Law Have Mercy!
Law Have Mercy! isn’t just about the law anymore—it’s about life, business, health, and everything that sparks curiosity. Join Personal Injury Attorney Chaz Roberts as he dives into candid conversations that mix legal insights with lifestyle tips, entrepreneurial wisdom, and personal growth. From breaking down complex legal issues in simple terms to exploring the challenges and triumphs of health, business, and beyond, Chaz brings his unique perspective and passion to every episode.
Whether you're here to learn, laugh, or find inspiration, Law Have Mercy! has something for everyone. Just remember: the opinions of our guests are their own, and nothing on this podcast is legal advice or creates an attorney-client relationship—it’s all about entertainment, exploration, and empowerment. Let’s make it fun!
Law Have Mercy!
The Calculated Art of Avoiding Uncle Sam: Expert Advice on Navigating Your Finances like the Wise & Wealthy ft. CPA Marcus Mire
To connect with our guest, Marcus Mire, you can find him on Instagram @miregroup_cpas, via his firm’s website https://www.mire.group/ or tune into his podcast “Make It Count” wherever you get your podcasts.
Ready to unlock the mysteries of tax deductions and learn some of tricks used by the super wealthy to minimize your payments to Uncle Sam? Well, grab your pen and take notes because this conversation with CPA Marcus Mire is putting you on game to save you tons of time and money!
On today's episode of Law Have Mercy! podcast, we are joined by podcast host, CPA and founder of his own Accounting Firm, The Mire Group— Mr. Marcus Mire— to answer some of your most frequently asked questions when it comes to taxes, credits, deductions and more! We’re talking everything from who can benefit from different tax perks, how to maximize your business write-offs and what’s some of the quickest ways to land yourself in hot water with Uncle Sam.
Things get really cranked up when Marcus exposes five of the most closely-guarded tax loopholes leveraged by the super wealthy to keep their money and give less to the IRS! Marcus highlights the importance of understanding business tax preparations and year-round tax strategizing for maximizing your deductions. Our talk dives deep into insights you won't want to miss if you're a business owner aiming to keep more of your hard-earned money!
The conversation takes a turn towards real estate investors, shedding light on innovative tax strategies that can set you apart from the competition. We examine the pros and cons of owning versus leasing business property, and Marcus gives us the lowdown on a powerful tool for accelerating depreciation and slashing tax liabilities. However, it's not just about the short game; we discuss crucial considerations for your long-term real estate portfolio, balancing immediate benefits with future tax implications.
Finally, we're bringing you golden nuggets on wealth maximization and savvy state tax navigation. Discover how 1031 exchanges and donor-advised funds can reshape your financial legacy and charitable impact, and learn why athletes and high earners need to play defense against the 'jock tax.' We wrap up with practical advice for family business tax strategies and the importance of accurate documentation—because when it comes to taxes, the devil is in the details. Tune in and take notes because this is one full of info that EVERY taxpayer can benefit from and by the end the show, you and your net worth will be glad to did!
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This show is co-produced by Carter Simoneaux of AcadianaCasts Network, Chaz H. Roberts of Chaz Roberts Law and Kayli Guidry Bonin of Beau The Agency, and Laith Alferahin.
Hey, this is Chaz with another episode of Law have Mercy. Today I bring on Marcus Meir with a Meir group. He's a CPA. Is that G-Wagon worth buying that in five loopholes, the rich will not tell you. It's a ton of information. He's gonna save you money on your taxes. I learned a lot. I took a bunch of notes. I think you're really gonna enjoy this episode. Stay tuned, marcus. I've been waiting for this episode for a long time, just because I'm selfishly looking forward to the advice that you're gonna give on taxes. Yeah, thanks for being here.
Speaker 2:Yeah, man, this is great. I think you and I kind of kindred spirits. When we connected over coffee a couple weeks ago, it was like pretty inevitable, we're gonna do this, so I'm looking forward to it.
Speaker 1:Yeah, we got a lot of common interests. You have a podcast, you're into tech, you're into consulting, just running some things by you. You're like, yeah, you should do this, this and this. So I'm pumped up.
Speaker 2:Yeah, I hope you give your audience some good information.
Speaker 1:I think you're gonna teach us all how to save some money on our taxes, right? Yeah, that's the plan. Yeah, anything that we can not pay to Uncle Sam is a win, right?
Speaker 2:Yeah, let's keep it in our pockets.
Speaker 1:Yeah, what kind of work are you doing on a daily basis with the Meir group?
Speaker 2:Yeah, so what we do is what I would call small business bundled services. So we've kind of broken away from a traditional model in the sense that most people, when they think of CPAs in fact I posted this on Facebook like a year ago I said, when you, when I say the term CPA, what do you think of? And everyone I was like 30 comments taxes, taxes, taxes, taxes. And obviously we do that. But for us, what I would say is taxes are at the end of the engagement, or the least the tax compliance part. Most people come to CPA thinking follow my tax return, I give you my stuff, you know, give you my shoebox or receipts, you all put it together how you do it, all the taxes.
Speaker 2:We do it kind of a holistic approach where we want to work with you throughout the year. We want access to your accounting, so you got to be on a cloud based system to work with us, because we need access. We want to help you do it better Throughout the year. We're planning proactive, looking at your payroll, consulting with you, meeting with you, having correspondence, and then we do the taxes at the end and that's all for a fixed monthly fee. So you know what you're getting into. You know what you're paying no surprises, no bill for a 30 minute conversation.
Speaker 1:That kind of stuff. Well, that's great because it was normal. When I got a call from my CPA, I say, oh crap, I guess I never really thought of it. When people get a call from me as their lawyer, sometimes they're like, oh man, I don't even think about it. Yeah, hopefully I call them and say, hey, I got a bunch of money for you, absolutely Do you ever call your clients and say, hey, I got a bunch of money for you.
Speaker 2:Well, we did when we had the ERC a little bit. I mean, we had well it's funny, you said it.
Speaker 1:What is the ERC?
Speaker 2:Employee retention credits which were big, almost like a cottage industry sprung up about two, three years ago where you could go back with some COVID relief credits essentially. So in that is. You know, I had people where I was calling them saying, hey, I think you qualify for this. Like there's some money out there for you, totally legitimate, we can do the work, there's some money. I mean I had some clients make some big claims at that. But generally, yeah, we're working with people throughout the year to say like, hey, we're minimizing your taxes, but here's what you're paying. So like, make sure you got it set aside, let's plan proactively for it. Those are the kind of conversations we're having.
Speaker 1:Yeah, well, I have some notes. And one thing we also have in common is you get texts in the middle of the night with tick from from some of your clients, with tick talk videos saying hey, have you thought about this? Have you thought about that?
Speaker 2:Yeah.
Speaker 1:Are there any tick talk videos or any any myths that you wanted to bust?
Speaker 2:Yeah, I mean the biggest one, and I think I think most people just need to have a sub variety around taxes in this way. Not everything you do because you are a business is deductible. So like meaning Dammit, just, I know, I know and look. But look, I want to help Like, and when I tell my clients is all the time it's like we want to help you do it smarter, take advantage of everything, make sure we're dotting our eyes, crossing our teeth, take care of the low hanging fruit.
Speaker 2:But just because you buy a vehicle doesn't mean everything's deductible around the vehicle. Just because you, whatever the expense you have, it still has to have a business purpose. And I see a lot of people pushing like you know, year in, go buy vehicles, like that may be true, like you could buy a vehicle and deduct it, but it still goes back to what percentage? Do you use it for business? And so that's going to that's. That's going to equate to most everything you do as relates to business and deductions is does it have a business purpose, do you use it for business? And that's where the rub's going to be.
Speaker 1:So have you had clients that said hey, marcus, I'm I owe a lot of money on my taxes. I'm going to go out and buy a G wagon.
Speaker 2:Right.
Speaker 1:Absolutely yeah. And and is it taxable? Yeah, so, is it? Is it a tax deduction?
Speaker 2:I should say yeah, I mean, it's like I would say this it CPA is a notorious for this and I'll I'll kind of keep true to it it depends. So, yes, it can be If you have a vehicle. So the the crux of the G wagon is it's got to be over 6,000 pounds. That's where the faster write offs. You think you and I were talking before about bonus depreciation. Simply, what bonus depreciation is is it allows you to write off the cost of something, in the first year at least. Right now you have a hundred percent bonus depreciation where you can write it off. So, yeah, you could. If you, if you come to me and say, hey, I want to buy this vehicle for my business we I'm a, you know I drive in about 80% for business then you could take 80% of the cost and write it off right then and there, if it's over 6,000 pounds.
Speaker 2:But the G wagon is kind of the quintessential like when you hear on Tik Tok or Instagram it's like that's what people are going to because it's sexy and it's an influencer can push that. So, yeah, you can do that and it's expensive and it's expensive. So you, you know, there's some, there's some materiality, right, some dollars back, but it's just again going to go back to do you drive that thing for business, right? Everybody's bringing their kids to the soccer game. Everybody's got some personal stuff. What I tell clients is pigs get fat and hogs get slaughtered kind of thing. I don't say your business vehicle is 100%, say it's 85%, 90, something you can justify. If you get looked at it in an audit it's much easier to say, well, look, we got some personal use in there.
Speaker 1:Yeah, yeah, so those the the hot vehicles are the over 6,000 pounds. So that'd be like a GMC Denali, a Tahoe, a G wagon.
Speaker 2:What are some of the others are trucks, more than what you would think I mean lots of trucks, obviously, but more even some of the mid-sized SUVs, I think. I don't. I can't rattle them off, like when I need to look at it, I just go find the list. But more than you would think, it's called gross vehicle weight rating and as I'm saying that, I don't even know what that means, but I know that's the term. I mean like there's a specified way they they weigh that thing to be 6,000 pounds.
Speaker 2:If it's over that, that then opens up the ability to take the 100%. Well, and let me back up on bonus bonus depreciation for 2023, supposed to be 80%. There's a tax bill kind of being talked about right now to retroactively go back to 100%. So in the G wagon example, if you bought it 150 grand, let's just say, and you use it 80% for business, that's 120,000, just the math. That would then be available with 100% bonus to take 120,000 dollar ride off. So if you kind of play that example forward, 120,000 at 40% roughly, if somebody's buying that they probably have a high tax rate, federal and state about 40%. You'd say 40% on the 120.
Speaker 1:Okay, but devil's advocate. All right If you do not. If you have a two or three year old vehicle, you don't need a G wagon, all right. You're spending a dollar to save 40 cents. You said it better than I would. I mean it's. So you get the $150,000 deduction or 80% 150,000 deduction. You still have a note on a $150,000 vehicle that you really didn't need and you're spending a dollar to save 40 cents. Do people have a hard time understanding that a deduction is only 40% of a dollar? Do they realize that?
Speaker 2:I'm so glad you asked that because there's so much confusion around it and I get it Like taxes are complicated and there's all kind of misinformation. But yeah, the point is what you just made I'll kind of piggyback off of. You still have to run the economics of the thing, right Light. You still have to pay 120,000 or an example, 150,000. So if you only got a 40 cent on the dollar deduction, did you need that thing? Like you and I were kind of talking, taxes are a sweetener to the deal. It's like I was going to make this move anyway or I was considering it.
Speaker 2:We're really in the sense of buying things. If I was going to buy something, great, the tax has helped me. It's a sweetener to the deal, but still got to pay for it. So make sure it's something that makes business sense. I mean you still want to run a good business. Cash flow is king in a business. If you go tie up 120, 150 grand in a note that you're paying 1800 bucks a month on, like was it, do your cash flow? So you got to think about that from a big picture standpoint. You're making the point that I make the clients all the time is that yes, you can do it, but it's only 40 cents on the dollar. It's not a dollar for dollar credit on your taxes and that's a big. We could probably get into that a little bit too is like a credit versus a deduction. People get those. I even see people on like the news really blow that and that's kind of what you're getting at Is that people are not understanding it's only a percentage of the ride off that it saves you Right Now.
Speaker 1:Devil's advocate if you are. If you need a truck, okay, your truck keeps on going in the shop. It doesn't start one morning. It starts hurting your business Right, and it's the end of the year. That might be a good purchase for you.
Speaker 2:Yeah, absolutely. And what I would say to that too is, if you've got your accounting done, let's just say at that point you're December 15th and it's like, oh, and you're here in the hub city for commercials we were talking about that earlier Like if your books are done through November, now you know, like is this a really good year? How's it compared to last year? What do we think about next year? Like, my data is good. Coupled with the new information of man, this thing won't start.
Speaker 2:I probably could use one. Now you've got a better decision because you've got good data. So now you know, does that truck now save me? This year I'm in the 32% bracket because I know that based on my November accounting. But if I'm not, or I don't know that, maybe I took a, I bought a vehicle and this year I was in a down tax, my tax bracket was down, I'm in the 22%. Doesn't save you as much. So it all goes hand in hand when you're kind of looking at that stuff and in these tax and some of the a lot of things that we're talking about.
Speaker 1:Taxes, there's kind of two different angles. One is a W2 employee, someone that is on the someone's payroll, and then what we're really talking about is people that are business owners. Yeah, for sure it can take advantage.
Speaker 2:Yeah, I mean I hate to say but there's just not much you can do. W2 employee you've obviously got. Most of the things are going to relate to retirement and kind of automized deductions. You know you're fund your 401k or fund your traditional IRA or your HSA and then obviously charitable and mortgage interest and all that kind of stuff. But that's pretty much it when you're talking about individuals or people that work for people.
Speaker 1:Do you think that because of those tax advantages, a lot more people have gotten into the gig economy and become entrepreneurs or, you know, even working underneath existing businesses that used to be traditional W2 employees now are business owners, have their own agency, have their own thing, so they can take advantage of some of these things?
Speaker 2:Yeah, I think so, because I mean you can always then make the case and the Holy Grail and tax laws when you can convert something you're already paying for and make it deductible.
Speaker 1:So, right.
Speaker 2:So now you, you say, okay, I was a W2 employee, but now let me strike out on my own. I'm going to form an agency or I'm going to become a consultant. Now, that cell phone bill that you were paying for now you're already paying for it. Now you can say, well, that's related to my business and that's an easy kind of thing. Now, my mileage, that I'm driving to go meet with clients, where I was driving already, I had a vehicle already. Now those things are now deductible. So you start to get into the where you don't have to make as much to make as much kind of thing. Right, and most people now have so many tools at their disposal, with cloud based tools and apps, to run a small business and kind of get out of the eight to five running how they want it. So it starts to become attractive and then you throw some tax benefits on.
Speaker 1:it Makes sense that people now would start to think like, rather, maybe be a contractor and so, because of your experience with all these tech solutions, are you meeting with clients early on in their business development process to kind of get them set up?
Speaker 2:Yeah, we have kind of we have a we multiple ways where we come. We have people that obviously come to us and they've got, they've kind of seen what we do and heard and want to really modernize and so we will streamline. We'll say, look, we want to put you on these three applications, we know them inside and out. And then you got people who call kind of proactively and I really love those clients who start off on the front end like I want to get this together. I know there's better ways to do it. I've heard, like I've heard, the old, traditional ways. I know I could probably run this business with my phone and a laptop, so like how can you help me do that? So we get people all the time where we're getting them set up on the accounting software, a payroll software if they need one, and these are all, when I say software, these are web-based applications that you go. You know you access to a web browser.
Speaker 1:Cool. Well, I want to make our clients some money, or at least save all of our listeners some money. So I want to ask you five tax loopholes the rich will not tell you. Are you ready for this? Let's do it, are you good? Oh yeah, all right, give me your number one, or in any order. Give me. Give me a loophole that the tax will not tell you Okay. So give me a loophole, a tax loophole that the rich will not tell you Okay.
Speaker 2:Biggest one and I love it. I'm doing one right now Cost segregation studies. So we kind of get in the weeds here. Carter, do you know what that is? No, didn't think so. All right, here we go. So cost segregation study. So think real estate does best example it's where. So let me give you the backdrop real quick. If you buy a rental property or, like this office building, you depreciate it, meaning you deduct a little piece of it over time on your taxes. Right, when you bought office building it's over 39 years. So if you do the math on a million dollar building, that's what? Roughly 25,000 bucks a year. It's not a ton of money.
Speaker 1:Not a lot.
Speaker 2:You pay a million bucks, you get a. Let's take out the land component which is not depreciable. Let's just say you got a million dollars of depreciable asset, 25 grand a year. Okay, not much. But what if? And there's ways where you can get an engineer, since their firms that do this, they come in and say, no, there's more to this building than the structural components, which qualify for 39 year. There's things like your flooring and your light fixtures and the uh baseboards that qualify for five or seven year. Like you can write them all faster. But not only that, not five or seven year, but bonus depreciation. So back to where we started the conversation, where I can now again in 2023, the law is 80%, they're talking about a hundred I can now write off that component of the building right now because paint doesn't last 39 years and floor carpet doesn't last 39 years.
Speaker 2:So that's the the premise is there's things that wear out faster. Right, Like your structural building should last. I mean, I don't know where they came up with. 39 years, that was probably something lobbied years ago. But the thinking is, yeah, these things are components that are going to have to be replaced and they are in a different class of property, essentially in the tax code, so you get to write them off faster so you could see where you buy a building now. Like, give back to where I said you get a $25,000 ride off on that million dollar building. Now maybe 25% of it qualifies for that bonus depreciation. So now, instead of 25 grand, maybe it's 250. I think normally people fall in on a cost segregation study 20 to 25% of stuff they can write off faster.
Speaker 1:So if you're a business owner, you may want to consider buying a building and then doing some kind of cost segregation to get some cash flow early on in the first 10 years. Yes, yeah.
Speaker 2:It's an awesome tool. I would say caveats to that is make sure it's something we can talk about 10, 31 exchanges, but make sure it's something you you're going to be in for a while, because once you write something off and you go to sell it, it's kind of an unwelcome oh wait, a minute, I got to give those gains back, pay taxes on them. So make sure it's something you owner. Occupied real estate is the best right. You got a business, you need real estate you're renting, you buy put it in a separate LLC is kind of a common strategy rent back from your operating company. And then there's all kind of things around how you then group. There's some grouping things you can do not get probably too much for this podcast, but there's some things you can then do to make sure you can take advantage of a cost segregation study and use it to offset the the income your business has your operating company.
Speaker 1:That's exactly what I did on this building. Okay, I built it, I did a cost segregation and I and it's worked out very well for me.
Speaker 2:Tell me this yeah, yeah, yeah. So I mean you know you live this now look Again.
Speaker 1:Some people may say I like leasing because I don't have to worry about the hurricane blowing out the windows, I don't have to worry about the roof, I don't have to worry about the air condition going out. There is money involved. There's actually expenditures involved when you actually own, versus Absolutely.
Speaker 2:Yeah, you just don't have the options, though, like you know, you kind of I think about it kind of the W2 versus business owner conversation we just had a minute ago when you own the building, you got some options now with depreciation, but, to your point, you're not dealing with what I'm dealing with this week, which is water leaks. So, I'm on building. I got some water leaks, so you take the good with the bad.
Speaker 1:Yeah, so real estate as a whole is a good way to save money on taxes.
Speaker 2:Yeah, not many places in the tax code where you get, or just in any investment you get appreciation, generally minimal cash flow and pay minimal taxes.
Speaker 1:Okay, yeah, when I sell the building I take all the depreciation out and I pay on the game, right.
Speaker 2:Yeah, real quick example bought the building for a million. Let's just say you depreciated 300 grand. You did a cost segregation. So now your basis meaning what you're going to use to determine how much you owe in taxes when you sell it is 700,000. So if you sell it for 1.2, a lot of people think, oh, I bought it for one, sold for 1.2. I have a $200,000 game. No, you have a $500,000 game because you've used up 300 grand in depreciation. You've got a deduction for something that really didn't depreciate, in fact it appreciated. So that's what throws people In that example. You'd have a $500,000 game you'd have to pay taxes on. So to my point earlier if you're going to do that and accelerate some depreciation, make sure you're going to stay there or be thinking I'm going to do a 1031 exchange.
Speaker 1:That's the second loophole right, yeah, yeah, tell me about 1031 exchanges.
Speaker 2:So kind of just kind of going back to our last kind of example where you've got a built-in gain on real estate which you can do with the 1031 exchanges. You can sell it and then you can buy a replacement property and in effect what happens is and there's rules about how quickly you have to identify that property Like you have to say these are the three I'm looking at. There's rules around how quickly you have to do that. There's rules around how quickly you have to close on the next one. But the bottom line is you're taking the gains of the one you sold and rolling them into the next one. So a lot of people would say in real estate you buy 1031, sell 1031.
Speaker 3:I mean, you just go through this path and you keep on and you die with it, and you die with it, and then what happens at the end is that your heirs, under the current tax law, get a step up in basis.
Speaker 2:So let's just say you bought a $200,000 building and over time you turn that into a 400 and an 800 and a 1.3 and a 1.7 and you die. That thing's worth 10 million. You've never paid taxes on it. Your heirs get it in their hands like they paid 10 million for it. They sell it for 11 million. The next day they pay taxes on one million bucks. That's amazing, yeah. So that's a very common strategy of buy. Now there's rules around what it has to be, how much you have to spend, and all that, but the gist is you're buying something to replace the one you just sold and you got to leave the money with an attorney. So a qualified intermediary generally an attorney, closing attorney hold your money when you're at the closing until you go buy the replacement. Then they fund the next deal. That's a heck of a deal. It's awesome.
Speaker 1:Yeah.
Speaker 2:But people just don't, a lot of people just you know they want the cash or they you know it's. It also helps, if you're in a good spot financially to not need the money. You know where you can leave it there and just roll it, because if you do, man, the beneficiary's compound.
Speaker 1:That's awesome, give me another loophole.
Speaker 2:All right, I love charitable donations, or what I would call bunching with a donor advice fund. So most people when they give to charity. So let's back up a little bit. A charitable donation at the individual income tax level is what's called an itemized deduction. So when you file your tax return you've probably heard the term itemized deduction and standard deduction people. The government gives you the greater of the two. The standard deduction right now for married couples, roughly 20, 26,000, I think.
Speaker 1:Do most people file a standard deduction?
Speaker 2:Most people take the standard deduction, so but as W2 or yeah, either way either way.
Speaker 2:So most people take that. But the itemized deductions are things like charitable, mortgage, interest, property taxes, that kind of thing. If the sum of those doesn't exceed the standard deduction, then you just take the standard deduction. So another way to think about it is if you're charitable, mortgage, interest and property taxes and state income taxes were 24 grand and the itemized and the standard deductions 26,. I think is 25, nine. They change it every year about did you get any benefit from these things?
Speaker 2:Over here, the government was already giving you a $26,000 deduction, so I could clients all the time say, hey, I gave some money to chair you this year. This should help me, right? I said maybe, because you were already getting this here's the point with it with a donor advice fund. Well, what if, instead of giving one years of charitable contributions and makes you to where you don't get to itemize, so, so no benefit? What if you gave five years worth of charitable donations in one year? So now your itemized deductions are much higher, so you get some benefit from them. And then, well, what if you said, well, I don't know who I want to give to? I mean and this is again, this is going to pertain to people who have maybe had a windfall or got a really steady business, got some income, hot net worth Like I want to give. I don't know who I want to give to sell it. A big case, yeah, there you go yeah.
Speaker 2:For example donor advice fund go to. So we got one here in town community foundation of a cadiana. I'll let you form the Chas Roberts family foundation. You go, put 200 grand in there on December 31st you could do it. You get a $200,000 charitable donation deduction. You can then figure out later who you want to give it to. Awesome. Lot people don't take advantage of it. Again, small slice of people that can take advantage of it. But if you've got a windfall you said settled a big case, came into some money, got a big year taxable business has taken off, sold your business Great tool.
Speaker 2:Got a couple of it with the fact that you also want to be charitable right. But that's a great tool because you get out of that rudder of your charitable getting limited by the standard deduction. Now you bunch it and then what I love, like for me, I've considered doing this with my church. My churches can basically counting on my tithe, right. So I would give it to the dough, the chair, the donor advice fund, and say y'all, you guys drip it out and the same schedule. I was gonna do it because they'll do that for you. So it kind of works. It kind of meets a lot of. It kind of covers a lot of things like, from a cash flow perspective, though the charity is expecting it Taxism it's a really, really good tool.
Speaker 1:So you have to have that money on when you donated them. The cash has to go correct.
Speaker 2:Yeah, you got to give it up. You got to give it up. At that point it becomes a charitable donation, and then you get to figure out later what you want to do with it or, I guess, better yet, who you want to give it to okay, and that that helps you sleep better at night instead of having to Eremark all that money to one particular charity on that day.
Speaker 2:Yeah, because you get to think it through. I mean, a lot of people Charitable becomes like a point of like stress for them. Right, because they want to do it well. But it comes with all these things like who do we give it to do we? Do you like you can kind of sort that out with a donor advice when you get to give it, get the deduction, like you said, sleep good at night, think about it, come back. Okay, how do we want to do this?
Speaker 1:Okay, and just to refresh, you are still only. This is only a deduction, so you're only saving 40 cents on the dollar rough.
Speaker 2:Yeah, whatever your, yeah, whatever income tax bracket you're in, that's what you're saving. So it has to really come from the heart, correct? Yeah? And when you start to tell people that again, I think it's the heart kind of goes bad.
Speaker 1:I'm not that chair, it's not a credit.
Speaker 2:Oh correct, I don't love them people that much, you know. I don't know if I love them kids that much, right, but yeah, just, but it's conversations kind of come on full circle in the sense that just if people leave this talk with a Deductions, not a credit, I think that's a win. Yeah, you know, because most people don't know that, most people don't know that and and it Misleads them into decision-making. You know, like I'm gonna do this thing. I think it's, I think it's gonna save me this and maybe not so most things.
Speaker 1:So some people are just not familiar with deductions at all. Maybe because they're W2 employees or they weren't organized in their business, they never really thought of deductions. But some people confuse deductions with credits. Right, when are the areas where you actually get credits a dollar-for-dollar credit?
Speaker 2:Yeah, there's different things. There's and again they're not always dollar-for-dollar credits in the met, in the like you spend it and then it gives you a credit. There's things like child tax credit, obviously dependent care, but these all child tax credits things is government just gives you right. Is that during the Trump?
Speaker 1:administration no, that's right now.
Speaker 2:I mean it's fluctuated. I mean it went up during COVID to like 3600 per child, is back down to 2000 bucks, but that's just a let's just say jazz. Your tax bill is 20 grand and you got two kids. It's now 16 grand. Yeah, but it wasn't anything you spent to get it. So that's what I'm trying to.
Speaker 1:I'm trying to wish I had dollar-for-dollar for the every dollar I spent on my kids right, I mean like. Tuition is not. Oh my gosh, tuition is not deductible, just at the state level.
Speaker 2:At the state gives you up up to 5,000 per kid that the Louisiana, so I don't if you, your listeners are out of state.
Speaker 1:Louisiana gives you a private school tuition donation deduction or school Expense deduction and now is that, in addition to the tax credit, the child tax credit or yeah, totally different.
Speaker 2:So state doesn't have that. The federal government has a child tax credit. State gives a $5,000 tuition for kindergarten through high school. That's not bad. Yeah, I mean it's something you know. It's just one of those things like just again being organized. You think about that. You know your kids are in private school. If nobody even asked you about that, like if your tax guy or doesn't even ask you, you maybe you know miss out on. It's not a huge deduction, but I mean it's something.
Speaker 1:Yeah, yeah, I'll cut you off on the credits. Yeah, what you're yeah.
Speaker 2:What I was gonna say is so child tax credit, dependent care, but there's not many places where it's a spend a dollar and the credits a dollar. Generally, a credit is a function of the money you spent. So even that I'm just like racking my brain thinking and I'm probably missing one. But like dependent care, that's where your kids in daycare, after school or or pre-k tuition, where the government will give you a credit on Some of the dollars. So again, even even there there's not like a hey, I spent five grand to send my kid to Ascension, you know, for the pre-k program. It's not a dollar for dollar credit, even on that.
Speaker 1:Okay, yeah, it's a percentage. Louisiana has state income tax. Of how much? Four and a quarter is the highest rate really.
Speaker 2:Yeah, it lowered a couple years ago. Used to be six once you made over a hundred grand roughly it got to six percent, but it's going. What they did was you used to be able to deduct your federal tax on your Louisiana income tax return. So they got rid of that and lowered the rate. They were thinking kind of a push, you know we'll lower the rate but you don't get the deduction.
Speaker 1:But whenever you think about, like, how much taxes we? We have a state income, oh, we have a state sales tax, yeah, and that's up to 10, 11 percent in some areas, right, it's parish by parents, which, or which, our counties, right, we call them parishes right. When you go to a place like Texas or Florida has no state income. Yeah, is that? I mean that that could be the reason why most people at like post during COVID post COVID, have Flocked to those areas, right?
Speaker 2:Yeah, and one thing to think about is athletes. Yeah, so athletes, Especially when you talking about tens of millions of dollars. Where are you gonna play California?
Speaker 1:Florida, california's like 13 13 percent size rate.
Speaker 2:No, you look, there might be some quality life things that you just say, look, I don't care, I love California.
Speaker 1:I like.
Speaker 2:I like 65, 70 degrees, every day, no rain right, I'm going to San Diego for family vacation this year. I get it, yeah. But you start piling up the dollars enough, and make you say, well, we'll travel there a couple times.
Speaker 3:Well isn't it also the? It's your away checks when the place you're playing at yeah, you don't have to be on that team. If you're playing in California you play for the Saints, for example You're still getting taxed for the cap, the California.
Speaker 2:That's a good point. What I was gonna say is I think the term is they call it the jock tax and most states have enacted this, where if you're like Play for Philadelphia Eagles, let's just say you play a game in Kansas City. I figured out they're in Kansas or Missouri, but anyway whatever state you're at, bad example?
Speaker 1:Yeah, I don't know that.
Speaker 2:answer to that, yeah you're playing, you're paying taxes in that state, you're deemed to earn the income in that state. So you certainly can't get around all of it. But if half your home games are in Florida versus half in California, you've kind of made out better on that deal.
Speaker 1:So having a professional team in your state, let's say the Saints, yeah that's. That's a pretty good tax revenue Generator, just having yeah. The 50 something players making millions of dollars playing on the Sunday. I've never even thought about that one 17th of a check, because I believe they just get 17 check or however many they call it a game Check.
Speaker 1:Yeah, so it's gotta be that, yeah. So if you make, if you're Padma Holmes and you make 30 million dollars a year, they take, you get 17 game checks of 30 million dollars besides, I guess, signing bonus and that kind of thing right per check. So if you play away at the Saints, hey man, yeah, he's probably.
Speaker 2:I mean, that's what's that? Roughly 1.5.
Speaker 1:You know something like that on 30 million. Yeah, so that's a good lick. Absolutely that's a good reason to have a sports franchise right in your, in your state, yep.
Speaker 3:Chas, do you know who Eric Armstead is? Eric Armstead, he sounds like a tackle. Yeah, he's like an interior defensive lineman for the San Francisco 49ers. Well, he's really good about posting and sharing how his game checks work. So if you look at the screen right here, if you're watching on the YouTube, his base salary in 2023 was 1.165 million, and then he showed his actual game check and if you could break this down for us what you're seeing here 194 thousand dollars in taxes to both the feds and California.
Speaker 1:There is a price to pay for that 70 degree weather year-round, right? Do you want to pay it? So, so he's paying 13% of state income tax on top of the federal so he's got.
Speaker 2:So okay, he's got 37% federal, maybe not withheld, but probably so. Ultimately he's paying 37% federal, 13% state, so that's 50. He's got Social Security, just on the first, like 160 grand, that's 6%. But he's got Medicare, which is point which is 1.45% On every dollar. And then once you make over 250, there's another point, nine percent. That came in when the old Obamacare rules came in. It's called an additional Medicare tax. So yeah, he's, you know he's upwards of, he's 50 plus.
Speaker 1:Alright, let's talk about HSA retirement accounts. That's another one, right? Yeah, a lot of things.
Speaker 2:I think people just overlook is the ability just to put in. So let's start. I call this the low hanging fruit because it's just stuff available to everyone. W2, business owner doesn't matter, right, and so we've been making that distinction around. Here's not a lot you can do as a W2 employee, but there is a lot you can do as a business owner. But this is the area where doesn't matter.
Speaker 2:So if you work for somebody, contribute to the 401k, right it comes, it's a. It's a dollar for dollar. If you contribute to the traditional 401k, not Roth, you get a dollar for dollar deduction off your wages, right. So if you've made 100 grand but you put 15 in the 401k, you're paying tax on 85. In that example you also can get the employer match. So if your employer is going to give you 343 or 4%, take it's free, it's not taxable till you pull the money out later in life. So that's easy. Hsa is one of the places where I don't think a lot of people know the benefits of HSA. So HSA is short for health savings account. Now you have to have a high deductible insurance plan to qualify and that's one of the criteria. But what I always tell people that HSA is. If you're not sure, call your health insurance provider. They'll tell you if you have an HSA compliant plan.
Speaker 1:Well, I can tell you this from being a personal injury lawyer and looking at hundreds, if not thousands, of insurance plans because I look at my client's health insurance plans and, being self employed, I've also had my plans. Most plans are probably high deductible. Yeah right, you don't see, we haven't seen that in 10 years where people have a $500 deductible, $1000 deductible, whatever.
Speaker 2:Yeah, I would say most people that, yeah, most people have a plan that will comply if it's high deductible. I will always just tell people, just ask the question, because there are some little other nuances about HSAs. But HSA what I would say is it relates to medical expenses. So health savings account, you're putting money away to take it out and use it for medical expenses. Well, I tell people all the time, people who deduct medical expenses, they're either dead broke, deathly ill or both. Right, Because of the way medical deductions work at the personal income tax level, they're subject. They got to exceed a certain amount of your income. So it's hard to get them. But HSAs change that because of the amount you put into.
Speaker 2:An HSA is not an itemized deduction, it's what's called above the line, meaning you're going to get to deduct it. So if you put, let's just say, for example, you can't deduct your medical expenses, right, but let's just say you know you have a high deductible plan, you qualify for an HSA. Your kid, you know, is going to have their. For example, my daughter had her tonsils removed. I knew that was going to be six grand. Put the money in an HSA first. So get a $6,000 deduction, get the bill. Let the HSA pay the bill. So what have I done? I've taken previously non-deductible medical if I paid it just out of my own pocket because I make too much money or I don't have enough medical, or both and now I've created a $6,000 deduction by putting it in the HSA. First, Just take the money out of HSA because it's an out of pocket medical expense pay from the HSA to the provider. Done? You were going to spend the money anyway. I was going to spend money anyway, so why not get?
Speaker 1:two grand off the top. So what I heard and this is high level but what I heard is you can actually contribute to the HSA, get the deduction, put that in a fund right in the stock market and I think they have. I'm on, I have a HSA account through HSAcom or whatever and you can let that money go in the market and make money right. And then that same example instead of using my HSA card to pay the $6,000 out whatever, I just pay a cash or pay it through a credit card or whatever and then let that money just bake and make money.
Speaker 2:Oh, let me give you another, let me give you even better.
Speaker 1:Is that good? Is that true? Oh, it's absolutely true. Oh, let's go.
Speaker 2:No, you did your research.
Speaker 1:Let's go, baby, all right, so let me give you.
Speaker 2:Let me bring the example for a confession.
Speaker 1:I'm blowing that HSA account like like no, nobody's business.
Speaker 2:Yeah you don't have it in, you don't have it invested in Tesla or no but here's the deal.
Speaker 2:Let's, let's think about it. So if you really want to nerd out on this stuff the HSA there is no limit to the amount of time you can wait to be reimbursed. So let's say you put in your seven grand a year and you don't touch it, so all the medical expenses that come up you just pay him. Then, personally, you let that money grow, grow, grow, grow, grow, grow, grow. You just keep a spreadsheet Again. Who's going to do this? I don't know, but there are people that engineers probably a good example. Somebody would do this. Keep my dad. He's a, keeps a spreadsheet for everything. 20 years later you can go back and say that's 20 years of medical expenses I need to be reimbursed for. Boom, take it out of the HSA. That's now grown tax free.
Speaker 1:That's amazing, yeah Damn.
Speaker 2:Yeah, so stop spending your HSA money. Let it grow, dude, pay it out of pocket.
Speaker 1:Okay, Also, business owners can take advantage of their IRAs like SEP IRA Roth. Ira that kind of thing yeah.
Speaker 2:All kind of different things. It just depends what kind of. So generally to put into an IRA you have to have earned income. So earned income would be own your W2 employees. That's earned income or money you make in an active, you know business. Yeah, SEP IRA. So you've got just real quick. You got traditional or Roth right. You've got traditional IRAs where you put the money in, get a tax deduction. Now the money grows, tax free. You pull it out later. It's taxable. Roth, just the opposite. Put the money in with you, put it in with after tax money, no, no deduction. But it grows and the earnings grow later in life you pull that money out, all of it, tax free.
Speaker 1:It's a great deal, but it's limited.
Speaker 2:Yeah, and so let me give you let me real quick on that Roth IRAs there's a limit on how much you could put in, but there's also an income limit. Once you start to make over 200 grand, you can't even put in a Roth IRA. But here's the hack If you have a 401k at work, you can make $100 million and put it in the Roth 401k, no limits. So people who want to put money in a 401k or people who want to put money in a Roth but can't because they're phased out because of income See, if you have a 401k plan at work Most people do. See, if they offer a Roth out the Roth 401k, use that.
Speaker 2:Or when you're small business, gig economy you can do a solo K, which is a solo. It's a 401k for a one person business. See, make sure your provider gives you the option to put it in a Roth Boom, no limits. Who sets that up? Mark, most of the time you get a broker, like a financial advisor, in there. If you're going to have a qualified plan like a 401k, you need a what's called a third party administrator, a TPA, to write your plan documents. It's called a qualified plan, like traditional IRAs and all that. Don't need those kind of don't need a level of formality. You could go up in one right now.
Speaker 1:On each trade, each trade. Whatever you want to do, yeah, and so you do. You counsel your clients and help set up some of those. Yeah, we tell them.
Speaker 2:Well, what we get into is hey, what are you trying to put away? Like, like, I'll tell clients like you want to put 20 grand away or 10 or 75 list. There's options. Cause if you just want 12 grand, do a simple. It's exactly like it sounds. It's easy to set up, not a lot of fees. Your broker can do that Probably get the peg working. You know, I don't know a couple hours. But if you want something but no, I want better options to put way more money away, maybe you need a 401k. That's when you need to bring in a third party administrator and get your plan documents written a little more costly but more flexible. So it just starts with how much you want to put away.
Speaker 1:I was looking at your list. My favorite of your tax loopholes yeah, employing your kids.
Speaker 2:Okay, yeah, I knew we're going to get to that one, yeah.
Speaker 1:Yeah, tell me about it.
Speaker 2:Okay. So what? I always tell people and I want people to kind of, what I want to leave this conversation with it will employing your kids, but also around deductions. Gotta be legitimate, gotta be reasonable. That's the table stakes. Okay, employing your kids. What you're trying to do is you're trying to divert money from you dad or mom. High tax bracket to them, low or no tax bracket, right. So, chas, you pay 40% tax and you pay your kid 10 grand. Well, now you've saved four grand. It's gonna go to him. He's not gonna pay any tax because that money is lower than his standard deduction. We talked about that earlier.
Speaker 1:So it's not so if you make, really if you make a low amount of money, under what? 12 grand?
Speaker 2:Correct, I think it's around getting up to close to 13.
Speaker 1:Getting close to 13. Yeah, if you make under $13,000, you do not need to file a tax form because there is no tax. That is Correct, it's federal.
Speaker 2:You will stop the file of state instead of small tax. But yes, for generally speaking. Yes, okay so, but what you've done is you've moved the money out of your taxable income to theirs, which is negligible, like we just talked about Caviots. Gotta be reasonable pay for reasonable work. I see people all the time pushing the modeling and the. There's some people that say you can get away with that. I would say just look at what any you would pay anybody else to do these jobs. You don't have your two-year-old saying they're doing spreadsheets, like let's have some common sense here. But get them to do stuff, get them to do manual labor, get them to. I mean God, kids are tax savvy. Now my daughter at 12 years old can work Canva better than most people I know, like she's great on Instagram. Like, get them involved. And let's even make it better.
Speaker 2:If you pay them from a sole proprietorship, meaning a LLC that you own personally, that's not like an S-Corp or a C-Corp or something like that. Or if it's a partnership where you and your spouse own it all, when you pay them you don't have any payroll taxes. So normally the payroll taxes a little bit of a sting to this deal, right? The 10 grand I just mentioned to you yeah, but what if it comes with a $1,500 payroll tax? Like, yeah, but what if it didn't? Well, the best way is to make sure you pay it from one of those type of entities. A lot of people are S-Corp, so that kind of throws that out, but a lot of people are just sole proprietors, kind of hang a shingle type. You might just be an LLC without an S-Corp election. When you pay your kids reasonable pay for reasonable work, you don't have to payroll tax.
Speaker 1:So if you have three kids, you could essentially take $36,000 and move it to your kids oh, by the way, you're probably gonna spend that in your regardless, you know, on the kids. And that's tax-free Correct. That's a hell of a deal.
Speaker 2:Yeah.
Speaker 1:Yeah, just do it right. I do see what you're saying about the modeling and kind of going overboard on that, but when you look at the way you and I run our business, and we're so heavy on social media and websites and print ads and everything else I mean my kids are prominently displayed.
Speaker 2:Document it. What I would say to me, our clients, is just document how you came up with it, what you used to determine, what you paid them. I mean, again, people don't wanna hear that, but that's what if you get audited? That's what we're gonna come to Like. We're not talking about this, but the Augusta rules, a big one. People talk about where you rent your house back to yourself.
Speaker 1:A very famous TikTok video. Okay.
Speaker 2:Right. So some guys out of Gulfport Mississippi actually just got busted on this and tax court like went to tax court and got handed to them. Yeah, what's the Augusta rule? Okay, basically, augusta rule. So the premise is Augusta, georgia, the masters, where people in Augusta would rent their house for people coming into the master's for like 10, 20 grand for the week. And they came up with a rule. I don't know how they came up with this, but they basically said look, if you rent something to people for less than 14 days, it's not taxable. Right, you rent it to 20,. You rent it to a bunch of PGA pros for 20 grand for the week. You're not gonna pay taxes on it. Spin that forward.
Speaker 2:People starting to think, okay, how can I do this? What people do is they have their business, rent their house. Like, for example, you have your Christmas party at your house. Instead of going to name your venue, you go to Chad's house and Chad says, hey, the value of this for the night 750. Okay, reasonable, and you could do that 14 times.
Speaker 2:Board meetings you know all the stuff you hear on tech doctors. You know, have your advisory board and all that. Some legitimacy to it. Reasonable rate can pay yourself 14 times. Document what you're doing, deduct it Not taxable, deductible by your company, not taxable to you as the individual. The guys in Gulfport were doing that. They had like 2,500 bucks a night. They were doing it for multiple year Like they got popped. And what did the IRS, the court case, say? We went back and saw what would it take to rent a space that was similar to that for the night. It was 500 bucks. The IRS gave them six grand 12 nights at 500 bucks but said the other were denying that. So just again, use your common sense.
Speaker 1:Tigs get fat, hogs get slaughtered. Thank you, why would I do that? You know, I mean, I get it.
Speaker 2:This is where it's coming from. The people they write a wrong hate the government don't wanna pay taxes. They think they're getting screwed. Don't like this, the president. I mean like name your things that I hear all the time. That's where that's coming from and I get it. I'm just trying to tell you, if you get all of it and you're doing these things, you better be able to document it.
Speaker 1:Yeah, I mean, look to that point about hogs get slaughtered. I don't think I even claim a home office deduction. Right, and I work from home a ton. I spent money, I built an office in my house. I added on, built an office and I use it. But it's just one of those things. Is why throw up a red flag there?
Speaker 2:Yeah, I mean I would say this I love that you're painting the both sides of it. It's like, okay, let's get over here, and it's super gray, and we're like, really, would you hear people say I want my account to be aggressive, or creative.
Speaker 3:That's right here.
Speaker 2:And what you're saying is that's not juices, not work to squeeze kind of thing. What I would say is paper it up, document it. Let's do it and get that deduction. Let's do it smart. There's this good middle ground of documentation, proactiveness and reasonableness and we get that deduction that you were like I didn't want to mess with because I didn't want to throw up a red flag.
Speaker 1:Yeah, I would assume that because of the changes since COVID they're probably a little more lenient on home office deduction, because so many people are working from home now.
Speaker 2:That's a good point, yeah.
Speaker 1:A very common question I get in this office. Every time we get a personal injury settlement. The client wants to know is a personal injury settlement taxable?
Speaker 2:No, not generally, there's caveats to that, but most cases now.
Speaker 1:So it seems like a huge windfall for the client.
Speaker 2:Yeah, absolutely. And I think the thinking is is just replacing what you lost, right? They're making you hold on what you lost so you didn't get deduct the loss. Income's not taxable.
Speaker 1:That is probably the one area that I have seen where you can get a windfall of money where it is not taxable.
Speaker 2:Yeah, I have a question for y'all, though. Are you guys, are you looking at how the and because I don't know this world are you looking at how the settlements disperse? Is there like line items where it says what it's for and you're giving that determination? Yeah?
Speaker 1:So what happens is we collect the gross amount of the settlement. We get a 1099 from the insurance company right, like you, chaz Robbers Law, chaz Robbers Law, we put it in a trust account and then we disperse it and it shows legal fee every single expense, every single medical bill. We pay any outstanding medical bills and then, once you subtract all that, the client gets a remainder. I got you.
Speaker 2:So at that point it's just deemed to be a personal injury settlement not taxable.
Speaker 1:And we do not. 1099 in the clients, yes, yeah. So I don't even know if any entity would know what the client actually recovers.
Speaker 2:Yeah, because it's a function of the gross that you got. After all the payments, they're left with the net Correct, got you?
Speaker 1:So what I tell my clients is sometimes I joke and when we talk about the money I say well, you just had a great day on Wheel of Fortune, right? But the difference is, in Wheel of Fortune that money is taxable. Oh yeah, so any game show winning is taxable. Lottery is certainly taxable, a personal injury settlement is not. Yeah, marcus, where can people find you, my man?
Speaker 2:Yeah, easiest place would be in terms of the socials big on LinkedIn, select me up, marcus Meir. That's M-I-R-E, or our website, meirgroup. And if you want to hear more about kind of the stuff we're talking about a lot of software, a lot of tech, how to run a better business. You can check out my podcast. It's called Make Account, with Marcus Meir pushing 100 episodes. Been doing it about two and a half years.
Speaker 1:That's awesome. I have listened to a few of the episodes and I really enjoyed it. It's I've subscribed to it. I recommend that everyone subscribe to that podcast because I've learned a ton and I'm working my way through man.
Speaker 2:I'm learning a bunch.
Speaker 1:I'm kind of I'm like man. Why didn't I hear this about three years ago?
Speaker 2:You're gonna be a top fan dude. I appreciate you. Yeah, awesome man. Well, thanks for being here. Yeah, this is great.
Speaker 1:Awesome, all right, hey, it would mean the world to me if you subscribe to the podcast and leave us a five star review. It helps keep the show free and it helps us book better guests to provide more valuable content to you. None of the opinions expressed by my guests are that of my own, and nothing we talked about creates an attorney-client relationship or could be construed as legal advice. Hope you enjoy the show.
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