Digital Social Hour - Mastering & Knowing Tax Secrets I Matt Bontrager DSH #428
Episode Date: April 22, 2024Matt Bontrager comes to the show to talk about mastering and knowing the secrets of taxes. APPLY TO BE ON THE PODCAST: https://forms.gle/D2cLkWfJx46pDK1MA BUSINESS INQUIRIES/SPONSORS: Jenna@Digita...lSocialHour.com SPONSORS: Deposyt Payment Processing: https://www.deposyt.com/seankelly LISTEN ON: Apple Podcasts: https://podcasts.apple.com/us/podcast/digital-social-hour/id1676846015 Spotify: https://open.spotify.com/show/5Jn7LXarRlI8Hc0GtTn759 Sean Kelly Instagram: https://www.instagram.com/seanmikekelly/ Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit podcastchoices.com/adchoices
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get a refund or a little bit. But when you're self-employed, it is literally this like world
of difference where it's all not gray, but it's like this area where there's no right or wrong.
You can take certain deductions, you can do certain things with your expenses. And so
I think the biggest misconception is, is that the IRS always knows what you owe them. When in
reality, you're telling them what you owe them. And then if they don't believe that,
then when you start to like flirt with the audits and stuff.
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And here's the episode.
Welcome to the show, guys.
We are here on the Digital Social Hour.
And today we are going to help you save some money on your taxes. I have with me Matt Bontrager today. How's it going?
Good, man. Thanks for having me.
Absolutely. So this is a topic no one likes to really dive into, but I think it's going to be
beneficial to talk about. Yeah, I think taxes are a little bit taboo, and you don't learn a lot
about them unless you're going into this field. Yeah. Or you become, you know, like a savvy business owner.
Yeah.
I mean, it's definitely a game to know.
When I found out I was paying more in taxes than Donald Trump, I was like, yeah, I'm doing
something wrong here.
Yeah, for sure.
And we'll get into that too, because there's also certain things that he does that it's
the same thing we do with our clients.
Yeah.
It's the area that we focus into.
Yeah.
So what made you go down this path?
Were you into taxes growing up?
I always make the joke. So I'm a Jew and I just love money. So right out of high school, I went to work at a bank. I thought I was going to play pro baseball. That didn't work. Okay.
But I went to go work at the bank and working at Wells Fargo and just a large bank and seeing
people with money, without money really opened my eyes and got me intrigued as to how to sort
of chase more dollars and earn more. And then I stayed in finance and then I went into accounting in school. And then when you're in accounting in
school and college, they just preached you to go to the big four. And so I tried that. I landed
myself at one of the big four out here and then had a great time. It was this big organization.
I got a really good resume. When I left, anybody would talk to me. And then I just stayed in
accounting and saw the money that was there and saw that it's such a big need. It's the language of business, you know?
What was the biggest bank account you saw at Wells Fargo?
Dude, there's a funny story. So he actually lives here in town. I obviously can't say the name,
but they always told us at Wells Fargo that if there was a high-end customer that came in and
when you, like, for example, when you populated their account, the screen would turn gold. And
I was like, oh, this is like a myth. I've never seen it. And it happened one day and I was like, oh my gosh. And so, I mean, it was at least over 10
million. Holy crap. And liquid cash. Yeah. Liquid cash too. And right. And so I had saw that happen.
I was like, whoa. And so, yeah, this guy still lives out here, runs a business. Yeah. Yeah. That
was a cool thing that I had heard about it and then finally saw it. And I was like, whoa, that's
sick. So when you made that jump from the big four company to start your own CPA firm, what was that
like? A little bit scary. So that was right around the time I met Ryan. Being an accountant, I feel
like it's very risk adverse, right? You want to go to school, get a good job, get W2, sort of work
your way up the ladder, staff, senior manager, senior manager. But I started, you could say,
a little bit slow. I slowly started to grow a book of business on the side and have clients on the side.
So when I made the jump, it wasn't as scary
than just going out and having no clients.
Yeah, that's good advice for people looking to go
from their nine to five to their own startup.
Have some sort of side income as a safety net, right?
Oh, yeah.
So if anybody asked me when the right time,
I don't necessarily think there's an exact time,
but I'm much of a fan of,
I would grow some sort of business on the side, make some side income so that when you make the jump, you're
not stuck with no paycheck. Absolutely. Yeah. That's what I did in college. Cause I was like,
I can't just drop out off an idea. I need to actually have some revenue. Yeah. And that's
where people I think mess up. Yeah. And you have the time to do it, right? I mean like whatever
you're doing full time, if it's currently at a job or being in college, you have time to do
something on the side and start. Proof of concept.
Yeah.
So what are some common tax myths you see online
or from people that you want to address?
Dude, the first one is that the tax system is an honor system.
So like there's a meme that goes around where it's like,
well, hey, the IRS knows exactly what you owe them.
And if you don't pay it, then you go to jail.
And if you ask them what you owe them,
then they're like, I don't know, you tell me.
Yeah.
And there's some truth to that. Like if you're a w-2 employee there's a right answer on
your tax return right you made this much money you owe this much tax you either overpaid or
underpaid you get a refund or you owe a little bit but when you're self-employed it is literally
this like world of difference where it's all not gray but it's like this area where there's no
right or wrong you can take certain
deductions you can do certain things with your expenses and so i think the biggest misconception
is is that the irs always knows what you owe them when in reality you're telling them what you owe
them right and then if they don't believe that then when you start to like flirt with the audits
and stuff yeah have you ever had to deal with an audit oh yeah what's that like are they up your
ass like calling you it really depends one they're. So on the other end of it, you can get somebody really nice or you can get somebody
that really wants to be a stickler. Right. So being nice to them and like, you know, you catch
more bees with honey kind of thing is for sure true when you're dealing with the IRS. But one
of the other biggest misconceptions is all you really need is documentation when it comes to
an audit. And people always ask, well, what does that look like? Well, I've seen documentation be a receipt for something, an invoice, an email, a calendar
screenshot, a text screenshot. Think of it as if you were sitting across the table from a friend
and you're trying to argue a point. You're trying to bring everything to the table to prove your
case. And so that's how audits are. And then obviously you have like a tax code or a list of
rules to follow, proving that you followed them. Now, what triggers these audits? Is it revenue-based? Like, do they go after the bigger
companies in general? I would say more so, yes, because that's where the potential most liability
lies for them and the underpayment to them lies is larger companies. But it can be a range of
things. One is misspelling. Misspelling on a tax return can be off and that can trigger something.
Wow. If you misspell the name or something. Totally. A name or an expense line item that looks funky, that can trigger it.
Round numbers is a big one. So when I'm about to do a tax return, if somebody sends me numbers
and they're like, I spent $5,000 on meals, I spent $10,000, like something is off. Rarely
will you spend that exact dollar amount. I would say those are the two biggest. And then obviously
if they just see major losses,
meaning like you're making income over here,
you have losses over here,
and if they feel that there's an approach that maybe you didn't follow,
then they can trick you, grab you there.
In terms of write-offs,
what are some good things that business owners,
entrepreneurs should be considering writing off?
Now in this day and age,
with just obviously digital work, there's two things that people
have to keep in mind when it comes to writing things off. And it's, is it ordinary and necessary?
So is it ordinary for someone in that same line of work to spend money on something that you are?
And is it necessary to produce income? Obviously us sitting here, if this was your business,
the lights, the cameras, the desk, the mic, right? Everybody involved is somewhat
of an expense. So I feel like people need to keep that in mind because the question is not what can
you write off. It's first, well, what are you spending your money on to produce it? And then
I think when you start to look outside of that, you factor in those two variables like, hey, I'm
not a fan of spending money just to get a tax deduction because at the end of the day, you're
out the cash. I'd rather keep the cash. But first, I would look at what you spend money on in your business
and then two, start to see what you can buy to there
further improve your business and then still get it as a write-off.
Is it true that you just changed the write-offs on meals and restaurants?
It went back, yeah.
So for COVID, they gave you two years where it went from 50% deductible
to 100, which was massive.
I mean, we ran that up last year.
And then now it's back to 50% this year.
It was to spur economic growth in the restaurant industry.
So you could see that's how they kind of write these policies.
Oh man.
Yeah.
I went off, went to Nobu, went to Mizumi.
Yeah.
I went off and it was fun.
Yeah.
Been a miss those days.
I know, dude.
Yeah.
Now we're back in the 50%, which still is not bad, but yeah, it's not a hundred percent.
It's still decent.
Are you interested in coming on the Digital Social Hour podcast as a guest guest we'll click the application link below in the description of this video we are
always looking for cool stories cool entrepreneurs to talk to about business and life click the
application link below and here's the episode guys but yeah and they changed it with i know jets
right jets used to be a hundred percent well so the whole bonus depreciation thing that's where
if we want to get into that that that's the lane in the space that we really ride in. So the Trump's, the
Cardone's, Kiyosaki's, like how all these people are making a ton of money at their business and
then buying a ton of real estate and netting them out together, um, is really the depreciation
component. So jets, you can still take depreciation on buildings, cars, but it went from a hundred
percent for certain assets down to 80. Wow. So people to 80. But it used to be 50. So people are
freaking out that the 80 is bad. And I'm like, 80 is not bad. So good. Yeah. I like the way Kiyosaki
does it, man. I keep getting his clips. It's super impressive. He knows the tax game well.
He does. You could see that he's a savvy business owner that takes the time to talk with his CPA.
Yeah, absolutely. So in terms of CPA versus accountant, there's differences there, right?
Oh, yeah.
So an accountant, I feel like you can just like self-proclaim you're an accountant.
Once you go into the field, you're maybe landing clients.
You got an accounting degree.
A CPA, there's a series of tests.
You're licensed by the state board, stuff like that.
So that was probably the most grueling time of my like educational.
Oh, it was tough?
Oh, dude.
It's so like I always argue it's way harder than the bar.
Wow.
Is it actually?
Oh, I think, yeah, the pass rate's a lot lower. And there's four tests know the bar is one i think damn what's the pass rate oh the pass rate's definitely sub 50 for sure whoa yeah four tests all written tests
so they're one of them's like a 60 40 and now they're changing them as we go so back when i
was doing it one of them for example was a 60 multiple choice 40 long answer now i think they're
going more 50 50 jeez i was never a fan of long answers or short answers.
It's a grueling process, but I'm glad I got it. And the worst, you have to pass all four
within 18 months. If you start to lapse, you'll lose them.
You've got to redo them. I'm getting in the insurance game right now, so I have to get my
insurance license, and it's giving me PTSD from high school. I hate tests, dude.
Are those the series
licenses for insurance or no? I don't know if that's for insurance. That's more for like finance.
Yeah. I got to study 40 hours and I think it's an online test, which shouldn't be too bad.
Yeah. Because sometimes the in-person ones, you just get in your own head. I feel like
online it's more like chill. Oh yeah. Self-study is fine. And then again, if you get to take the
test online from home, I don't think that'd be bad. Yeah, I think I'll be good. But in terms of like LLC structures
in general, what do you see as good ways to structure if you're like a business owner,
entrepreneur, LLC? So my word of advice here is anytime you are ready to spend money in pursuit
of a business to make money doing something, I would set up an LLC. A lot of people think LLCs are there for tax purposes, but they're not. This is purely a
liability play. So it's really a legal play. So that's my answer is like right away when you're
starting a business or starting a new venture, I would set up an LLC to give you that protection.
Yeah. Did any of your clients make that move to Puerto Rico?
No, they haven't. And that's not something that we deal with. If you're going to do that, I 100% would find an account that specializes in moving assets there
because there's an interesting fact, right? So when you're a citizen of the US, you're taxed
on worldwide income. That's sort of the price to pay of being a citizen. And so you technically
lose citizenship when you go do that. Oh, really? Yeah. There's a lot of complications there. Oh,
I didn't know that. I thought you'd keep it if you're there for 181 days.
Yes, but then, so there's another way that they'll sort of claw at you,
is if you have, so what I've heard is,
people will start and grow a business in the US,
and then right before exit, they'll try and move there.
But if the income's already sourced from the US,
the US is going to grab their share.
So it's like, even if you move
and try to close the transaction while you're there,
it could be sourced back to the US.
So that's why, yeah, you really have to go to any CPA that you're working with.
You've got to find one that deals with exactly what you're looking to do, that has clients doing what you're doing.
I didn't know that, man.
And yeah, I had one friend who did it, and he said when he was going through his IRS audit, they were geotracking his phone.
So they were seeing if he was actually there.
That's gnarly. I've never heard of that. That's crazy though. And I don't doubt it. I don't doubt
what these government agencies have access to. Yeah. So now basically they could tell where you
are because everyone has their phone on them all the time. So, oh, you were only there four months.
You're paying the full tax rate. Yeah. That's, that's crazy. Yeah. What's it like dealing with
Nevada tax? Cause it's zero, right? Zero income tax, yeah. So like us, Texas, Florida, really easy.
And that's, again, sort of my reason I like to live here.
You know, no state income tax.
You don't got to deal with Cali.
Because I heard Cali's tougher than the IRS.
Oh, it's a mess.
In California right now, if you try to call somebody a contractor
and they work in California, it's so difficult.
Because for them, they want them to be employees
because then you owe all of these other insurances and taxes
on top of your employees.
And so it's very hard to be,
I guess, considered a contractor in California.
They really want you to be an employee.
Yeah, they want every dollar they can make out there, man.
Oh, yeah, dude.
And I don't think it's going to the best places either.
Oh, no, yeah.
The money's not being spent well.
Yeah, that's a whole other conversation.
I've always been interested in this potential write-off,
like your house. I've heard from different in this potential write-off, like your house.
I've heard from different people
you can write off certain rooms.
Is that true?
Like your personal house?
Yeah, if you have an office in your personal house.
Yeah, for sure.
So that's right.
So home office deduction is if you have a business
or business activity within your house,
you can write off certain aspects of the
house. So part of your mortgage interest, part of your cable, utilities, internet, all of that,
that are associated with that square footage of the house. The best example I gave or have is
we have a client that did Amazon FBA out of the house. And so usually when you see somebody
working in their house, it's maybe 10, 15% of their house that they use. But this guy had like
65% of his house because he was just storing
inventory there and had this like whole amazon fba operation that's impressive 65 of the house
just an inventory yeah i know inventory and like packaging and all that stuff though too so yeah
it's basically how much square footage are you using for your business what's the total square
footage do that math you get a percentage and then multiply that times your expenses interesting
that's good to know yeah i should probably do probably do that because I would say 10% of my house, if you include the bathroom. Not the bathroom, but... If the bathroom is
exclusive to the business portion of the house, then yeah, you can put that in there. Yeah,
I only use it when I'm in the office. Yeah, that can make sense. There you go.
So right now I'm looking into trust because I'm buying a house. What's been your experience with
timing and trust? When should you go down that route?
I would get a trust if let's say you're at least 300,000 liquid maybe,
or you run a successful business that's generating cashflow every year, or you have one plus rental properties.
So, I mean,
I see a lot of people that think that that's a quick fix to things up front
when in reality it's not, it's,
it's really just upfront costs and it's going to give you legal protection.
But until you have the assets
to really substantiate needing one,
I'm more of a, hey, use that five or 10 grand
that you would spend for a trust towards your business.
Yeah, I'm mainly doing it for privacy, I'd say.
And definitely additional legal layer, right?
Yep, exactly, yeah.
Because you can't really...
Now, is this true?
Because I've heard when you get sued
or you're in a lawsuit, they can't go trust some trust yes they cannot so whether it's an irrevocable revocable
and that's where like you definitely want an estate attorney that's going to be like hey these
are my goals if i get sued i don't want them to be able to get this that's so crazy so i'm assuming
all the richest people in the world have something set up like that oh yeah crazy estate planning
structures because then you start to get into the tax game too, where, you know, if you die, your estate is taxed at a certain rate. And so you try
to like structure your assets to be given out basically upon death. Yeah. What are some ways
to minimize the death tax? How much do they take when you die? I don't even know what that is. I
think the estate tax might be like 40, 40%, 40% Just for dying? Right. If you don't have proper planning
in place for your estate. Right, right. So if you just die without a plan, half of it's gone pretty
much. And that's where too, when you're at that level, you don't want to leave something like
that up to a will or something like that. You would want to trust with some sort of an estate
attorney set up. Dude, that's insane. And you have a lifetime gift exemption. So a lot of people ask,
well, if I walk down the street and I just gave somebody $30,000,
some of that technically could be taxable,
but you have a lifetime gift exemption,
meaning you can give away, right now it's roughly $12 million,
you can give away that for free, no tax to either party.
And so if you were, again, to walk down the street,
because people usually ask, well, what amount can I give somebody
without it being taxed?
You can technically walk down the street and give somebody a million bucks.
It would just come against your lifetime exemption.
Oh, interesting. Sort of this bucket, which that goes down here soon too.
Oh yeah, it goes down. I saw Mr. Beast dealing with this. He gives away so much stuff. Now it's to the point where he's paying taxes on the stuff he gave away. Exactly, because the receiver can't
pay the tax on the assets that they're receiving. I got a. Got a question about salaries. So a lot of CEOs of
Fortune 500 companies, they pay a majority of their salary in stock. Yep. Is that due to taxes,
tax savings mainly? I would say that because then they start to get the growth on the stock. So it's
probably their preference as well than to get just a cash value up front. And from a cash flow
perspective, it's easier for the business to give them stock shares than to give them cold, hard cash. Right. So I, yeah. So it's really a, it's a growth play for the receiver and it's a
business play too, for them to sort of harness cash. Yeah. Cause I noticed, I think Nike,
like 10 million stock a year or something and like very minimal salary, like just enough to live off
of. Yeah. I was just reading an article the other day. Wells Fargo is actually in hot water and
they said one of their like VP bankers was worth 150 million. And I'm like, whoa, as a right as a banker. And so again,
I would assume most of that is stock option. Oh, yeah. He was there from the start. Yeah.
Interesting. Wells Fargo hates to throw shit, but they're always in some hot water.
Oh, dude, I was there during that whole debacle of seeing people set up fake accounts because it
was such a numbers game. Yeah. You would come into the branch and you had to get eight or 10
sales on the day. That was it. Yeah. Oh, yeah. You had to get sales on. It was such a numbers game. You would come into the branch and you had to get eight or 10 sales on the day. That was it.
Oh yeah, you had to get sales on the,
it was such a sales heavy business.
So when you say sales,
you're talking people opening up a bank account?
New accounts, credit cards, debit cards, all of that.
And they were just letting anyone make accounts, right?
I remember this, I think.
Oh yeah, and they were setting up accounts for people that didn't want them.
Oh really?
You'd come in for a checking account
and I would just throw a debit card on it for you.
I would not do that, but yeah, I saw that all the time.
Wow.
And would you get a bonus if you got like...
Oh, most of your bonus compensation was tied to sales.
Oh, so that's how you were doing it.
Even, right, like your branch's performance
was all tied around sales too.
Yeah, I mean, it makes sense
because the more accounts they have, the more they're worth.
So I could see why they would want to do that.
It looks better, right, from the, let's say, a buyer's perspective if they were going into the
bank to invest with them. It just makes your numbers look stronger. Yeah, absolutely. Yeah.
So with your firm, what's the strategy? Do you want to sell the company one day? Do people even
buy these types of companies? They do. Private equity is coming into CPA firms right now pretty
hard. Yeah. I love it. I think it's a great business model because for context, a lot right now are like educational companies. Those kind of scare me because one,
you're always relying on new sales. If your sales team slows or dies, you die as a business.
CPA firms are great because they're almost like rental properties with clients. If you treat a
client well, you do a good job. They're likely to recur. And as they grow, you grow with them
as a client. And so yeah, usually the multiple on a CPA firm
can honestly be anywhere from one to three.
Of revenue?
Yeah.
So if you have a CPA firm that's grossing a million dollars,
you can expect anywhere from one to three million
for that firm.
Nice.
But I think to end up, I guess,
positioning your firm to sell,
you really have to focus on the process.
Not so much just the relationship with the clients.
Because right now, I've been approached to sell or buy and my always thought has been if i come in and buy an
old legacy firm with all these older clients and they see some young guy with a hat come in and
they're like hey you're not going to come to my office i'm going to zoom you they're going to
leave right so it's really big on client retention so you have to get the clients really relying on
the firm not so much the partner of the firm that's a good point because usually when you sell
a business you're kind of hands-off at that point,
because you've outsourced everything.
But with CPA firms, it's all about relationships, I feel like.
So if I just say, hey, book of business is gone,
I sell it for $2 million, the buyer's not...
If half the clients leave, because I leave...
Yeah, that'd be interesting to see how many would stay
and how many would leave.
There is going to be such a massive shift in this industry
in the next five to 10 years,
because everybody's old and they want to retire soon. Dude, that's a good point. A lot of my
accounts that I used to use were old, old and they're doing it their old ways. And, you know,
but again, if I'm in my sixties and I'm going to retire in whatever, five, 10 years, why would I
change? Yeah. Just ride it out, make some money and then sell it later. Yeah. No crazy story.
Cause my first accountant ever was in Jersey when I lived there. And I ended up moving to Vegas.
So I'm texting him like nonstop like every couple weeks.
Yo, did you follow the return?
And like I'm emailing him.
I'm emailing his old employees.
No one's responding.
And I think the dude died.
Oh.
Yeah, because I looked up his name and found like an obituary.
I'm like, oh my gosh.
Yeah.
It's crazy.
Yeah.
That whole industry is nuts now because there's so many.
There's more than enough clients and not enough CPAs and like,
you know,
service providers.
So yeah,
it's a weird time in the industry.
Good problem to have,
I guess.
It is.
It is.
So can you even take on more clients right now or you're fully.
Oh,
we can.
It's just now bringing on the right style client.
So like our,
our space is real estate.
So real estate investors,
flippers,
wholesalers,
whatever.
Yeah.
But you know,
like that's why if you're going to go work with a CPA,
like I've said, it's important to find somebody that's in your industry.
There's too many generalists out there that can help you file your taxes,
but they're not going to really give you advice.
Right.
Yeah.
So I know you're big into real estate.
Do you believe real estate's the best way to save on taxes?
Oh, 100%.
So how would you go about setting that up in the proper way?
So if I was somebody right now that let's say I made 90
grand and I'm like a manager at a department store, the first thing I would do is I would
save up enough cash to go get a short-term rental property. And this is how it really shakes out on
paper. My W-2 is 90 and this rental property, let's say, will cash flow me three grand a year.
So nothing crazy. But on paper, I could lose, let's say, 40 to 60 grand on paper
through depreciation, meaning I get to write off a portion of that property. So if I make 90 over
here and I lose 40 on paper, I technically only pay tax on 50 grand. Wow. So you could put it
against your salary almost. Exactly. And so, yeah, so it's funny, like in a slide deck I have,
the taxpayer that pays tax on the 90 will pay, let's say around 19 grand.
Or no, I'm sorry, like 16 grand.
And then on the flip side,
it'd be about four if you did that strategy.
So if you multiplied that
and were able to get one or two homes a year,
which again, most people want to buy rental properties
because it's a great retirement strategy.
Forget about the tax benefits up front too.
That's really great to know
because I purposely don't pay myself a lot.
But using that strategy, it could provide more flexibility to me. Oh yeah, for sure. Right. And then it's
like two birds with one stone. You're growing your portfolio for retirement. You're getting
cashflow from the property, but then on the same end, you're saving on your tax bill. So that's
exactly what Kiyosaki is doing. Kiyosaki is making 5 million in education. He'll go out and at a
larger scale now by apartment buildings. Wow. So he could write it off using that it's a separate business
though right exactly at the end of the day you're trying to generate cash over here you're trying to
buy real estate on this side and then you get the losses to net against it that's the master plan
dude brilliant yeah so brilliant and that is that is that what uh trump did oh yeah that's what yeah
that's what they're all doing when he bought those big hotels and casinos?
Grant Cardone did it with the jet.
And he realized he sold the jet.
So he's like, oh, I got to buy another jet too.
Oh, he sold it?
Yeah.
Well, he sold it and then bought another one.
Oh, I had to upgrade that baby.
Yeah.
Out of all the presidents in your lifetime, or I guess ever,
who would you say had the best tax policies?
Since I've been an accountant, I have to say Trump.
And it was really for small business.
So I mean, the standard deduction increase was nice,
but then also he gave this QBI deduction,
which was basically qualified business income.
And the way to think about it is,
it was like a 20% shave off the top for small businesses.
Wow.
And so, yeah, so we saw small businesses
save a lot in tax this year.
So instead of paying that federal, federal is 37, right?
Max is 37.
He lowered it to 17.
No.
So what he did for the corporate, he brought the corporate tax rate down to 21, which was
nice.
Got it.
But as far as just this QBI piece, you were still hit with the normal tax brackets, but
he gave you basically a 20% chop off the top before you applied the tax bracket to it.
So it was really helpful for small businesses.
Wow.
That's cool.
And Biden just reversed it.
Didn't reverse it.
It's still there though,
but that's where these policies are starting to sunset.
So depreciation last year was 100.
Now it's 80.
Next year will be 60.
And so now the million dollar question is,
will it come back?
I think it will.
I don't think it will sunset eventually to zero.
It's set to, but again, we'll have to see.
Someone will change it before then.
Yeah.
Does the IRS ever publish how much revenue they take in?
That's a good question.
Oh yeah, I'm sure that that's in the budgets, right?
In all of those talks.
Yeah, I'd be so curious how much they're raking in.
It's got to be something astronomical.
What they call it too is the tax gap
because they feel that what they're receiving
and what they should be receiving
and that's exactly why they have audits.
They're trying to go out there and find the lost tax dollars.
Didn't they just hire like 30,000 agents?
The plan was like 87,000 agents.
I feel like they cut that down to some dramatic number.
I don't know how many they've hired since then,
but they pay pretty well.
And so it's always funny now as a CPA,
we always joke that if we worked for them,
we'd be raking it in because we know now what to look for.
Oh, they pay well, you said?
You could probably get a salary for 140, 150.
And then you have plus benefits, probably a little bit more.
Government benefits are insane.
It's all a game, dude.
What's the most you've helped a client save, you'd say?
The first one that comes to mind was $270,000 last year.
If you extrapolate across the client book, millions for sure.
One individual client,
at least a quarter million.
I mean, that's huge.
That's a house.
For sure, right?
And we have a lot of clients too
where they'll end up paying zero
because if they buy enough real estate,
basically is the game at that point.
Can they bring the tax bill to zero?
Right.
Yeah.
So I'm just wondering,
because you're parking a lot of money in real estate,
but it does seem to be worth it
if you're getting these tax deductions, right? Well, yes, but think about it this way,
too. You're not necessarily parking that much because you're using leverage to buy it. So
let's say for like the easiest example I give is a car for 50 grand. In this case, you could put
zero percent down on a car and get an entire $50,000 deduction for a home, a half a million
dollar home. You can put down, let's say, 80 to 100 grand and get a deduction let's say at the end of the day for the exact same amount
got it so you know at some point that the roi right like this is how i say would you rather
stroke a check for 100 grand to the irs or stroke a check for 10 to 15 but then also buy a rental
property right and so when you start to lay it out that way it's like well i think the funds would
better be used but right growing the. Plus you have an asset.
Yeah, that makes sense.
I'd rather have that than cash these days with inflation, man.
Yeah, exactly.
You're losing money every day you have it.
Yeah, that's crushing people.
How did you become business partners with Ryan Pineda?
So we're both from Vegas.
Funny enough, too, we had must have crossed paths
playing baseball, too, when we were younger.
He was a little bit older than me, but he was posting on Instagram looking for a bookkeeper.
And I was working at a firm.
And I'm thinking in my head, like, dude, I could do this with my eyes closed.
And so after a few DMs, we ended up meeting.
I went and met with him and his sister.
And then first meeting, I was just going to do his bookkeeping.
And then it quickly led to tax work.
And then he was throwing a quarter party for like his old brokerage.
And I'd made a joke like, hey, man, you know, like we should start a business. You'll drive the business. I'll
run the business. And then I quit my job December of 19. We started January 2020.
Wow. Amazing. Yeah, that's a great partnership, man.
It worked great.
So what are you working on next?
Next is bookkeeping blueprint, which is a big thing for me. Because all of the tax talk at the end of the day,
the biggest problem that we see with business owners
or self-employed people, they don't keep good books.
So at that point, you can't even really tax plan.
Everybody wants to do the sexy tax planning.
And so now bookkeeping blueprint is helping basically
start small bookkeeping businesses to help people do bookkeeping.
I love that.
Yeah, I used to never really care about bookkeeping,
but now I do my P&L at least once a week.
That's great.
It actually helps because you realize what you're spending money on and what's working.
So I'd recommend just doing that in general.
Oh, for sure. Whether it's your personal finances or your business.