It’s tax time, and I have my partner and tax expert Weldon Wulstein here to share with you everything you need to know to get the most out of your money and tax savings. A lot of people are underserved, because they don’t ask their accountants the right questions. Weldon is here to share some of the questions that you should ask your accountant.
A lot of people assume that the accountant will just take care of everything. That is not always the case, so you need to know these questions. Even worse, if you’re doing your own taxes, you really need to know about these concepts. We also talk about incorporating and tax entities.
You can find Weldon here:'I get excited about looking at someone's situation and using the tax laws for their benefit.' -Weldon Wulstein Click To Tweet
- [01:37] Weldon has been in the tax world since 1989. He cut his teeth in the oil and gas industry.
- [01:59] He moved up to Tahoe as a lifestyle choice. Using technology he converted his practice to an international practice.
- [02:22] Weldon loves the puzzle aspect of tax strategy.
- [03:04] The US tax code is upward of 80,000 pages.
- [03:13] Weldon is also it’s experienced in cross-border taxation.
- [03:26] This is not just the US-based podcast. In principle, even though, the company names are different they operate very similarly.
- [03:56] How all of the tax deductions are not in TurboTax. You need to set up an entity and a strategy that fits your situation.
- [04:11] Why do accountants tell people not to get incorporated?
- [05:07] The problem to having a certain number before you incorporate is that some people are never fully focused on their business.
- [05:24] Treat your business like a company, and your mind will start treating your expenses like business expenses.
- [05:37] There are processes to write off business expenses as legitimate expenses.
- [05:59] When you incorporate, you do have to have an annual meeting and do some administrative work.
- [06:03] This work is minimal for the benefits that you will get out of it. There are so many strategies that you are missing if you are not using a corporate or entity structure.
- [06:32] When you have income in your company it is time to set up the entity. If you wait, you will have to redo all of your contracts.
- [07:57] When you start your company that is technically the first day you are in business. So if you’ve been a sole proprietor for 10 years and then you incorporate it’s like starting over when you apply for credit.
- [08:27] Put your money in the right account because companies make money and individuals get taxed.
- [09:11] Keep in mind, there is a big difference between tax compliance and tax strategy. Tax strategy happens now for the year.
- [10:10] Guidelines for filing an extension.
- [11:46] You can wait until your extension date to fund your retirement plan.
- [12:41] Writing off the home office is not a red flag for the IRS. If your expenses are ordinary and necessary and directly related to the production of that income then you can take that deduction.
- [13:28] As long as you’re documenting what you are doing getting audited isn’t that big of a deal.
- [13:40] Have a business person’s thought process not an employee thought process.
- [13:57] You now can’t write off entertainment expenses.
- [14:36] A mistake people make is not doing their bookkeeping for last year until now. It’s a lot harder to remember stuff from last year.
- [15:17] Don’t cheat yourself out of deductions by not keeping good records.
- [15:40] Things that are going to affect people this new tax year.
- [15:55] If you have a W-2, you cannot deduct your employee expenses.
- [16:35] The limitation of income and property taxes. Property tax deductions are now limited to 10 grand.
- [17:00] New mortgage write offs are now limited to $750,000.
- [17:18] You can still write off rental property mortgage interest.
- [17:37] Flow-through of business income. You will get a 20% deduction off of this taxable income. Convert your business into an S corporation so you can run your income through your company and get that big 20% deduction.
- [18:25] Sole proprietors get the deduction, as well but they have to pay the Medicare and Social Security tax.
- [19:42] This tax law was designed for high income real estate moguls.
- [21:35] The first thing you need to do is set up your entity.
- [21:43] Get your ID numbers, get a bank account, and get a credit card account that is used only for your business.
- [22:05] Then get bookkeeping in place.
- [22:12] Your monthly profit and loss information is key to help plan your future strategy.
- [23:05] Get your stuff done now. Don’t wait until the last minute.
- [23:25] What do you do if you haven’t filed your taxes in years? File your current year’s taxes. You can order what has been reported to the IRS and reconstruct the tax documents.
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