Digital Social Hour - Michel Valbrun On Saving Money On Taxes, Opening Up a Trust, Best Write Offs | DSH #152

Episode Date: November 9, 2023

On today's episode of Digital Social Hour, we sit down with Michel Valbrun to discuss the best ways to save money on taxes, legal loopholes & why he recommends parents pay their children a salary. BUSINESS INQUIRIES/SPONSORS: [e-mail] APPLY TO BE ON THE POD: https://forms.gle/qXvENTeurx7Xn8Ci9 SPONSORS: Opus Pro: https://www.opus.pro/?via=DSH HelloFresh: https://www.hellofresh.com/50dsh AG1: https://www.drinkAG1.com/DSH Hostage Tape: https://hostagetape.com/DSH 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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help people save money on taxes. Really? Yeah. Is it true Native Americans don't pay tax? So I'm not going to say they don't pay tax, but they do have I heard that too they do they do um there are some some benefits to be a native American yeah to be to be a native American so I'm native American too you are I'm not gonna go down that rabbit hole not like when the tax code was created there's over 70,000 pages in the tax code right right so if you were to print out the whole tax code that's almost like the size of this room literally longer than that right probably read it all right do you ask if i haven't read it have you read it all or something listen Welcome back to the Digital Social Hour. I'm your host, Sean Kelly.

Here with my co-host, Wayne Lewis. What up, what up? And our guest today, Michel Valbrun. What's happening? How's it going? What's up, man? Mr. Tax Guy. Yeah.

That's what I do. Money making Mitch, man. Help y'all keep the bag Is what I do y'all So yeah So how would you help Athletes Keep their bag

How do Let's say A lot of these cats Are signing What 100 million dollar deals 100 million dollar deals 160 million dollar deal

Granted they're taxed In every city That they're playing Every state Pretty much It's top 47% So they If they Get signed for 160 But they're taxed in every city that they're playing in, every state pretty much. It's top 47%. So if they get signed for 160, but they're only making about 83 million of that, that's what they take home, right? That's what I'm saying.

Now, can they save on that 47% that they're being taxed on? Is it possible to save on that? Or could you save the money more so on the profit part? But I would want to start with the tax part, the 47%. Can you lessen that number? Yeah, major. So yeah, what you're referring to is the jock tax, okay? So what happens is as an athlete, you can get taxed based on the different states and places that you pay, right? And one of the things that happened, the back story with that is it's interesting. So it was actually Michael Jordan, right? So Michael Jordan, he basically, it's originating from Michael Jordan.

So Michael Jordan, he was playing all over the country, whatever the case is. And basically, long story short, they hated on him, and basically they started taxing all the states that he played, right? So then they created this jock tax now where you're an athlete, you're being taxed on every state that you play. So one of the things that you need to do. Why is that? If that's not the place you actually reside in.

I never understood that. I understand the concept, obviously, jock tax, but why am I getting taxed on places that I don't reside in? Yeah, the reason is because you're generating revenue there, right? So basically, at the end of the day, when it comes to saving money on taxes, like the IRS, their main objective is to be able to create revenue, right? So they're trying to generate as much revenue as they can. So if they can find opportunities to be able to tax you and be able to generate revenue now they can do whatever they want to do right so one of the main goals and one of the most important things that people need to do is understand how to proactively save money on

taxes so when it comes to the athletes there's a lot of strategies that you could do right believe it or not like when the tax code was created there's over 70,000 pages in the tax code right and yeah 70,000 pages right so if you were to print out the whole tax code that's almost like the size of this room literally longer than that right probably to read it all right do you ask if i had to read it all have you read it all or something listen if i read the first page i read the stuff that you need to know so this is the thing about it right 90 of the tax code believe it or not is actually showing you how to not pay taxes right less than 10 is actually telling you what you you how to not pay taxes right less than 10 percent is actually telling you what you actually have to pay in taxes right so what people need to focus on

is that 90 percent yeah the not paying taxes part so really the big ways to save and this applies to athletes this applies to regular individuals right is there's six big ways to save money on taxes right so the first one is deductions so figuring out okay how can you maximize your deductions deductions basically a tax write-off so people talking about writing off things on taxes that's basically they're spending money and it reduces their taxable income for athletes this is i'm strictly talking about the jock tax yeah so this is could be so this could be applicable to athletes right so basketball shoes yeah what so basketball shoes so that's not not not necessarily right so one of the things that happens with athletes is they also get paid w-2 right so with as a w-2 it's a little bit more challenging to be able to

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Make sure that you have some kind of business okay so the tax code actually favors business owners entrepreneurs entity right having an entity on the side right because what that allows you to do now is now you could basically turn your lifestyle into a tax write-off can the NBA sign you as an entity versus an individual they generally based on my understanding you'll come in as a salary. Okay. So they can't sign. If they were to sign, it would more be like on a subcontractor. That's what mostly basketball players are.

Right. But they're W-2. Yeah, you'll get paid as W-2. Even if you come in as an entity, they can't sign you as an entity, right? It's negotiable i think right i think i don't know i mean i think you could be signed as an entity you should be i'm gonna say i'm gonna say i'm not i'm gonna say it's it's possible i'm not gonna say it's impossible i'm just generally speaking i'm gonna say that when you're coming into it it's mostly you're gonna

pay it as a salary individual right there you start a business and then you're right off exactly yeah so what you want to do and this again applies to w-2 workers at a job right you want to go ahead and start that side hustle right having a business on the side because now the tax code opens up stop right there is the nba depositing your nba checks into that business account not because it's no the reason why i'm asking is because it's a it's a process so i want to go step by step so just in case people don't know can that money from the nba whether it's hockey nba nfl baseball can that money be directly deposited from the mlb or nba to the business uh account is that possible it is possible so it's it's possible but generally speaking it's still

it's going to be w-2 okay it's because basically the way it works with w-2 versus contractor is basically they control your schedule right so you have to be here at a certain time you got to work these certain hours you got it it's basically you are under the control of the owner right so that's why you're getting paid you're beginning pay as a w-2 and because of that now you have to pay payroll taxes on that so again like really the process is I'm speaking speaking generally speaking, like, of course, on an individual basis, we don't know every single person's contract or every single entity or whatever the case is. So it depends on the individual. But just generally speaking, that's the way it goes where you're getting paid W-2.

So what you want to do with that W-2 income is now start transferring that over into a business entity. Right. And then that business- So when you say transfer, am I doing wire transfers to that account? It could be a wire transfer. It could be however you want to transfer that money. Because really, initially, when you're moving that money over from personal to business, that's considered a capital contribution.

So now you're contributing to that account. So it's not taxable when you do that. It's not taxable, yeah. Right? You're just basically investing into that business, right? To be able to get it going, get it started, whatever the case is. So what you want to do is you want to figure out, okay, how can I be able to write things off on taxes now as a business owner? So now the money's in the account. Now we rock. Exactly. So now what am I doing to get write-offs? Yeah. So write-offs, really, when it comes to write-offs, there's four requirements.

I call these tax-free requirements. So tax-free is an acronym I came up with. Tell people, remember. So the first part of that free is for business. Okay. So the expenses and what you're spending money on, it needs to be for your business. The next thing is our regular, right? So it needs to be considered regular for your business. Okay. So it needs to make sense for your business. So depending on the type of business that you're in, you need to be able to figure out what is ordinary for that business. The IRS calls that ordinary. So for instance, one of my homegirls, she owns an ice cream shop, multi-million dollar ice cream shop all across the country. She could write off ice cream cones, spoons, napkins, all those kinds of

things. If I try to write that off, right, I'm getting audited. I'm going to have some issues, right? Because it doesn't make sense for my business. So you want to make sure that it makes sense for your business. The third part of that is essential right so what's going to be essential for you to operate your business the iris calls that necessary so necessary expenses are going to be rent utilities employees hiring professionals all right yeah all right what about a car car a thousand percent right that could be that could be ordinary or just the notes the whole car i'll break down i'll break down i'll break down the car because that one's powerful. And the fourth part of that is what I call economical. So economical just means it needs to make sense for how much

money you're making in the business. So going back to that car, one of the things that 50 Cent did at the end of the year, he ended up owing a whole bunch of money. We know 50 Cent, he's a rapper, he's a producer, he's multi-millionaire. So what 50 cent could write off is going to be different from what someone else could write off because 50 cent has hundreds of millions of dollars so he ended up buying five vehicles brought off all those vehicles wow because he's a business owner he's a business he has his business entities he was able to categorize that as ordinary and necessary for his business right but if he's just starting off in business maybe you could do one car right maybe you might not be able to write off the whole car but maybe you could do mileage

right that's another way to do it so there's different ways to do it depending on the individual so those are the four requirements it needs to be for your business it needs to be regular free business essential for your business and economical for your business so going back to the vehicles right one of the things that you could do is you're able to write off the full amount of the vehicle, right? Again, if it's for your business, it meets those four requirements. You're able to write off the full amount of that.

So the vehicle does need to be paid off? No. Oh, wow. Yeah. That's, that's so that's, so that's, so that's the, yeah, that, that's the secret, right? That's one of the most powerful things in the tax code is what's called depreciation. So depreciation is basically, it's a, it's a, it's a cashless deduction, meaning that you don't have to put up money. You don't have to put up bread to be able to take it off. It's just based on the

purchase price of the vehicle. So let's say for instance, like a popular one is a G-Wagon, okay? Yeah. So the G-Wagon- It's heavy. Yeah, it's heavy, right? So one of the requirements is the vehicle needs to weigh over 6,000 pounds in order to be able to write off the whole vehicle, right? It used to be now they brought it down to 80 percent right so do you know why because one of the things that happened is so when trump was in office he came in he made like the biggest changes in the tax code for the past 30 years right he did a whole bunch of things to benefit entrepreneurs business owners real estate

investors right trump's out of office it's not a political discussion he's out of office so now they're trying to bring that stuff back so now they're trying to change it back but he got it to a point where you could do what's called bonus depreciation and what's called section 179 that lets you write off 100 of the vehicle right so now they're bringing it back and bonus appreciation is prior to the car depreciating bonus appreciation allows you to be able to write off basically 100 of it yeah that helps it lets you accelerate the depreciation right because like i said on one of the dope things about depreciation this applies to homes like investment properties as well manufacturing homes too right yeah so what's dope about it is that it's a it's a cashless deduction

for you right so you don't have to put up all the bread. And again, you're able to write off the full thing. So let's just say, let's just keep the math simple. Let's say 100% of the vehicle, right? So let's say 100% of the vehicle, you get a vehicle that weighs over 6,000 pounds. Let's say you're able to write off 100%. Like I said, it's 80 now. But let's say you were able to write off 100%. Even if you put down 10%, 20%, again, if you're using it 100% for business purposes business purposes boom you're able to write off the full

amount of that vehicle so that's how that goes yeah so really again the thing is you just want to make sure you meet the four requirements before your business regular free business such free business and economical for your business and then that's one of the ways to do it and then on top of that you could do the gas my bad you could do the gas, my bad. You could do the gas, the maintenance, everything else that goes into maintaining that car for your business. So let's say an athlete does all that, right? Family, payroll, everything. When he sits down with his tax guy or CPA at the end of the year, he'll get a tax return. Based on the 47% that they took from him, he'll get a portion of that back because he has deductions.

So this is for after they take the 47%. This is how you recuperate those funds. A thousand percent. Okay. So I just wanted to make that clear for viewers. Yeah. So just to, and just to even piggyback and clarify that more.

So what happens is during the year, right? Especially if you're W2, you're automatically getting paid. You're automatically paying taxes during the year. Right? So at the end of the year, if you could show like, yo i paid this much but based on all these

deductions that i have yeah y'all need to give me some money back right so that's that's what happens when you really the tax return is just like a true up of what you ended up owing right so what happens is one of the biggest issues is that people think that the best time to save money on taxes during tax season but it's too late the first time i say money is during the year it's during the year spending time it's tax planning now being proactive figuring out like if you didn't know how to write off the vehicle during the year now we're in 2024 and you try to tell me like yo can i write off the vehicle for no bro have you seen cases where they took 47 and then at the end of the year the person got the 47 or 30 that they took back the whole entire thing yeah it's possible wow so check this out so that's

technically not paying taxes no you can get it down like so one of the things grant cardone did it too grant cardone he bought a jet right he bought it yeah he bought the pj right so the the jet i think i don't forgot how much it was but i think it was over a million dollars yeah over a million dollars right i think 20 i think yeah over a million dollars again met the four requirements for business regular essential economical for his business that business that he owns at the end of the year literally at the end of the year he went and bought the whole jet basically basically rolled up, got a big deduction, got money back. So my thing is what happens the following year when you accumulate more?

Are you just doubling down on spending and put outs or what's the, what's that? I mean, or again, are you, are you just doubling down? Like, okay. No, not necessarily. So deductions is one way, but there's other ways to be able to move and transfer your money to be able to save money on taxes. But basically, it's just it requires like consistent planning and looking at your situation. If you're going to make more money, then now you got to figure out other ways to be able to reduce how much money you pay on taxes. Right. So I'm not going to say that every year, like you're going to pay zero money in taxes. You're going to get money back, especially as an entrepreneur and a business owner. Just understand that you probably may end up owing some money on taxes. The biggest thing is figuring out how to legally and ethically. Illegally avoid paying taxes. Yeah, and avoid is key, right?

Not evasion. A thousand percent, yeah. Avoid. Yeah, you know. You understand. So, yeah, you got tax avoidance. You got tax evasion. Yeah, tax avoidance is legal, right?

That's basically reducing how much money you pay in taxes tax evasion is when you're saying you make less money than you actually made or you say you're spending more money in deductions than you actually did right that's tax evasion right that's what you can get and then you get audited and then they find out you're not everything was a lie but exactly likelihood of them auditing you is not likely but they will at some point yeah is it true native americans don't pay tax so i'm not gonna say they don't pay tax right but they do have i heard that too they do they do um there are some some benefits to be a native american yeah to be to be a native

i'm native American too, you are. I'm not going to go down that rabbit hole. Evasion. Yeah, I'm not going to get people in trouble with that one. But no, there's different things. There's different exceptions and rules. Like I said, that's what's so dope about it. It's like 90% of the tax code is telling and showing people how to not pay taxes. Everyone's thinking about, oh, I i gotta pay all this money in taxes and if i don't pay money in taxes either that makes me like unethical or i'm breaking

the law somehow but that's not the case like the wealthy and and the rich understand like you can use the tax code yeah you could avoid it right because why like the the the reason why i push and tell people to do that is because i feel like you have a moral obligation to keep as much money as you can now you can use it for your family now you can use it to give back to the community use the money the way you want to now you can use that to reinvest into the business and be able to provide jobs for people right you could get into real estate right and provide housing for people right so that's that's why it's so powerful to understand like how to be able to proactively send money on taxes what would you say would be a nice amount of of entities to have attached to you as a normal

person not even as an athlete just like the normal person walking around makes a decent amount of money how many entities should he or she have attached to him yeah i wouldn't even go based on a number but based on the different types of ways you can go ahead and create entities right so you're gonna have one entity for an active business okay so like let's say you have a consulting company whatever the case is you want you're gonna want to have a separate legal entity for that right a legal entity is gonna be what's called an LLC limited liability company or a corporation right those are two yeah that's those s corral I'll talk more

about the escort that s corp is actually a tax and yeah so that's how your tax but the legal entity that gives you that legal protection llc's corporations can do that right then you got your passive type of activities passive activity is going to be you investing into real estate for instance right so you're going to go ahead and invest in real estate let's say you do buy and holds or whatever the case is you want to go have a separate entity that's a separate yeah three you just said okay yeah so now we're at three right and then you could also have you can create more different more complex types of entities depending on your situation but i'll say the average person like having an entity yeah you think the number is five i think you should at least have five entities attached to you

whether separate standing or you know fictitious entities or i think you should have five different entities yeah i've eins i would i want to put a i wouldn't put a number on it but there is there is benefit to being able to do that because like you said even with the eins now that opens you up to being able to get business funding business credit and now reduces your risk now right because what happens is now with these legal entities right someone tries to come after one business. They can't come after all the businesses, right? If you got it structured the right way, if you're doing the right things, you're not co-mingling funds and mixing things and trying to finesse too much.

Like, then now you're able to go ahead and have that legal protection. So that's super key. But going back to the S-Core, that's super important. I want people to understand this too, right? So we talked about legal entities. You got the LLC and the corporation. Those those are legal entities that's how you're basically legally structured with the state right because most people get those confused llc's and the corporation confused with the escort a thousand percent so explain the difference between the

three yeah so basically what happens is you have the legal entities and those legal entities are basically registered with the state right then you got what are called tax entities that's how you actually tax that's what the IRS is looking at so that's why for tax purposes LLCs are considered disregarded entities when people are new in business they're like why is my entity considered disregarded something wrong like no they don't even they don't even see it it's not even it's it's basically it's disregarded disregarded for tax purposes but then you have your tax entities how you're actually taxed you can be taxed as a sole proprietorship right that's usually when you're in business by yourself partnership business and more than one person the s corporation okay so the s corporation

is going to be different one of the benefits of the s corporation is now you're able to avoid self-employment tax okay so self-employment tax. Okay. So self-employment tax is the tax that they pay, basically the tax that you pay, which is 15.3% on the profit of the business. Right. So let's say you didn't have an S corporation. Let's say you make $100,000 in profit in your sole proprietorship, 15%, 15.3% of that, which is social security, Medicare, all that kind of stuff that's included with that. Now you're paying 15,300 in taxes for

your sole proprietorship. But now if you go ahead and switch over to that S corporation, what happens now is that instead of being taxed on the profit of the business, that you're being taxed on the salary that you pay yourself. So that's one of the requirements. That's important for people to know is like as an S corporation, you have to go ahead and create what's called a reasonable salary right reasonable salary is just basically if i had to give you a number a good start to consider is 30 of the profit of the business right um minimum to start looking into but you want to make sure you work with someone like really crunch the numbers to figure out for you but then what happens now is because you're only paying yourself the self-employment 15.3 percent on the salary you basically let's say you pay yourself half of let's say you pay

yourself fifty thousand dollars now you're paying you reduce your tax bill by seven thousand right you basically cut in half because now you have that s corporation so that's one of the benefits so the time when people need to switch over to the s corporation is when you know that you're going to make more than fifty thousand dollars000 or really $40,000 in profit is when you need to switch over to the S corp. Right. If you're just starting off, you don't think you're going to do $40,000 in profit. It may not make sense because it's going to be expensive for you. Right.

Now you got to pay fees. You got to put yourself on payroll. Like the tax return is going to be more expensive for you to go ahead and process. So that is when you want to make that switch. And when do you attach a 501c right when you attach that and then start to allocate money there because none of that money can be touched when do you do that or it's no better time you can do it whenever you want as long as they approve the 501c yeah 100% so yeah you know 501c is right yeah so 501. So five, one, C three nonprofit entity. Yeah.

You want to make sure that you're starting it to be able to, you know, have some kind of charitable, you know, justify like not necessarily a tax strategy. That's it. People, but it kind of is a tax track.

It, it, I mean, let me, let me, let me say this. Check this out. No,

no, check this out. So there's tax benefits. I'm not going to call it. I'm just going to say tax benefit. That's the CPA because we're on camera in public. I'm going to say, it there's tax benefits i'm not gonna call it i'm just gonna say it because we're on camera in the republic i'm gonna say is there some tax benefits tax incentives to benefiting the community why like just like anything right the tax code what the government realized that the tax code they can use it as an incentive system so if they want you to do

something they're going to go ahead and create incentives for you right so right now they're really pushing hard on the electric vehicle so now they want people to pay something, they're going to go ahead and create incentives for you. Right. So right now they're really pushing hard on the electric vehicle. So now they want people to pay, now they're giving people credits for electric vehicles and they want people to go ahead and invest in real estate. Why? Because as a real estate investor, you're providing housing. That's one less person that they have to put in public housing. As a business owner, you're providing jobs.

It's one less person that they have to pay unemployment to. Right. So you want to see what those benefits are. And the nonprofit, yeah, of course, is going to be a way for you to be able to help the government out by going ahead and putting money into that. So yeah, that's something that you, if you have a heart, you know what I'm saying,

to go ahead and contribute. Is it true if you set up a trust, put all your assets, your real estate, LLCs in it, and you get sued, they can't go after that? It depends, right? So when it comes to trust, there's different types of trust out there, so you have what's called a living trust, which is revocable trust. You have an irrevocable trust. So the revocable trust basically is a living trust. Honestly, for a lot of people,

that's what makes the most sense. At least that's the starting point. The revocable trust is basically what happens is one of the biggest the biggest benefits of the trust not even getting into tax we're going to talk about the tax piece with that one of the biggest benefits of the trust is that if you just have a will now you're going to have to go to probate right so when you die when you become incapacitated what happens is you got all this money you got all these assets right people are trying to figure out yo what where's this money going like who's getting this who's getting that right a whole bunch of families get into arguments because they don't know who's going to get what right so what happens is now you got to go through a court process

called probate probate is basically you know people are fining for years of spending all this money on attorney fees lawyer fees whatever the case is and the crazy thing about that is because now it's probate you're going to court and now becomes public information so now everybody can see oh you got this time and right so then what happens is and what's really crazy is that sometimes even with that because now it's public right there's literally people for their job like people make make a living like literally just posted up by probate um um hearings or whatever the case is and they hear about oh this family can't pay for that the property tax on the house taking it i'm gonna take that and flip it right and pay i'll just pay the little tax on it they'll sell deeds all day yeah it's crazy it's messed up

right a property tax for 6k and instead of 12 whoa just transfer the deed over somebody for 12 yeah it's crazy yeah so and the crate and and the thing about it is right even some of the most and this happens unfortunately like even like Prince right he died without a will like there's a whole bunch of celebrities and multi-millionaires who do even I think you know rest in peace to offset uh I don't think he had a will not offset my he didn't think he was gonna die that's yeah take off take off yeah take off yeah um yeah no you you but we're not thinking about that but we just i mean you just got to be prepared we got to be in position right yeah so so with that like i said that's a revocable trust right so it helps

you be able to avoid probate which is again you don't have to go to court it's all documented laid out for you and um then you could basically allocate it and you could do what's called directives basically saying like you can get really specific on how you want to do right so one thing that you want to put like i got a daughter now right so one of the things i could say is like hey when i die right my assets could only go to her it's not gonna go to her man i don't know who this person is like she's gonna get all of it right so that's that's something that could you could be that specific right you could say that hey i don't know who this person is. Like she's going to get all of it, right? So that's something that could be that specific, right? You could say that, hey, I don't want my kids because I know my kids are crazy.

They're going to blow the money, whatever the case is. I want to make sure that they go to college. I want to make sure they get it like before they can get the assets or whatever. So you can get really specific on how you want to do that. That's a revocable trust. Then you have the irrevocable trust. Irrevocable trust is basically and it's a lot more complex, right? It doesn't make sense for everybody to go ahead and do this, but the irrevocable trust, that's when you're able to save money on taxes because now you're basically in a position where they, you know, the same control, own nothing, control everything.

That's what they're talking about is the irrevocable trust, right? So with the irrevocable trust yes you can same thing you can go ahead and put assets in it but now you don't necessarily on paper you don't own the trust right someone else you have a trustee someone else that controls that and then you can go ahead and start pulling out money like through annuities whatever that you have to pay taxes on but now in that case that's what's gonna give you the protection right so and then you can get even to you can get even you basically have assets but it shows zero on paper yeah so you so you'll still have to

trust your trustee though yeah once you sign it over bro it's no longer it's really not yours yeah it's it's basically irrevocable you can't change it no no no that's like wow yeah so they can run off with it they can take everything from from you. Wow. You can lose everything. It's got to be like your mom or brother. Not even that. Moms take stuff. Brothers take stuff. Girlfriends take stuff.

Yeah. It got to be, it got to be somebody that you have either the battery to their heart monitor. So if they take it, you can press the button and it'll drop in. But you got to trust them. I mean, really trust them. Even some people will sign their attorneys as their trusted attorneys. You want to make sure it's like a separate, like some kind of business, like maybe attorney or something like that. That's going to oversee it.

They're basically in control of that. And with that, yeah, like I said, like I even have one client. You can get really creative with this, but like I said, there's different types of trust. But I have one client, they just won the lottery or whatever the case is, right? Wow. Won the lottery. How much did they win?

They sold, they won a million dollars. Literally, they were making. The scratch-offs? I forgot which one it was. Because a million is not a lot with lottery. Yeah. You only paid five bucks, so I mean. Well, that's not, but that's not like the mega jackpot as well.

Yeah, when he says lottery, I'm like, 16, 30, 18. No, but he was making less. I think he was making less than 100K or whatever the case is. So, like, you know what I'm saying? That's a lot. This is big money.

And they basically took all of it, so they ended up getting half of it because when you basically decide to get like the full distribution, you get 50% that's taxed or whatever right and that's another thing i'm cool with that i would i would much rather take right because you might end up you know lottery winners die for some strange reason yeah so but what one of the things one of the benefits of the irrevocable trust is that you're able to be

anonymous so what they did was he's like i don't want nobody to know i won this money and what state though because every state you can't be anonymous. California makes announcements. Ohio makes announcements. Texas makes announcements. So, yeah, you're right. So, it depends on the state. But what he did was he got with an attorney.

And this is like, when we're going to talk about trust, whatever the case is, it's more of like a legal concept as well. So, you want to make sure you work with a state planning attorney. That's crazy. So, let me ask you this before you start. So if I win the lottery, am I starting the trust immediately or am I doing it before I win? Like when is a good time to start the trust and then am I telling the lottery, the estate lottery, to transfer the money to the trust? Yeah. So you can do it after the fact.

Okay. Okay. But just to make the announcement. Yeah. It's called's called like a transactional trust okay this is what it is so basically it's transactional transactional yes it's basically transactional sense that they go ahead and move the money in there so no one knows who it is on paper it's like the attorney you know what i'm saying like really moving this and no one really knows what's going on who has it and then from there then then they go ahead and transfer the money and it's before you give them the winning ticket um so as far as the timing is concerned i believe yeah i believe so yo that's crazy i'm learning so much yeah i'm learning so much so it's called a

transactional trust yeah so you do that immediately after winning the lottery and it looks just like a bunch of paper scram like a transaction yeah it's an anonymous person yeah you wouldn't yeah so even when they announced me it'll be like the williams trust fund it wouldn't even win the lottery it would probably even be their name right to keep it even more anonymous it's like random like some guy won it yeah bcg trust won the lottery and you don't know who that is if i won it i would be anonymous for sure no for sure yeah you don't want that you don't want who that is. If I won it, I would be anonymous for sure. No, for sure. Yeah, you don't want that. You don't want that pressure.

You know what I'm saying? No, that's crazy. Yeah, so that's another benefit of the trust as well. Transaction on trust. Yeah. What's the most you've helped someone save? The most? Over a mil?

I've been able to show someone, yeah like 1.2 this is this thing about they got back at you saved them i was able to save them in like tax savings or whatever the case is so this is the thing about it is like obviously the more money that you make the more it's going to be right so it's really just like percentages right so the impact for one person is going to be different another person right so if i'm showing you like, hey, these are all the write-outs that you get, you know, 30% of 10 million is going to be different for 30% of 100,000. So it's really just percentage-wise, right? Based on how much money the person makes.

But a really key thing with that is like when it comes to, again, saving money on taxes that tax planning piece is really important because you know again and this is the thing about right i'm a cpa right so certified public accountant that's like one of the highest standards that you can go ahead and get in the accounting field right so um it's tough to get yeah it's tough right there's less than one you have to get a bachelor's you got to get a master's you got to work under cpa for two years has less than 50 passing rate less than two percent of cpas are black so it's like it's like the highest basically the highest level right but congrats brother appreciate it

that's love i appreciate that so yeah no it's it's but the thing about is even as a cpa i'm telling y'all like right now even as a cpa cpas don't even know how to help people save money on taxes really yeah so this is the thing about like as a cp so what are cpas actually well i know what some of you guys are good for because i've been dealt with a lot of phenomenal cpas but right the fact that most people have that misconception that you guys are supposed to say them um they always applaud their cpas no and is that a luxury being knowledgeable about taxes being a cpa actor level no a thousand percent like because one of the things is like from my my perspective is the cpa exam really prepared you to work in corporate america so basically you're just working within businesses whatever but they don't teach you and show you how

to help business owners save money on taxes right So I had to invest over a hundred thousands of dollars in myself, learning from people, top tax attorneys and all these different things to be able to learn this information to help people proactively save money on taxes. So I came up with this thing called the Tax Elite. It's another acronym to help people really understand who you can work with because the CPA is not enough. So with the tax elite the first part of that is e education right so did they go to school for accounting attacks

they did that's a positive thing but then also when you're working with the cpa they need to be educating you on how to save money on taxes so that's another thing a lot of people did they just give their tax return and expect them the cpa is going to save the money on taxes it doesn't work that way they need to be like yo wait i see you got this this and that going on like this time you need to move like it needs to be a conversation whatever the case that's you need to be able to expect that the next thing is l legal representation legal representations can they represent you in front of the irs right so if you get a call if you get audited you don't want to be taking that call right because one of the things that they understand exactly and they

do it because they know you don't know. So they're going to start asking you questions. And it's psychology, right? They're going to play nice, but, hey, how you doing? Yeah, we just noticed that. If you start asking you questions and then next thing you know, you're going to overshare whatever the case is and say things that you're not supposed to. Like, ah, we got him.

Let's go. Right? And now you're going to get hit with another tax bill. So legal representation you know you want to make sure that you have a cpa the cpas can represent you you want to make sure you have a cpa to go ahead and represent you eyes integrity that's the next part of the elite so i have integrity integrity means that someone that's following the tax code doing things legally and ethically you don't want to have work with someone that's telling you to claim kids you don't have like come on like it's crazy like that's what people really do in real

life like you know what i'm saying so like you want to make sure yeah so you want to make sure that you you work with someone that's doing things legally and ethically t is training are they constantly getting trained up on the latest and greatest tax information tax code that's going to be key and last but not least experience right so one of you want to look at years of experience like how long they've been in the game so i've been in the game for over 10 years but also you want to work work with someone that has experience with your specific situation right do they have experience working with real estate agents real estate investors what type of real estate investing are we talking about wholesaling are we talking about fixing please are we talking about buying

holds like are we talking about these like like what are we talking about specifically right right so that is going to be key because every business like i said has different requirements of what's considered ordinary what's considered necessary there's some kind of benefits with a particular industry so that's going to be key so like making sure you're working with the right person like i said the tax elites is who you need to be focused on what would you say the best places uh just to kind of touch bases on that, are the best places to incorporate and then create nonprofits outside of the U.S. too? Yeah. So there's a couple of places that give you some more benefits as far as like registering. You got Wyoming.

It's going to be Nevada is actually good. So Vegas. Yeah, Nevada is good. You got Delaware that gives you some type of tax incentives um really more of the anonymous type of type of benefits as well outside the country man you got puerto rico you got turks and caicos like a lot of the celebrities i've ever heard yeah you got turks you got turks dubai it has some crazy tax benefits as well and incentives. So yeah. But again, you want to make sure that- What about Mexico, Belize?

So I would say New Mexico. New Mexico, yeah. Oh, New Mexico. Has some benefits. So not actually Mexico, is that it? Nah, well, I mean, as far as like- Benefits. As far as saving money on tax, because it's a different country, you know what I mean? So it's going to be beneficial for you. But I would say, again, you want to make sure, like,

you talk to someone about your specific situation. Because I don't want people to, like, just jump out there and start, you know, getting these entities or whatever. Like, it needs to make it make sense or whatever. If you're just starting off, like, you could literally just go ahead, start it in your state and where you're located. That's the ideal way to do it. And then as

you feel like or as you start moving up then you want to start you know looking into different strategies to be able to help save why do you recommend all parents pay their children a salary oh man that's like so this is the thing about it so when it comes to the money that we spend right some of the what we spend a lot of people spend most of their money is on their kids right kids are expensive like i said i just have a daughter and you know it it it costs right how early should you start paying their solid that's a good question so what i would recommend what i generally recommend publicly is because there's a court case and in that court case there was basically a parent that paid their seven-year-old through the business, and they were cool with that.

So anything younger than seven starts to become a gray area. So I know people do it, and they say that their child is a model, and they try to do it that way. I personally recommend seven years and older is when you want to look at that based on the court case. Because the taxes, when it comes at the end of the day, taxes are really law. So what I tell people all the time is in order to change your tax, you got to change the facts. Right? So it's based on the facts of the situation.

What's the facts? Okay. You have, your kid now is an employee. So that's the fact. Right. So now with that, you're able to pay them up to the standard deduction amount. So whatever the standard deduction amount is for the year, this year is $13,850. Right.

You go ahead and you could pay them up to that amount. And based on that, they need to be performing legitimate services for the business. You need to make sure they have a job description. You want to record their hours. The hours need to make sense. So basically with the hours, just because your kid, let's say, for instance, you have your kid cleaning around the house or whatever the case is, you can't pay them $100 per hour, right?

So you want to make sure you do research and figure out like what makes sense for how much work that they're doing right so that's one of the key things there and then also you know you just want to make it look you want to have the documentation tight on that right so you want to make sure it's it's it makes sense and one of the best one of the dope things about that is now the kid is able to have earned income because they have earned income now you can go ahead and put that into a retirement account. Let's say you put it into a Roth IRA. Let's say you started at the age of seven, right? And let's say the rate of return on that happens to be like

10% or whatever the case is. You can even go lower than that, but just hypothetically speaking, let's say the rate of return over a 10 year period, they, from seven to 18, right? You go ahead and bring that out. By the time they're 18, they have over a hundred thousand dollars in their bank 18, right, you go ahead and bring that out. By the time they're 18, they have over $100,000 in their bank account, right, from going ahead and being able to do this.

So that's why I always push, you know, being able to pay your kids through the business. One, it's a tax deduction for your business. So you save the money. You're not paying taxes on it, right? That's a tax loophole. So is it okay if you pay a serving row $100,000 a year? Nah, bro. Nah, bro. Nah, bro.

So, well, like I said, one, it's up to the standard deduction, the amount of $13,850, and then to be able to not pay taxes on that. Okay, so you can't. I want my seven-year-old to, my seven-year-old makes $100,000 a year. What's wrong with that? But they can. Oh, okay. I'm not saying you're not allowed to.

What I'm saying is that the tax benefit that I'm talking about the 13,000 in 250 that's the max awesome match that they're gonna bet you don't have to pay tax anything over than that then sorry hey so this so the kid doesn't have to pay taxes on that 13,000 a no wow I never knew that because I got a little allowance when I was a kid yeah yeah so that's that's the thing like one of the things that people need to think about is not if you could write off but how can I write it off? Okay. And how many kids can you put on that $13,800 salary? How many employees do you want? You got five kids. You're, you, you're able to pay them each 13,800. But yeah, but, but remember this, right? Again, it's the economical piece.

Like how much money does your business make? So if your business only makes $5, but remember this, right? Again, it's the economical piece. Like how much money does your business make? So if your business only makes $5,000, like, you know what I'm saying? It's got to make sense. Yeah, you can. It has to make sense. And it has to make sense with the age too, right? So I'm not going to tell you to jump out and pay a seven-year-old $13,850, right? Because the math ain't math.

And it's going to be a little bit harder. But like if they're 15, 16, and they're your graphic designer, social media manager, we live. Go ahead and pay them the whole $13,850. Now, what's this health insurance thing I see people doing where they're taking out loans against their policies? Yeah, so there's different policies that are out there. Health insurance? Yeah, people are opening up health insurance accounts, putting money in it, and then taking money out interest-free, right? Yeah, so one of the –

Is that cure credit so i would so i would say this so on the health insurance piece i'll just say that's really more of a life insurance type of strategy so generally speaking people will do that with life insurance so life insurance if you get like a whole life policy whatever the case is there's policies that are out there that um basically you're basically able to borrow against the the cash value of that right so one of the things actually that's interesting is that walt disney like that's how he one of the things that he did to be able to start disney world he's able to go ahead and use that because loans are non-taxable then yeah you're able to go ahead and borrow against that that tax-free right so again but

that's life insurance but yeah that's life. Life insurance loans are non-taxable, but anything you get from the bank, the bank is that's the, that's the deduction, especially if you're a delinquent owner, right? If you, the banks write it off, they have an insurance policy on every loan. Yeah. Right. Yeah. So for the banks, yeah. If they write it off and that's, yes, it's then, yeah, it's basically a loss for the bank. Yeah. Yeah. That loan stuff is not so, cause people would take money out, buy a house with it and make more money yeah so one of the things you could do so this is this is a really um dope strategy people can but it lowers your face value right you face them out if you take a loan out against your your whole life so yeah yeah so basically what one thing that you can go and go into like the borrowing right and being able to get homes right so one thing that someone

could do right potentially be able to do is like let's say you're working on a job right yeah but you're working on a job you have a 401k account for instance right you go ahead become a business owner you go ahead and switch that over to a solo 401k right that's the 401k business owners right one of these you could do is you can borrow against that retirement account right so you can borrow I believe up to 50% of that account. Now you can go ahead, use that money, be able to buy property, right? And then basically be able to use the money, the cashflow from that property, go ahead and pay down the loan. You get tenants in there,

they're paying down the loan, whatever the case is. So yeah, that's another way to be able to do it. And that's the 401k, right? You can do that with, yeah, the 401k right you can do that with yeah before okay you can borrow up is it 60 or 50. i'm just gonna say i'm gonna say 50. yeah it could it could be it could be more but i'm just gonna say 50. i don't want to misquote and get people jammed up michelle what are you working on next and where people find you yeah man um always got always got something going on so this is very informal i actually really enjoyed this it was taxing people may say it was boring but i liked it. Nah, listen.

I'd even scratch the surface on it. But yeah, we can really go with it. One of the things, one before we, I want to share this because this is super key that I want people to understand, right? Before we wrap up with this, is understanding tax is literally your biggest ROI to increasing your wealth, okay? Because, and again, people don't realize this, but like tax is destroying most people's wealth, right?

So think about this, right? When you make income, you pay income tax. When you buy something, you pay sales tax. When you buy property, you pay property tax. When you sell the property for more than what you pay for it, you pay capital gains tax. When you die, because they tax you to death, now you're paying death tax, right?

And you add up all these different taxes, like 52% of your income. Like, people are not even aware of this, right? So basically, every dollar that you're making, that's 52 cents, $10, $5.10, that's $100. Like, it goes on and on, right? But the biggest tax that people don't talk about is what I call ignorance tax.

And ignorance tax is the tax that you pay by not understanding the tax code, by not working with the right professionals. So for the listeners, for everyone out here, like I'm begging y'all, like really make sure you take this thing seriously and, you know, understand how to save money on taxes because too many people are overpaying in taxes and there's a lot of ways to be able to save. Like I said, the tax code, most of it is showing you how to save money on tax. So that's going to be key.

But as far as what I'm working on, yeah like i got a couple things so one of the things i started is now i'm actually coaching and helping other people become what i call the tax elite so helping people now helping their clients be able to save money on taxes right there's seven over seven billion people i can't work with seven billion people whatever the case is right so i want to make sure i help the next generation of accounting tax professionals that's one thing i also have an ebook that y'all definitely need to check out so it's called tax wealth secrets ebook um we're gonna have the link in the bot um in in the description make sure you guys tap into that got a special discount for the listeners so you guys go ahead tax wealth secrets ebook um dot coms where you can go ahead and pick that up. And yeah, just again, just continuing to educate folks and helping people save money on taxes

is what I got going on, man. So yes, sir. Oh, yeah. I loved it. All right, guys. If you need help saving money on taxes, hit my man up. Thanks for watching. See you next time.

Peace.