Epic Real Estate Investing - How Do You Know If Your CPA Is An Idiot? | 387

Episode Date: May 8, 2018

Today, tax expert Tim Berry and Matt Theriault share a simple method to tell whether or not your CPA is an idiot. The method can also be applied to car purchases, business purchases, and much more! Learn it all with Epic Real Estate on Tax Hacker Tuesday! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Did you know that up to 50% of your lifetime income will be wiped out by taxes? What if you could stop this madness? Isn't it about time you play on a level playing field with the wealthiest 1%? Now you can. Tim Berry, attorney at law, shares here each and every week current tactics and strategies that anyone can implement to hack the tax code. Protect your assets and keep what's rightfully yours.

It's time. for Tax Hacker Tuesday. Hello, and welcome to the Epic Real Estate Investing show. It is Tax Hacker Tuesday with my attorney and friend Tim Berry. How goes it, Tim? It is going good. Matt, how's it going with you? Fantastico.

Here on Mondays at Epic, we show you new and creative ways, as well as time-order ways of making money using real estate. And then here on Tuesdays, Tim and I, well, actually, Tim, will show you how to keep it. So if you have a question for Tim, you can go to taxhacker.com for questions. and post it there. And today, Tim actually has a question for himself. He wants to know if your CPA is an idiot or not. I don't know, however that went.

We're going to talk about idiots. Or we're going to talk about CPAs. God bless if you are a CPA. We love you. But we're going to give you some firepower to treat your clients better. How about that? How are we doing, Tim? Well, I'm shocked to even say this, Matt.

I mean, I'm really shocked and appalled. your use of the word idiot with the CPAs. I know. You know, I'm easily offended by people that are easily offended. And if you can't handle it, not the right show. We say that with the utmost respect. And please accept that within the spirit that it is said. But anyway, let's get serious.

How do you know if you have an idiot for a CPA? So this is actually an impromptu episode, because Tim had said something off air after we got finished recording last week. I said, let's talk about that. And specifically, we were going to talk about, Tim, is the home office deduction with what's just about every single person in our audience can qualify for. And there's a right way to do it and a wrong way to do it, or a good way, or a better way or a bad way. I'll let you take it from there, but you were saying some interesting things. Sure. And this goes so hard of a matter, like what we were talking about and laughing about

before, is how do you know if your CPA is an idiot is if they're taking the home office deduction, whenever you're operating through an LLC or S corp or something or that nature. I can't tell you how many times I see that. And people may not know it, but the home office deduction is an absolute pain to deal with. It's setting you up for all sorts of problems later on down the road. Number one, it's making most people liars. Because in order to take the home office deduction, you have to use that area exclusively for your business.

If you have the kids come into your home office and play around while you're trying to do some work or something, it's not being used exclusively for the home office so they can disallow it. If you, I don't know, play computer games on your computer in the home office, you're busted. It's not being used exclusively. And yet everybody says, oh yeah, we used it 100% exclusively for our home office. They say that on their tax return. So they're lying. So they're getting in trouble there. Other thing is, if you have the home office, you have to depreciate, you are effectively depreciating your house. and now whenever you sell your house, instead of getting the whole thing completely tax-free under the so-called 121 exclusion of the first 500,000 tax-free if married, you actually have

to recapture the depreciation you've taken on that property. And that's a nightmare to keep track of. Nobody keeps track of it. And now once again, they're being liars on their tax returns. And other big thing on the home office is you can't even use the home office to create a loss. If you're already running the loss, okay, you can't take a home office deduction. You can't add on to the losses with a home office deduction. So in my version of reality, the home office deduction is the biggest pain in the posterior on the face of the earth. And you're doing things wrong if you're taking the home office deduction and you're

operating through a partnership or through a corporation. Better way to do it. Better way to do it is set up something called an accountable reimbursement plan. with your business. And all that is, that's a fancy phrase for saying, at the end of each month, you're going to submit your expenses to the business. Now the business is going to reimburse you for those expenses. So let's say that you used one-tenth of your house for an office. You say, hey, business, I used one-tenth of my house for a home office. Please reimburse me for one-tenth of my depreciation during that timeframe, one-tenth of my mortgage during that time frame, one-tenth of my taxes, and you guys all get the picture,

you submit that over to the corporation, just like you what you would with the home office, and corporation gives you that money back. Now, here's a mind-blower. Tax code says, you don't have to report the money you receive from the corporation on your tax return, and the corporation gets to deduct it. So you're kind of double-dipping in a certain sense, and I just absolutely love it. So that is the smart way. Say that again, how you're double-dipping? You're double dipping in that corporation gives you the money. You get that money tax-free. You don't even have to report it.

And yet the corporation gets deducted as well. I like it. Yeah. It's almost the double Dutch thing. I don't know. Anyway, yeah. Maybe this episode should be called, how do you know if you have a genius for a CPA?

I think that's better because I don't think you're necessarily qualified in the if you didn't know that, but you're certainly a genius if you did know that. Yeah. Well, it's just the better way to do it. And I don't know how many tax returns I've gone through over the years. Maybe one or two actually do it this way. I have no idea why more don't, but they don't. It's insanity. And there's so many ways you could use this reimbursement, anything for, gosh, oh, and by the way, super big deal on this. With the home office, you have to use that area exclusively. With this thing, the reimbursement, I could use my kitchen table one night and use a computer on the kitchen table to do some work,

and I can charge my business for that. It has to be a reasonable rate and everything. Whereas there's no way I could deduct that with just the home office. So there's just a lot more flexibility, and it's a much better way to go. Got it. So you could go from like one-tenth to three-tenths. Yeah. Right?

Seriously, you could break it up however you wanted to. That's just amazing. And whereas before, you couldn't even qualify. for the deduction, now that other stuff just goes out the window. You don't have to play that game. An accountable reimbursement plan. Accountable reimbursement plan. Yes, sir. I learned something new. Every day when I talk to you. That's awesome. Well, thanks, Tim. That was a good one. I think that's applicable to just the darn about everybody that's listening to us right now. Yeah, because they're all real estate investors. They've got businesses that qualifies as a business and you can do this.

Oh, easily. And this is probably the better way to buy a car too, because now you can buy it in your personal name and you can just ask the company to reimburse you for it, including the so-called 179 deduction. So there's just all sorts of neat things you can do with this that's over and above the normal way that most tax preparers do. Okay. I thought we were going to wrap this up, but then you just said something really cool because I'm in the market for a new car. So explain to me this. Okay. So I go out and buy a new car. Yes, sir. Under my name? Sure. Okay, I buy it under my name. And then...

And by the way, who's the insurance going to be under? Your name. Okay. And this is a biggie because if it's in the name of the corporation or of a business, they're going to jack you on the rates. They're going to charge higher rates. Now you're not going to be hit with the higher rates. Okay.

And other thing, too, other, you know, triple bonus round. We did double bonus round. Let's go into triple bonus round. Triple bonus round. How many times is the car company, the car dealer, are going to actually make a loan over to your corporation. Or not. But now how many times they can make a loan to you personally?

Every time. Or same thing with the lease. How many times they get a lease of the corp? It's not going to happen, but they go to you personally. All right. So I got that. We just buy the car as normal. Yeah.

Just like we're going to buy ourselves. And now what do we do? We set up an accountable reimbursement plan. Yes, sir. And then we are going to charge the company for use of the car. Yes. That's what we do. do we have to break that up into fractions or can we do the whole thing?

Well, I don't know about you, Matt, but I'm a pig. I mean, just look at me. You want me to do a profile? No, please. That hurt, Matt. That really hurt. Okay. So what we can do is we don't really have to break it up.

What we can do is under the tax code, to the extent a corporation would be able to, I'm not even going to get in all that. We can hit it for accelerated depreciation. Gosh, and I forget what the number of, are right off the top of my head right now. I think there is 18,000 a year. We can send, even though we're buying the car on payments, we can send a bill over the corporation for, let's say, $18,000 for the accelerated depreciation. And we can write off the full $18,000 right now, even if we put no money down and are making payments of a dollar a month for the next 30 years.

So the corporation could give you that $18,000, and that comes to you tax-free. Tax-free. Okay? And then, The company gets an $18,000 deduction. Yes, sir. That's double dipping to the finest. Isn't it, though? I love it. Okay.

And actually, it's probably more than $18,000, but I don't know the exact numbers right now. And I don't want to start off a session calling people idiots, and then they're going to come back and say, you're an idiot for not knowing the exact numbers. So let's just say $18,000 right now. So essentially, let me see if the government is paying you to drive your car. Oh, big time. Right? Yeah, and there's even more, if you buy, the government incentivizes people to, gosh, buy a big gas hog. If it's over 6,000 GVW gross vehicle weight, they'll let you write off the whole thing under many circumstances.

So let's say you go out and buy a fancy, dancy car for 70,000 bucks, and it's over 6,000 GVW gross vehicle weight. You might be able to write off the whole entire thing. Got it. Do they know about this? The government? Yeah. What are they doing now? Yeah.

All right. Sweet. Okay, we got houses and cars. Can we do anything else with that? Oh, anything that you use for business purposes. Got it. Purposes. Your fancy computer.

Your laptop. All that stuff you can do the reimbursement to plan with. Anything that you use in furtherance of your business purpose, if it's personal assets, you can ask to be reimbursed by, the corporation, just that simple. Sweet. That's a good one, Tim.

Well, thank you, sir. Yeah, you've been holding back on that, I mean, or with me on that one. That was good. All right, well, you heard of here first. What your CPA is not telling you. Maybe we'll change it to that. There you go. Sweet.

All right, so if you got a question for Tim, maybe we don't want questions because he just volunteered some stuff that I don't know if any of us could have even imagined. But that was a good one. But if you got a question for Tim, and specifically, if you have something about what we just discussed here, that'd be great. So you can take total advantage of this. You can go to taxhacker.com forward slash questions, post it there. And then if you like a copy of Tim's new book, his free book, how to take advantage of five loopholes in Trump's new tax plan, blah, blah, blah, blah, blah. You've heard here before.

It goes on really long. I could have actually finished the title with in the time that I just went blah, blah, blah, blah. Okay, how to take advantage of five loopholes in Trump's new tax plan, the mainstream media isn't sharing with you. and could cost you a small or large fortune. Go to taxhacker.com, download the book there. And then after you've got the book in your possession, you'll have the opportunity to schedule some time, some one-on-one time with Tim,

and either he or one of his team members will get on the phone with you for a short five-to-10-minute call to assess your situation to see if there's even anything that they can do for you, see if there's a good fit. They'll take the next step in schedule a tax action plan, and if there's not a good fit, what they'll do is they're going to share some alternative resources to where a better fit for you can be made.

Either way, Tim and his team are committed that you are better off after the call than you were before. That's just Tim. That's what he does. And he's trying to help your CPA out. That's just in his good nature. Got it. Tim, any last bit of advice? That's all I can think of right now, sir.

That was a really good one. I think that's my favorite episode so far. We're just getting warmed up. Cool. Sounds cool. All right. So that's it for Tim and myself. And we'll see you next week for another episode of Tax Hacker Tuesday on the Epic Real Estate Investing

Show. That's it for today, as we dream of a tax system that works just for you. But until then, you have Tim Berry. See you next Tuesday for another episode of Tax Hacker Tuesday. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.