if I can’t help you guys out on at least at the very minimum, try to refer you to someone who’s qualified as a resource.
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Mark Perlberg: And so that’s all I want to talk about today, as you know, as far as things that we’re thinking about right now, if you want to learn more, follow me on all social media, you just search more. Karlberg, Cpa. You’ll see my Youtube page, Instagram
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Mark Perlberg: linkedin tik tok as well. I did. Listed there. You also be on my mailing list as well. We try to provide a lot of value. I got a Webinar next Wednesday on long term financial planning, and we do collaborate with clients in their financial planners
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Mark Perlberg: to see what kind of opportunities we can create and talk about the tax application.
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Mark Perlberg: So lots of different topics here, and what I want to do now is I want, you know this is just a brief little workshop in order for this to really be collaborative, and me to give the most value. I want you guys to. Now give me some of your questions
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Mark Perlberg: on how some of these topics
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Mark Perlberg: or other topics you’re interested in may apply to you. So you know i’m going to give you a couple of minutes here to give me some questions.
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Mark Perlberg: so we can keep talking about this
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Mark Perlberg: and let’s see what we can. We can discuss.
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Okay, we got one question here. I rented an apartment for the summer last year. Can I write that off as an offices?
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Mark Perlberg: The answer Would you know you’re going to get this answer from a lot of attorneys and account, and it it it depends.
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Mark Perlberg: If you had to travel there for work. then it certainly would be treated as an a deductible expense. If this was a business that you owned.
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Mark Perlberg: But if you were just there for fun hanging out at the beach, probably not a lot of opportunities. You might have been able to carve out a Home Office if you had a place dedicated for your entrepreneurial endeavors
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Mark Perlberg: might be some opportunities there, but there may not. I would have to know a little more about the circumstances.
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Mark Perlberg: So we got another one here. talked about it earlier, where
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me and my wife have several businesses of our own, plus 2 short from metal that
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Mark Perlberg: I think. Here, you i’m not sure if you’re asking about risk. But certainly there’s a good chance that you have lots of assets here, and you want to protect your assets.
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Mark Perlberg: You have 2 short term rentals, and you’re going to be, you know. Think about the growth inequity you’re going to have here
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Mark Perlberg: when you, when your your risk exposure, even if in an Lse is, is equal to your equity in the property.
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Mark Perlberg: so as you pay down that mortgage, and no less and less in in in principle, on that mortgage you own more and more that house, and that out
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Mark Perlberg: is going to increase in value, giving you additional equity. So your risk exporter increases year after year. Well with explain, with inflation.
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Mark Perlberg: increase property values
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Mark Perlberg: and mortgage pay down.
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Mark Perlberg: Yeah. Another question. Here
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Mark Perlberg: must you start with an Llc. Prior to an escort. What is the threshold to an
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Mark Perlberg: thank you.
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Mark Perlberg: So here my thoughts on this I think that you should.
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Mark Perlberg: Now you may disagree very California, because they make everything harder, and you gotta pay like 800 bucks to maintain your entity.
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Mark Perlberg: But what you should do here. I want you guys to think about with this
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Mark Perlberg: with forming in. That’s corporal. If you’re a new business owner, you’re likely going to be uncertain on whether you need an escort or not.
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Mark Perlberg: We need enough profitability to justify the efforts to generate, to create this escort.
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Mark Perlberg: Now, on a side note, no rentals go into the escort. I can go on a whole tangent.
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Mark Perlberg: This for active income.
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Mark Perlberg: You can create a C court and elect for that C Court to be taxed as an escort. But I would recommend that doing that because we may be able to find enough tax strategies for you.
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Mark Perlberg: that we can bring your profitability so low that you don’t even pay self employment tax. and if that’s the case, then there’s no reason for an escort can save you money on filing.
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Mark Perlberg: so let’s say you started a business as your house living business. Well, lots of equipment and trucks, and this and that
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Mark Perlberg: we get bonus appreciation on a lot of this stuff. At the end of all this we may find that your profit is only down to $20,000. We shift some expenses into that active income, drive down your self employing tax. And now we don’t even need an escort. And then we stayed at that flow through
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which is optimal.
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Mark Perlberg: But let’s say eventually, if now, we’re soon, you get a profit of a $100,000. Now we likely can justify that as well. and we, when we know it’s right.
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Mark Perlberg: we can do a retroactive escort tax selection for that Llc. And get the escort tax treatment for the whole year. So that’s why we do like to collaborate with our clients monitor profitability. So by the when we make that election go from Llc. To escort, we we are confident that the efforts to do this
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Mark Perlberg: are going to create enough savings to justify. And now I, what threshold does that make sense? Now it depends on a lot of factors, and you know the type of service. And and what’s the fair market value of services you performed in this?
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Mark Perlberg: So if you’re working part time, you know the fair market value, and your reasonable company is going to be really low.
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Mark Perlberg: Let’s say you’re you know you’re a dentist, you know. The pay for attention is pretty high. You’re gonna need a lot of profit to show that your profit exceeds you that reasonable cost, that you’d pay yourself by enough of a margins.
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Mark Perlberg: so, as a rule, of for typical businesses. What I like to say is, I want to see
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Mark Perlberg: between 80 and a $100,000 of profit.
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Mark Perlberg: and expected increases in profit
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Mark Perlberg: in the years to come. So in this instance
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Mark Perlberg: you know. What we want to see here is that you know we don’t want to see a spike in income, or let’s say you’re dabbling in something we don’t want to invest in that as court, because there are additional procedures, and there is additional work that you and we have to do an additional fee. We really want to make sure that we can create enough tax savings to justify
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Mark Perlberg: and what it property.
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Mark Perlberg: Also other little tax saving opportunities with the escort, such as what’s called a pass through Entity tax selection, or you can make your personal residence to your escort. Get a double right off some really cool stuff there as well.
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Mark Perlberg: and another benefit while I’m. Here is the escort will reduce your risk of an audit. The most audited activity is your active schedule, c. At
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Mark Perlberg: income activities. So when you move it to the S 4, you’re reducing your audit risk. Do we have any other questions here that I can answer to give you guys
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Mark Perlberg: some additional thoughts on how you can be reducing taxes in 2,020.
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Mark Perlberg: Okay? Well, i’m going to give it about 5 to 10 more seconds. If I don’t see another question here, I will end the chat, and if you want to discuss more. I I encourage you to complete the survey.
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Mark Perlberg: I will give you some feedback, and we can potentially discuss what, putting together a package to help you guys reduce your taxes. In addition to that, we’re going to look at your prior year tax. Return and see if
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Mark Perlberg: you, If the Irs owes you any money for overpayment and tax. 254
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Mark Perlberg: Oh, that one more question here. What’s the difference between office supplies and material supply
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Mark Perlberg: to me? It doesn’t matter if it’s a deduction, it’s a deduction, you know, whether you grow on this line or that when you return
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Mark Perlberg: we don’t really spend a whole lot of time deliberating, deliberating.
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Mark Perlberg: But let’s say that you have a computer, a desk. etc., etc. And you created a home office. But you bought this material years ago. We can assess the fair market value of your equipment in furniture that’s been converted into your Home Office and get some additional production.
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Mark Perlberg: Nice to know full this opportunity when you But you know what’s going on in the tax. So
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Mark Perlberg: okay, cool. Well. anything else gonna give you guys another 5 s.
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Mark Perlberg: All right. Well thank you. Everyone for attending. I hope that you found this conversation valuable, and have some ideas to think about
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Mark Perlberg: for your 2022 taxes and your 2,023 tax planning opportunities, and how we are going to create taxes in the future. You know where to find me.