Speaker 1: Because four hours. Simply, this is Armstrong and Getty extra large,
Speaker 1: something we can all use. A conversation with longtime friend
Speaker 1: of the Armstrong and Getty Show, Stephen Moskowitz, who has
Speaker 1: advised us on tech stuff forever. A founder and tax
Speaker 1: attorney for Moskowitz l LP, Steven joins us. Now, Steve,
Speaker 1: how are you?
Speaker 2: I'm fantastic And you know I'm happy because I get
Speaker 2: to talk about that, and you know I mean that.
Speaker 1: You know it's funny. I was just gonna say, I'm
Speaker 1: gonna embarrass Steve and tell the folks this. I have
Speaker 1: known professional musicians, athletes, all walks of tech, guys, all
Speaker 1: walks off life, and I've never known anybody who's more
Speaker 1: excited about their jobs than you are. Steven. You love
Speaker 1: helping people deal with taxes.
Speaker 2: Sincerely, I love it. And there's so much in the
Speaker 2: tax so there's so many hidden gems. I have everything
Speaker 2: from all walks of life. Whether we can tell you
Speaker 2: how you can deduct your multimillion dollar yacht to your
Speaker 2: struggling and how the government will give you money to
Speaker 2: help you take care of your kids, and everything in between.
Speaker 2: For example, I have a question for you. Suppose I
Speaker 2: told you that you could go on a two week
Speaker 2: vacation anywhere in the world you choose, some stranger would
Speaker 2: pay for it, and the money the stranger gives you
Speaker 2: is tax free. How would you like that?
Speaker 1: When can I leave?
Speaker 2: He said, Oh my god? What is Steve talking about?
Speaker 2: And I'm talking about Internal Revenue Code Section two eighty
Speaker 2: AG like Armstrong and Getty, also known as the Augusta Rule.
Speaker 2: And what happens with that. You can rent your home
Speaker 2: for up to fourteen days a year and there's no
Speaker 2: tax on it. So the bottom line is in that
Speaker 2: home can be the mansion you live in, the studio
Speaker 2: apartment you rent, or a boat. And I'll explain that separately,
Speaker 2: but the bottom line is supposed. For example, he said, okay,
Speaker 2: I'm going to rent my place out for one thousand
Speaker 2: dollars a day, and now everything is so many people
Speaker 2: like renting a home instead of a hotel. So the
Speaker 2: bottom line is you go ahead, and let's assume that
Speaker 2: you rented your house for one thousand dollars a day,
Speaker 2: so it's fourteen thousand dollars. You go off to Hawaii,
Speaker 2: you spend ten thousand on your trip. That fourteen grand
Speaker 2: that you god is tax free. It doesn't even go
Speaker 2: on your tax return. It's excluded from income. That's just
Speaker 2: an example of one of the many, many, many hidden
Speaker 2: gems in our tax law. And glad people say, well,
Speaker 2: why should there be such things? Because our legislators and
Speaker 2: their infinite wisdom thinks this is good for the economy
Speaker 2: or the business, or there's some special interest that pushed them.
Speaker 2: But the bottom line is this law is for everybody.
Speaker 2: All the laws are for everybody. We're all equal under
Speaker 2: the law. And the bottom line is you just have
Speaker 2: to know where these gems are hidden, because there's two
Speaker 2: reasons for the tax code. One is they get money
Speaker 2: from us. But the other one if you give us
Speaker 2: all kinds of incentives like this, mister, well what a deal.
Speaker 2: I mean, think about it. You're off on vacation anyway.
Speaker 2: The Airbnb's is so popular and you get fourteen days
Speaker 2: tax free. So you can see why I get so
Speaker 2: excited over these things.
Speaker 1: Love it so hey, we are happy to have so
Speaker 1: many small business people, entrepreneurs, go getters listening to the show.
Speaker 1: Also slackers like myself. But what do you see small
Speaker 1: business people either failing to take advantage over getting wrong.
Speaker 1: What advice would you give them just right off the bat.
Speaker 2: Oh, the first one is retirement plans. There's over twenty
Speaker 2: different types of plans. You can have multiple plans in
Speaker 2: the same year, and you can put away so much
Speaker 2: by there's four benefits to that one. You pay less taxes.
Speaker 2: Usually when I'm talking to a client, people say sign
Speaker 2: me up, Steve, You got me say taxes. Besides that,
Speaker 2: the money sits in your plan and the income doesn't
Speaker 2: tax wells in the plan, so no brainer. Everything grows
Speaker 2: faster and bigger if there's no taxes on it. Also,
Speaker 2: it's exempt from lawsuits, so take a level. I hate
Speaker 2: to mention his name. Suppose you pick a look at
Speaker 2: OJ Simpson who had a multimillion dollar judgment against him
Speaker 2: for many, many years, and he never lost a penny
Speaker 2: of his pension. So that's good when you're in business,
Speaker 2: so you don't have to worries to take it away
Speaker 2: from you. And most tax planning you have to write
Speaker 2: to check by December thirty first twenty four to deduct
Speaker 2: it in twenty four. But with most of the pensions,
Speaker 2: not all of them, but most of them, you have
Speaker 2: up to the time of filing your returns, including extension,
Speaker 2: which in English means, depending on your business entity, you
Speaker 2: could have as late as October fifteenth, twenty five to
Speaker 2: set up the plan, fund it and still deduct it
Speaker 2: from the previous year before. And there's all kinds of
Speaker 2: things in here. So for example, if you're in a pension,
Speaker 2: there's no everybody knows about forty one k's and Irish
Speaker 2: and all that. But there's all kinds of additional plans,
Speaker 2: what I call the fancy plans, which you can put
Speaker 2: in much much more money, and they're based on your age,
Speaker 2: your earnings. There's an actuarial evaluation ticket. But people can
Speaker 2: put away a tremendous way more than this. But when
Speaker 2: we talk about putting things away, everybody should have a
Speaker 2: pension plan. Everybody should put that away.
Speaker 1: So well, I was just gonna say, and that includes
Speaker 1: if like I'm my only employee, I'm a solid proprietor,
Speaker 1: I can have a pension plan for myself.
Speaker 2: Right, absolutely, absolutely, And again with retirement plan, there's so
Speaker 2: much in there. For example, suppose you say, well, you
Speaker 2: know what, I'm listening to the show today, but I'm
Speaker 2: a little bit older, and you know, I haven't had
Speaker 2: the money in there. Well, there's something called a ketchup plan.
Speaker 2: If you're over fifty, you can put in bigger deductions.
Speaker 2: And our legislators in their infinite wisdom and get this.
Speaker 2: If you're sixty, sixty one, sixty two, or sixty three,
Speaker 2: only those ages, you have a super catchup plan this
Speaker 2: beginning this year in twenty twenty five, where you put
Speaker 2: it even more. The bottom line is there's so much here.
Speaker 2: And then what about taking money out of plans? He said, well, okay,
Speaker 2: you know I need the money, but I don't want
Speaker 2: to get hit with that penalty. There's all kinds of
Speaker 2: exceptions to that. If you're a victim of domestic abuse,
Speaker 2: you can take money out without the penalties. If you
Speaker 2: need it for emergency purposes, you can take it out
Speaker 2: wild penalties. If you take it out because of federally
Speaker 2: declared disasters, think about O the wildfires in California, let's
Speaker 2: mention Hawaii and other places. You can take it out
Speaker 2: without penalty if someone's terminally ill. And also a no
Speaker 2: to are firefighters. If they're age fifty or twenty five
Speaker 2: years of service, they can take it out without penalty.
Speaker 2: I have to go on and on and on. But
Speaker 2: there's just so much here for everybody, and whether you
Speaker 2: know with being a small business owner, this is just
Speaker 2: the trumendous. Say I get so excited over this. But
Speaker 2: if you're in business, there are so many benefits to
Speaker 2: you just it's incredible, and it's all kinds of things.
Speaker 2: For example, supposed to me says, you know, I'd like
Speaker 2: to have an electric vehicle. Well, guess what, you know
Speaker 2: the government will give you seventy five hundred bucks. And
Speaker 2: you say, well, that's nice. I can go ahead and
Speaker 2: take seventy five hundred dollars off my tax return, right
Speaker 2: you can. But even better, when you're at the dealer,
Speaker 2: you say, you know what, there's a special program where
Speaker 2: I can say to the dealer, I'll give the credit
Speaker 2: to you. You knock seventy five hundred bucks off the price,
Speaker 2: so I never have to give you the money and
Speaker 2: ask for it back. You get the seventy five hundred
Speaker 2: from the government. There's so much, so much. Then there's
Speaker 2: another thing that gets me really excited, something called opportunity zones.
Speaker 2: Suppose you have this situation you sell something anything, some gold, coins,
Speaker 2: some stock, real property, anything, and you have capital gain
Speaker 2: and you say, well, all right, you know I realized
Speaker 2: that there's three capital gains rates zero what's a nice one.
Speaker 2: But you have to be making less than forty seven
Speaker 2: grand for that or fifteen percent, which is between forty
Speaker 2: seven grand and over just half a mil. You know,
Speaker 2: most people are making under half of mil. Fifteen percent bad,
Speaker 2: and it goes to twenty percent if you're over five
Speaker 2: hundred and eighteen thousand. But the bottom line is you say,
Speaker 2: you know, I don't want to pay that either. So
Speaker 2: you can go into an opportunity zone and you can
Speaker 2: defer the taxes until twenty six. As you say, when
Speaker 2: somebody gives you something nice, what do you.
Speaker 1: Say thank you?
Speaker 2: Of course, no, say more? I want more. And what
Speaker 2: happens is there's a provision with these opportunities zone. Suppose
Speaker 2: I do this. Suppose what is an opportunity zone. There's
Speaker 2: designated areas in our country where the government says, invest
Speaker 2: here and we'll give you special tax benefits. And there's
Speaker 2: a tremendous number of them. So you go ahead and
Speaker 2: do that. And let's assume that you buy a real
Speaker 2: property for million bucks. Ten years later you sell it
Speaker 2: for one hundred million. You've made a gain of ninety
Speaker 2: nine million. You know, I can calculate the tax on
Speaker 2: that right now in my head. You know, the taxes zero.
Speaker 2: What Steve Wait talk about, there's a special provision that
Speaker 2: if you hold this property for more than ten years,
Speaker 2: when you sell it, there's zero capital game, there's no
Speaker 2: cap on it. So in my example, you made a
Speaker 2: profit of ninety nine million bucks, you pay zero taxes.
Speaker 2: Talk about an incentive. So you see, that's why I
Speaker 2: get so excited about this and our laws filled with
Speaker 2: these things.
Speaker 1: Stephen Moscowitz found our tax Atturning moscow at s LP
Speaker 1: is online, longtime tax advisor of the show and our friends.
Speaker 1: So Stephen, in a couple of minutes, we have left
Speaker 1: what notable changes to the tax code have happened recently
Speaker 1: or do you expect to happen as the Trump administration
Speaker 1: gets going.
Speaker 2: So I think there's going to be a lot with
Speaker 2: the Tax Cuts and Jobs Act. When President Trump was
Speaker 2: president in the first term, he had a lot of
Speaker 2: stuff that was going to be Basically he expected to
Speaker 2: be re elected and he had a lot of stuff
Speaker 2: in the tax law that was expiring right after where
Speaker 2: there's the second term, so it's expiring now they're probably
Speaker 2: going to make changes and keep a lot of the things.
Speaker 2: And also a lot of things that have changed are
Speaker 2: the numbers, like the standard deduction went up a little
Speaker 2: bit for twenty twenty four, and a little bit of numbers.
Speaker 2: You know, for example, the art didn't come credit. So
Speaker 2: we talked about the other end of this. For example,
Speaker 2: suppose you have three kids and you're making under sixty
Speaker 2: six eight nineteen. The government will give you seven eight
Speaker 2: hundred and thirty dollars, but is give them will give
Speaker 2: you the money, so you have those things. There's also
Speaker 2: a change to the kittie tax. It's a small change
Speaker 2: for kids that are under age nineteen. The first thirteen
Speaker 2: hundred bucks is tax free. The next thirteen hundred bucks
Speaker 2: is taxed at the child's right, so it's a little something.
Speaker 2: Then the amounts for the flexible spending accounts and the
Speaker 2: health savings accounts have gone up. So what are those things. Basically,
Speaker 2: there are two different types of accounts where you can
Speaker 2: put some pre tax money at i e. Don't get taxed,
Speaker 2: and then you use it for healthcare. Now there's differences
Speaker 2: between them, so and with an exception, you can't have both.
Speaker 2: There's an exception, but we won't get into that right
Speaker 2: now on Michelle. But for the most you say, well,
Speaker 2: what's more important to me? And you look at these
Speaker 2: and basically the best way to do it is their charts,
Speaker 2: and you say, okay, well, a flexible spending account, here's
Speaker 2: the advantages. With the health savings account, here's the advantages.
Speaker 2: But basically the idea here is you get a tax deduction,
Speaker 2: you use the money for medical and isn't that nice?
Speaker 2: You don't have to pay tax on that amount of
Speaker 2: your earnings. And the bottom line, for example, with a
Speaker 2: health savings account, you can triple benefits. There's no taxes
Speaker 2: on the money you put it in, it grows tax free,
Speaker 2: and there's no taxes when you use it for medical bills.
Speaker 2: So again, I mean, you look at this stuff and
Speaker 2: you say, well, okay, why shouldn't I have it? There's
Speaker 2: so much in tax Lobbrady complaints about their taxes. My
Speaker 2: taxes are too much. They're that, but people overlook all
Speaker 2: these benefits. And again I'm just throwing out a few
Speaker 2: samples and teasers. There's so much there. If you're interested
Speaker 2: in this to me. This has fascinated me my whole life,
Speaker 2: and it's here. It's available for everybody.
Speaker 1: Well, if you want to get in touch with Stephen,
Speaker 1: his number is one Triple A Tax Deal. It's one
Speaker 1: triple A tax Deal, Stephen. It's always a pleasure. Thanks
Speaker 1: for the time, interesting and fun as always, be well.
Speaker 2: Thanks so much. I had a great time as always.
Speaker 2: Thanks for inviting me all right.
Speaker 1: Thanks
Speaker 2: Extra large