1 00:00:00,160 --> 00:00:02,520 Speaker 1: Welcome to How the Money. I'm Joel and I and 2 00:00:02,680 --> 00:00:05,920 Speaker 1: Matt and today we're talking smart tax planning moves with 3 00:00:06,040 --> 00:00:29,320 Speaker 1: Sean Mulaney. Yeah. Sean mulaney is a financial planner c 4 00:00:29,520 --> 00:00:32,120 Speaker 1: p A and the president of his own company where 5 00:00:32,120 --> 00:00:35,599 Speaker 1: they offer fee only financial planning. Sean's career path took 6 00:00:35,680 --> 00:00:38,159 Speaker 1: him from getting a degree at law school, landing a 7 00:00:38,240 --> 00:00:39,800 Speaker 1: job with the I R S, to working for a 8 00:00:39,800 --> 00:00:43,000 Speaker 1: couple of the big for accounting firms, and then finally 9 00:00:43,040 --> 00:00:46,080 Speaker 1: to starting his own business UH and building it from scratch. 10 00:00:46,560 --> 00:00:50,440 Speaker 1: In addition to providing a fiduciary financial advice to his clients, 11 00:00:50,440 --> 00:00:53,720 Speaker 1: Sean also writes over at PHI tax guy dot com, 12 00:00:53,720 --> 00:00:58,160 Speaker 1: where he blogs, of course about financial independence and taxes. 13 00:00:58,720 --> 00:01:01,160 Speaker 1: And so with tax season upon us, we wanted to 14 00:01:01,160 --> 00:01:03,760 Speaker 1: bring Sean on to discuss what listeners need to know 15 00:01:03,800 --> 00:01:06,040 Speaker 1: about filing their taxes this year. So Sean, thanks so 16 00:01:06,120 --> 00:01:08,640 Speaker 1: much for joining us today on the podcast. Matt and Joel, 17 00:01:08,720 --> 00:01:11,360 Speaker 1: thanks so much for having me pleasure to be here. Sean, 18 00:01:11,400 --> 00:01:13,360 Speaker 1: We're so glad to have you. And the first question 19 00:01:13,440 --> 00:01:16,399 Speaker 1: we ask everybody that comes on the show is gives 20 00:01:16,480 --> 00:01:18,440 Speaker 1: us like a window and the kind of person you 21 00:01:18,480 --> 00:01:20,759 Speaker 1: are and Matt and I we drink a craft beer 22 00:01:20,840 --> 00:01:23,880 Speaker 1: on every episode because we love beer and it's one 23 00:01:23,920 --> 00:01:25,880 Speaker 1: of the things that we're willing to splore john now 24 00:01:25,920 --> 00:01:30,520 Speaker 1: while we're also saving and investing intentionally for the future. So, um, yeah, 25 00:01:30,680 --> 00:01:32,880 Speaker 1: what is that in your life? What's your craft beer equivalent? 26 00:01:33,520 --> 00:01:36,440 Speaker 1: In my life, it would be travel to Hawaii. So 27 00:01:36,560 --> 00:01:39,600 Speaker 1: I grew up on the East Coast, and until my 28 00:01:39,760 --> 00:01:43,440 Speaker 1: honeymoon three years ago, I had never been to Hawaii, 29 00:01:43,840 --> 00:01:46,600 Speaker 1: and now that I live in California, Hawaii is very 30 00:01:46,640 --> 00:01:49,720 Speaker 1: accessible and my wife and I have now been twice, 31 00:01:50,080 --> 00:01:54,040 Speaker 1: and in after coronavirus, I'd like to get back. And 32 00:01:54,200 --> 00:01:57,480 Speaker 1: these days, actually a little uh side diversion I have 33 00:01:57,760 --> 00:02:01,480 Speaker 1: is occasionally watching on YouTube some why travel videos. It's 34 00:02:01,520 --> 00:02:05,200 Speaker 1: just a great place, so many different types of environments 35 00:02:05,440 --> 00:02:10,720 Speaker 1: and leisure activities. So in my life, vacations in Hawaii 36 00:02:10,800 --> 00:02:14,079 Speaker 1: would be my sort of craft beer equivalent. For you guys, 37 00:02:14,280 --> 00:02:17,160 Speaker 1: I'm jealous because you can get their way cheaper than 38 00:02:17,480 --> 00:02:20,120 Speaker 1: I can from the East Coast. What's the typical affordable ticket. 39 00:02:20,160 --> 00:02:22,440 Speaker 1: What's a good price for you? Well, boy, it would 40 00:02:22,440 --> 00:02:25,200 Speaker 1: be like maybe four dollars would be a good price 41 00:02:25,520 --> 00:02:28,800 Speaker 1: where we've had some savings is through thank you points. 42 00:02:28,840 --> 00:02:31,280 Speaker 1: My wife has credit card points that were able to 43 00:02:31,480 --> 00:02:34,960 Speaker 1: use for accommodations, So that's sort of where we get 44 00:02:34,960 --> 00:02:38,480 Speaker 1: the financial savings. In terms of going to Hawaii. Airfare 45 00:02:38,560 --> 00:02:42,760 Speaker 1: is still relatively expensive though that was certainly true before coronavirus, 46 00:02:43,120 --> 00:02:45,799 Speaker 1: and I suspect it's going to be true after coronavirus. 47 00:02:46,240 --> 00:02:47,920 Speaker 1: Well let's not. Let's let's dive into some of this. 48 00:02:48,280 --> 00:02:53,440 Speaker 1: Some tax talk got quiet and educational and and and 49 00:02:53,440 --> 00:02:55,720 Speaker 1: work history. How did you kind of like make the 50 00:02:55,800 --> 00:02:58,720 Speaker 1: jump from the corporate world to doing your own thing 51 00:02:58,760 --> 00:03:01,960 Speaker 1: to starting your own business. Yeah, so I've always been 52 00:03:02,000 --> 00:03:05,400 Speaker 1: been interested in personal finance. It's always been sort of 53 00:03:05,600 --> 00:03:08,480 Speaker 1: a hobby of mine. And I had a career in 54 00:03:08,520 --> 00:03:11,960 Speaker 1: corporate tax that really treated me well. It was a 55 00:03:12,000 --> 00:03:15,600 Speaker 1: great career. I got to travel to different client sites 56 00:03:15,680 --> 00:03:18,440 Speaker 1: and different parts of our country. Um, but I always 57 00:03:18,480 --> 00:03:20,480 Speaker 1: had that sort of longing to do my own thing 58 00:03:20,639 --> 00:03:24,320 Speaker 1: and to go more on the personal individual side of finance. 59 00:03:24,760 --> 00:03:27,920 Speaker 1: And so eventually I saved up some money and decided 60 00:03:28,000 --> 00:03:31,960 Speaker 1: to leave big four accounting and start out my own venture. 61 00:03:31,960 --> 00:03:34,640 Speaker 1: And I set up my own registered investment advisor firm 62 00:03:35,360 --> 00:03:38,800 Speaker 1: I've been doing it as of this recording being released 63 00:03:38,880 --> 00:03:42,560 Speaker 1: a little over two years and it's been a great adventure. 64 00:03:42,680 --> 00:03:45,960 Speaker 1: And you know, recently I listened to a podcast where 65 00:03:46,120 --> 00:03:49,000 Speaker 1: it was someone who has their own business and they said, yeah, 66 00:03:49,000 --> 00:03:50,920 Speaker 1: well we've been doing it for two years, so we're 67 00:03:50,920 --> 00:03:54,160 Speaker 1: really only just beginning, and that wrung true to me. 68 00:03:54,200 --> 00:03:56,920 Speaker 1: I said, Wow, isn't that interesting there two years in. 69 00:03:57,200 --> 00:04:00,480 Speaker 1: I'm not even two years in and there's saying they're 70 00:04:00,520 --> 00:04:02,720 Speaker 1: just beginning, and I think it is. There is that 71 00:04:02,840 --> 00:04:06,080 Speaker 1: piece of your learning the business of the business, right, 72 00:04:06,160 --> 00:04:09,600 Speaker 1: So you know, I provide financial advice to clients, but 73 00:04:09,640 --> 00:04:13,080 Speaker 1: I'm also building my own business and there's always lessons 74 00:04:13,120 --> 00:04:15,440 Speaker 1: to be learned in terms of building your own business, 75 00:04:15,440 --> 00:04:18,160 Speaker 1: which I'm sure Matt and Joel, you guys learned lessons 76 00:04:18,160 --> 00:04:20,880 Speaker 1: every day. We like to think, Okay, I know this 77 00:04:20,960 --> 00:04:24,280 Speaker 1: business and I can run this you know, no problem. 78 00:04:24,320 --> 00:04:26,880 Speaker 1: There's nothing new under the sun, And it turns out 79 00:04:26,920 --> 00:04:28,880 Speaker 1: when you're running your own business, there's a lot of 80 00:04:28,880 --> 00:04:30,880 Speaker 1: new things to be thinking about in terms of how 81 00:04:30,920 --> 00:04:33,880 Speaker 1: you run your business, all right, So I totally agree 82 00:04:33,960 --> 00:04:37,080 Speaker 1: Matt and I were learning every single day about you know, 83 00:04:37,120 --> 00:04:39,840 Speaker 1: working together too. Especially when you're working for someone else 84 00:04:39,880 --> 00:04:42,280 Speaker 1: and you're not a solo preneurs. There's an element of 85 00:04:42,600 --> 00:04:46,279 Speaker 1: that right of partnership. But yeah, Sean, what have you learned, Like, 86 00:04:46,320 --> 00:04:47,760 Speaker 1: what are some of the biggest lessons you've learned in 87 00:04:47,760 --> 00:04:49,479 Speaker 1: the first couple of years kind of getting up to speed. 88 00:04:50,320 --> 00:04:56,600 Speaker 1: I would say having grace with myself in terms of results. Right. So, 89 00:04:57,120 --> 00:05:02,159 Speaker 1: I think there's this impression when you work in corporate America, right, 90 00:05:02,200 --> 00:05:05,000 Speaker 1: that we're always going to be successful, and we're always 91 00:05:05,000 --> 00:05:07,720 Speaker 1: going to meet our numbers, and we're never going to 92 00:05:07,839 --> 00:05:11,040 Speaker 1: make a mistake, especially in terms of UM client acceptance. 93 00:05:11,080 --> 00:05:14,400 Speaker 1: So I'll give you one example. No is a very 94 00:05:14,440 --> 00:05:18,600 Speaker 1: powerful term when you're a solo preneurs, right, because there 95 00:05:18,600 --> 00:05:22,800 Speaker 1: are times where opportunities come to you and it's like, Okay, 96 00:05:22,839 --> 00:05:25,800 Speaker 1: if I take this opportunity, I'm going to make one X. 97 00:05:26,440 --> 00:05:29,200 Speaker 1: But if I say no to this opportunity, I'm going 98 00:05:29,279 --> 00:05:32,440 Speaker 1: to be able to say yes to another opportunity which 99 00:05:32,440 --> 00:05:35,560 Speaker 1: will pay me two X or three X. I think 100 00:05:35,600 --> 00:05:38,719 Speaker 1: when you work in W two Corporate America, there's this 101 00:05:38,760 --> 00:05:41,280 Speaker 1: pressure to always say yes to any new assignment, to 102 00:05:41,560 --> 00:05:45,400 Speaker 1: any new challenge. In being a solo preneurs. I've found 103 00:05:45,440 --> 00:05:48,640 Speaker 1: that sometimes no is the most powerful term, because yes, 104 00:05:48,680 --> 00:05:51,719 Speaker 1: you're saying no to one opportunity, but by saying no 105 00:05:51,839 --> 00:05:54,960 Speaker 1: to that opportunity, you're saying yes to something that could 106 00:05:54,960 --> 00:05:57,880 Speaker 1: get you two or three times the amount of revenue 107 00:05:58,160 --> 00:06:01,760 Speaker 1: or rate per hour or whatever. Is So the power 108 00:06:01,800 --> 00:06:04,440 Speaker 1: of no is so important, and it's something we're not 109 00:06:04,520 --> 00:06:08,000 Speaker 1: conditioned to say. We're conditioned to say yes to our teachers, 110 00:06:08,000 --> 00:06:10,800 Speaker 1: our professors, our parents growing up. And then it's like 111 00:06:10,839 --> 00:06:14,000 Speaker 1: you become your own business person, and you probably better 112 00:06:14,040 --> 00:06:16,320 Speaker 1: be saying no because if you just say yes all 113 00:06:16,360 --> 00:06:18,800 Speaker 1: the time, you're gonna take work that probably isn't the 114 00:06:18,839 --> 00:06:21,720 Speaker 1: work you should be doing. Yeah, not just from from 115 00:06:21,760 --> 00:06:24,760 Speaker 1: an income standpoint, but from a just a self fulfillment 116 00:06:24,760 --> 00:06:27,520 Speaker 1: standpoint to you, right, you know, and Sean, I feel 117 00:06:27,520 --> 00:06:29,560 Speaker 1: like this kind of leads into maybe your definition of 118 00:06:29,760 --> 00:06:32,560 Speaker 1: financial independence, which you know you mentioned on your site. 119 00:06:32,600 --> 00:06:35,240 Speaker 1: It's not about getting rich. So what does financial independence 120 00:06:35,279 --> 00:06:37,880 Speaker 1: mean to you? What's your what's your definition? Yeah, so 121 00:06:38,279 --> 00:06:43,520 Speaker 1: my definition of financial independence is arranging your finances so 122 00:06:43,560 --> 00:06:47,200 Speaker 1: that other things in life can take the priority. Right, 123 00:06:47,240 --> 00:06:50,440 Speaker 1: So I believe what you're trying to do in financial 124 00:06:50,440 --> 00:06:53,360 Speaker 1: independence is get to a place where you have more 125 00:06:53,440 --> 00:06:56,240 Speaker 1: options for the things that really matter in your life, 126 00:06:56,240 --> 00:07:01,960 Speaker 1: whether that's your spouse, your children, travel, charity, um, working 127 00:07:02,000 --> 00:07:05,920 Speaker 1: a more flexible schedule, right, all these sorts of things 128 00:07:06,400 --> 00:07:11,120 Speaker 1: as opposed to um, Hey, I have a fine number, right, 129 00:07:11,400 --> 00:07:14,480 Speaker 1: I'm going to get thirty times my expenses every year, 130 00:07:14,560 --> 00:07:17,360 Speaker 1: or twenty times my expenses every year, or twenty five times. 131 00:07:17,480 --> 00:07:20,160 Speaker 1: There's nothing wrong with that, right. There are plenty of 132 00:07:20,200 --> 00:07:23,040 Speaker 1: people in the fine movement, the five community, whatever you 133 00:07:23,080 --> 00:07:25,520 Speaker 1: wanna call it, that say, my goal is to get 134 00:07:25,600 --> 00:07:29,000 Speaker 1: twenty five times of my annual expenses, and that's financial 135 00:07:29,040 --> 00:07:32,240 Speaker 1: independence for me. I think that's great. But for me, 136 00:07:32,320 --> 00:07:35,880 Speaker 1: it's more about let's make good decisions in our financial 137 00:07:35,920 --> 00:07:39,720 Speaker 1: life that gives us better financial outcomes over the long run, 138 00:07:39,960 --> 00:07:42,760 Speaker 1: that gives us more options for the things that matter, 139 00:07:42,920 --> 00:07:45,960 Speaker 1: for our faith, for our family, for charity, for travel, 140 00:07:46,400 --> 00:07:50,080 Speaker 1: all those sorts of things. Yeah, it's a nice holistic 141 00:07:50,120 --> 00:07:54,000 Speaker 1: beau Sean. I appreciate your perspective on financial independence because, yeah, 142 00:07:54,040 --> 00:07:57,240 Speaker 1: sometimes it can be all about the numbers, and you know, 143 00:07:57,280 --> 00:08:00,240 Speaker 1: we leave behind real life in the process. Um, And 144 00:08:00,400 --> 00:08:03,560 Speaker 1: let's let's talk about taxes too. That's what we're gonna 145 00:08:03,600 --> 00:08:05,640 Speaker 1: spend most of the rest of this episode talking to 146 00:08:05,640 --> 00:08:07,880 Speaker 1: you about. And the real reason that we want to 147 00:08:07,880 --> 00:08:10,360 Speaker 1: talk about taxes is because there's a lot of money 148 00:08:10,360 --> 00:08:13,040 Speaker 1: on the line, and some of the money moves you 149 00:08:13,080 --> 00:08:16,520 Speaker 1: make will affect your how quickly you're able to reach 150 00:08:16,560 --> 00:08:19,720 Speaker 1: financial independence, maybe as an end goal, right, but also 151 00:08:20,000 --> 00:08:22,320 Speaker 1: in the interim, how that affects your life. So to 152 00:08:22,360 --> 00:08:25,520 Speaker 1: put things in perspective for folks, how much money could 153 00:08:25,600 --> 00:08:29,720 Speaker 1: like the typical American household be unnecessarily paying in taxes? 154 00:08:29,760 --> 00:08:33,920 Speaker 1: How much could poor tax planning actually be costing us? Yeah, 155 00:08:34,000 --> 00:08:38,400 Speaker 1: so I think it's it's hard to exactly quantify it. 156 00:08:38,480 --> 00:08:41,880 Speaker 1: I look at it in two buckets, right. One bucket 157 00:08:41,960 --> 00:08:45,640 Speaker 1: is what I'll call tax optimization. So folks, for example, 158 00:08:45,640 --> 00:08:48,200 Speaker 1: I've seen it where folks leave something like a roth 159 00:08:48,280 --> 00:08:51,760 Speaker 1: ira on the table, right, So they qualified to contribute 160 00:08:51,760 --> 00:08:55,000 Speaker 1: to a roth ira. They had the money to do it, 161 00:08:55,080 --> 00:08:57,520 Speaker 1: but they didn't do it. Right, So the money remains 162 00:08:57,520 --> 00:09:01,280 Speaker 1: in taxable accounts in any one year, that's only gonna 163 00:09:01,320 --> 00:09:04,439 Speaker 1: cost you a relatively modest sum that will build up 164 00:09:04,480 --> 00:09:08,120 Speaker 1: over time. Right, So that's going to be very dependent 165 00:09:08,160 --> 00:09:10,640 Speaker 1: on just how much income you have what your marginal 166 00:09:10,720 --> 00:09:13,559 Speaker 1: tax bracket is. But you know, let's just say you 167 00:09:13,720 --> 00:09:17,360 Speaker 1: for went, you know, for went roth Ira a contributions 168 00:09:17,360 --> 00:09:20,640 Speaker 1: of six thousand dollars over a decade. That's sixty tho 169 00:09:20,960 --> 00:09:23,840 Speaker 1: dollars at least that could have been in a rath. 170 00:09:23,960 --> 00:09:26,920 Speaker 1: That's now in taxable accounts. You know, even at a 171 00:09:27,360 --> 00:09:31,760 Speaker 1: two percent yield, that's twelve dollars of dividend income every year. 172 00:09:31,800 --> 00:09:34,520 Speaker 1: That's now going to hit your tax return every year. 173 00:09:34,760 --> 00:09:37,840 Speaker 1: Even at a qualified rate of say fifteen per cent, 174 00:09:38,360 --> 00:09:41,720 Speaker 1: we're talking about two hundred dollars of leakage every year. 175 00:09:41,800 --> 00:09:45,679 Speaker 1: That's compounding. Right now, That's not the end of the world. Okay, 176 00:09:45,840 --> 00:09:48,240 Speaker 1: there's still ways to get to say financial independence or 177 00:09:48,320 --> 00:09:52,360 Speaker 1: retirements if you're not optimized. That's one example. Here's the 178 00:09:52,440 --> 00:09:58,240 Speaker 1: second example, though, what I'll call um tax problems. And 179 00:09:58,280 --> 00:10:02,520 Speaker 1: where this is is, hey, you know, um, this isn't 180 00:10:02,600 --> 00:10:05,960 Speaker 1: a roth Ira. This is I'm going to set up 181 00:10:06,000 --> 00:10:08,120 Speaker 1: my own business. I'm going to set up my own 182 00:10:08,320 --> 00:10:11,400 Speaker 1: s corporation and I'm not going to work with a professional, 183 00:10:11,920 --> 00:10:15,200 Speaker 1: And so what do I miss? Maybe I miss paying 184 00:10:15,240 --> 00:10:19,360 Speaker 1: myself a reasonable compensation out of that s corporation. Maybe 185 00:10:19,400 --> 00:10:22,560 Speaker 1: I miss my solo four O one K, or I 186 00:10:22,880 --> 00:10:25,120 Speaker 1: what I do is I over contribute to my solo 187 00:10:25,200 --> 00:10:29,439 Speaker 1: four O one K. Now I have excess contribution taxes. 188 00:10:29,880 --> 00:10:33,040 Speaker 1: Now I have planned disqualification I have to worry about. 189 00:10:33,400 --> 00:10:36,400 Speaker 1: Now I have remediation costs. When the I R S 190 00:10:36,480 --> 00:10:38,599 Speaker 1: comes in and says your solo four one K is 191 00:10:38,640 --> 00:10:42,440 Speaker 1: no good or you have to go apply for they 192 00:10:42,440 --> 00:10:45,920 Speaker 1: call it the voluntary compliance program to solve that or 193 00:10:46,000 --> 00:10:49,120 Speaker 1: fix that solo four one K, or the I R 194 00:10:49,200 --> 00:10:51,560 Speaker 1: S comes in and audits you and says you owe 195 00:10:51,600 --> 00:10:56,280 Speaker 1: all these back payroll tax taxes plus interest on that right. 196 00:10:56,600 --> 00:10:59,559 Speaker 1: So that's where it's like, hey, you know, if I'm 197 00:10:59,559 --> 00:11:02,560 Speaker 1: gonna be a little more sophisticated in my life, that's fine, 198 00:11:02,960 --> 00:11:05,360 Speaker 1: But that's sort of an addition of you know, wait 199 00:11:05,360 --> 00:11:07,760 Speaker 1: a minute, I should get a professional involved in my 200 00:11:07,840 --> 00:11:12,080 Speaker 1: life just to make sure I'm not missing opportunities and 201 00:11:12,120 --> 00:11:14,440 Speaker 1: I'm complying with the law in such a way that 202 00:11:14,480 --> 00:11:17,120 Speaker 1: the I R S can't come back to me and say, hey, 203 00:11:17,160 --> 00:11:19,839 Speaker 1: where's all those payroll taxes you know you owe us? 204 00:11:20,160 --> 00:11:21,960 Speaker 1: Where you know you put too much in your soul 205 00:11:22,080 --> 00:11:24,600 Speaker 1: for one k you know, you have to withdraw that 206 00:11:24,720 --> 00:11:27,560 Speaker 1: and pay attax and deal with that sort of stuff. 207 00:11:27,600 --> 00:11:31,439 Speaker 1: So I think it's two buckets Matt and Joel. It's 208 00:11:31,480 --> 00:11:34,359 Speaker 1: a little hard to quantify because it is so specific 209 00:11:34,440 --> 00:11:37,200 Speaker 1: to your situation, but you know, I look at it 210 00:11:37,240 --> 00:11:40,400 Speaker 1: as with some advance planning. You can say, on the 211 00:11:40,480 --> 00:11:42,960 Speaker 1: right side of the I R S and take advantage 212 00:11:42,960 --> 00:11:46,440 Speaker 1: of all the legal opportunities you have to build wealth 213 00:11:46,480 --> 00:11:49,200 Speaker 1: in a tax advantage matter. Yeah, yeah, it's not just 214 00:11:49,280 --> 00:11:51,920 Speaker 1: about the savings here now or a month a month, 215 00:11:52,000 --> 00:11:55,240 Speaker 1: but I mean the amount that you could be kind 216 00:11:55,240 --> 00:11:57,480 Speaker 1: of screwing yourself over could be I mean, theoretically it 217 00:11:57,480 --> 00:11:59,040 Speaker 1: could be infinite. You know, Like I guess, it just 218 00:11:59,120 --> 00:12:01,880 Speaker 1: kind of depends on how let you are earning, because 219 00:12:02,120 --> 00:12:04,640 Speaker 1: a tax mistake for for Bezos is gonna look a 220 00:12:04,640 --> 00:12:07,920 Speaker 1: lot different than a tax mistake for Joel. Well, and 221 00:12:08,200 --> 00:12:10,440 Speaker 1: another thing to think about is just the concept of 222 00:12:10,520 --> 00:12:14,000 Speaker 1: tax insurance. Right, So the idea of a roth ira, 223 00:12:14,200 --> 00:12:17,360 Speaker 1: for example, it's such a great idea in part because 224 00:12:17,640 --> 00:12:21,400 Speaker 1: you lock in today's relatively low tax rates. We don't 225 00:12:21,440 --> 00:12:23,240 Speaker 1: know what tax rates are going to be in the future. 226 00:12:23,400 --> 00:12:26,120 Speaker 1: It could be that they come down, but considering the 227 00:12:26,120 --> 00:12:29,880 Speaker 1: federal deficit and other factors, it may be that tax 228 00:12:30,040 --> 00:12:32,199 Speaker 1: rates go up, and it may be that you're gonna 229 00:12:32,200 --> 00:12:36,640 Speaker 1: live years. Wouldn't it be nice to get into your 230 00:12:36,679 --> 00:12:39,840 Speaker 1: eighties or nineties and just know that you have tax 231 00:12:39,920 --> 00:12:43,120 Speaker 1: free accounts that are growing tax free. You never have 232 00:12:43,200 --> 00:12:46,160 Speaker 1: to worry about requirementum distributions, You never have to worry 233 00:12:46,160 --> 00:12:49,800 Speaker 1: about tax rate increases. To my mind, it's like, let's 234 00:12:49,800 --> 00:12:52,520 Speaker 1: get some tax insurance, you know, let's do some good 235 00:12:52,600 --> 00:12:55,600 Speaker 1: tax planning to get money into tax free accounts if 236 00:12:55,640 --> 00:12:58,720 Speaker 1: we can. And you know what if tax rates never 237 00:12:58,800 --> 00:13:01,320 Speaker 1: go up, well, it's insurance, right. It's like when we 238 00:13:01,360 --> 00:13:04,520 Speaker 1: pay our auto insurance bill every you know year. We 239 00:13:04,600 --> 00:13:06,560 Speaker 1: hope we never use it, right, we hope it's a 240 00:13:06,559 --> 00:13:11,000 Speaker 1: waste of money. Yep, knowing that I don't need the 241 00:13:11,040 --> 00:13:14,520 Speaker 1: case that yeah, um, we're never going to use this, 242 00:13:14,600 --> 00:13:16,720 Speaker 1: but very likely we may have to use it at 243 00:13:16,760 --> 00:13:18,480 Speaker 1: some point, and we're gonna be glad we did that 244 00:13:18,840 --> 00:13:21,760 Speaker 1: if we ever have to, uh, you know, to be 245 00:13:21,840 --> 00:13:25,400 Speaker 1: worried about increasing tax rates. Right. Yeah. And so you know, 246 00:13:25,400 --> 00:13:27,920 Speaker 1: we're talking about some different situations here depending on the person. 247 00:13:28,040 --> 00:13:30,360 Speaker 1: But you know, for you, as someone who helps other 248 00:13:30,400 --> 00:13:32,240 Speaker 1: people with their you know, with their taxes. Can you 249 00:13:32,240 --> 00:13:34,559 Speaker 1: give some thoughts on like when doesn't make sense then 250 00:13:34,600 --> 00:13:37,000 Speaker 1: to do your own taxes and when people need to 251 00:13:37,040 --> 00:13:40,319 Speaker 1: maybe hire someone to help them file their taxes. Yeah. So, 252 00:13:40,440 --> 00:13:43,480 Speaker 1: if your tax planning is limited to I have a 253 00:13:43,640 --> 00:13:46,240 Speaker 1: W two, I contribute to my four O one K, 254 00:13:46,559 --> 00:13:49,120 Speaker 1: I contribute to a roth iarra, I'm well within the 255 00:13:49,160 --> 00:13:52,920 Speaker 1: income limits of contributing to a roth DIARRAE. That doesn't 256 00:13:53,000 --> 00:13:56,679 Speaker 1: scream out higher. A tax return prepare doesn't mean you 257 00:13:56,720 --> 00:14:00,880 Speaker 1: shouldn't write at all levels of sophistication. You should consider 258 00:14:00,960 --> 00:14:04,480 Speaker 1: hiring a tax return prepare. But some indisha that you 259 00:14:04,559 --> 00:14:08,360 Speaker 1: might want to hire a tax return prepare often involved 260 00:14:08,440 --> 00:14:12,840 Speaker 1: things like self employment, having your own business, possibly having 261 00:14:12,880 --> 00:14:16,160 Speaker 1: a side hustle. Those are in disha that boy, I 262 00:14:16,240 --> 00:14:20,440 Speaker 1: might need to um hire a tax return prepare. Another 263 00:14:20,520 --> 00:14:23,560 Speaker 1: one would be life changes. Right, so I have my 264 00:14:23,640 --> 00:14:26,840 Speaker 1: first child, I get married, I have a death in 265 00:14:26,880 --> 00:14:30,560 Speaker 1: the family, some big change in my life. I buy 266 00:14:30,600 --> 00:14:33,560 Speaker 1: a house for the first time. That could also be 267 00:14:33,600 --> 00:14:36,120 Speaker 1: an indisha that you know what, maybe I want to 268 00:14:36,200 --> 00:14:39,760 Speaker 1: hire a professional to do my tax return this year. Yeah, 269 00:14:39,840 --> 00:14:43,080 Speaker 1: and Sean on your blog you've written about how looking 270 00:14:43,080 --> 00:14:45,640 Speaker 1: at your return from the prior year can actually help 271 00:14:45,680 --> 00:14:47,560 Speaker 1: you when it comes to filing your taxes for the 272 00:14:47,600 --> 00:14:50,640 Speaker 1: current year. Absolutely, when you're doing that, like if you're 273 00:14:50,640 --> 00:14:53,000 Speaker 1: trying to d I y uh, one are the things 274 00:14:53,040 --> 00:14:54,800 Speaker 1: you need to be looking out for from a prior 275 00:14:54,880 --> 00:14:57,840 Speaker 1: year's return so that you can do it yourself. So 276 00:14:58,000 --> 00:15:00,360 Speaker 1: I would look at things like, did I file a 277 00:15:00,440 --> 00:15:04,800 Speaker 1: Schedule C, right, so that is self employment income? Did 278 00:15:04,840 --> 00:15:08,240 Speaker 1: I file file a Schedule E that's usually rent and 279 00:15:08,360 --> 00:15:11,400 Speaker 1: royalty type income. UM. I would look at things like 280 00:15:11,760 --> 00:15:15,320 Speaker 1: h S A S. Did I take an hs A distribution? Right? 281 00:15:15,360 --> 00:15:17,600 Speaker 1: If I'm young and healthy and I took an hs 282 00:15:17,600 --> 00:15:20,920 Speaker 1: A distribution, that could be a planning opportunity that no, 283 00:15:21,040 --> 00:15:23,440 Speaker 1: I want to in the future keep that money in 284 00:15:23,480 --> 00:15:26,480 Speaker 1: the hs A to grow tax free for a long time. 285 00:15:26,920 --> 00:15:29,960 Speaker 1: I would look at my scheduled D. So their scheduled 286 00:15:30,000 --> 00:15:33,040 Speaker 1: D is for capital gains and losses. UM. There's a 287 00:15:33,080 --> 00:15:37,000 Speaker 1: box on there for something called capital gain distributions. While 288 00:15:37,040 --> 00:15:40,040 Speaker 1: I'm not here to give anyone investment advice on this podcast, 289 00:15:40,440 --> 00:15:43,120 Speaker 1: i will say capital gain distributions are sort of the 290 00:15:43,520 --> 00:15:46,840 Speaker 1: boogeyman of the investing world. Right. So these are distributions 291 00:15:46,880 --> 00:15:48,840 Speaker 1: where you have a mutual fund or an e t 292 00:15:49,080 --> 00:15:52,800 Speaker 1: F and it generates these things called capital gain distributions 293 00:15:53,040 --> 00:15:56,320 Speaker 1: because there were sales inside the mutual fund. Some of 294 00:15:56,360 --> 00:15:59,960 Speaker 1: them are unavoidable, right, So having some capital gain distribution 295 00:16:00,200 --> 00:16:03,640 Speaker 1: is unavoidable if you're gonna invest in taxable brokerage accounts, 296 00:16:03,920 --> 00:16:06,720 Speaker 1: perfectly fine. But if you've got a big number in 297 00:16:06,720 --> 00:16:11,320 Speaker 1: that capital gain distribution UM box, you might want to 298 00:16:11,320 --> 00:16:13,720 Speaker 1: think about, Hey, is there a way I could reallocate 299 00:16:13,760 --> 00:16:16,920 Speaker 1: my portfolio? You know, in in a tax advantage manner, 300 00:16:16,920 --> 00:16:19,120 Speaker 1: you still gotta worry about gain on the sale of 301 00:16:19,560 --> 00:16:23,520 Speaker 1: that would be generated if you reallocate it. But maybe 302 00:16:23,560 --> 00:16:26,320 Speaker 1: you have a loss in that security and it generated 303 00:16:26,360 --> 00:16:30,200 Speaker 1: capital gain distributions that can happen. Maybe there's an opportunity 304 00:16:30,240 --> 00:16:33,520 Speaker 1: to do some reallocation of my portfolio if I've got 305 00:16:33,520 --> 00:16:35,360 Speaker 1: a big number in that box. So those are just 306 00:16:35,440 --> 00:16:38,200 Speaker 1: a few examples. Like you said, I blogged about this. 307 00:16:38,640 --> 00:16:40,400 Speaker 1: It's a little bit of a way of let me 308 00:16:40,440 --> 00:16:42,760 Speaker 1: take a look at last year's tax return with a 309 00:16:42,840 --> 00:16:46,520 Speaker 1: critical eye. Maybe there's some planning that that tax return 310 00:16:46,600 --> 00:16:49,560 Speaker 1: will reveal to me. That's good, that's good. It's you know, 311 00:16:49,560 --> 00:16:52,120 Speaker 1: it's good to see who needs to consider maybe some 312 00:16:52,120 --> 00:16:54,000 Speaker 1: professional help. You know, It's something we talked about here 313 00:16:54,040 --> 00:16:56,200 Speaker 1: often on the show. How there's a lot of the 314 00:16:56,200 --> 00:16:58,600 Speaker 1: basics that you need to know that you can figure 315 00:16:58,600 --> 00:17:00,640 Speaker 1: out yourself, but when it comes to to tax law 316 00:17:00,680 --> 00:17:03,000 Speaker 1: and how that's kind of constantly shifting and and just 317 00:17:03,160 --> 00:17:05,639 Speaker 1: all the fine nuances, sometimes that does make sense to 318 00:17:05,760 --> 00:17:08,200 Speaker 1: bring on a professional. Uh, you know, and we're talking 319 00:17:08,200 --> 00:17:11,200 Speaker 1: about the massive impact that doing your taxes can can 320 00:17:11,240 --> 00:17:13,479 Speaker 1: have on you. And so actually after the break, we're 321 00:17:13,480 --> 00:17:15,439 Speaker 1: gonna dive into what it is that we need to 322 00:17:15,440 --> 00:17:17,600 Speaker 1: pay attention to when it comes to filing your twenty 323 00:17:17,680 --> 00:17:19,800 Speaker 1: twenty taxes. We'll get to that right after the break. 324 00:17:30,040 --> 00:17:32,040 Speaker 1: All right, we're back and we are one month out 325 00:17:32,119 --> 00:17:34,080 Speaker 1: from tax day, and that's part of the reason we 326 00:17:34,080 --> 00:17:37,520 Speaker 1: wanted to have Sean Millennial to talk about smart tax 327 00:17:37,520 --> 00:17:40,679 Speaker 1: planning moves and Sean. Before we dive into some of 328 00:17:40,720 --> 00:17:43,080 Speaker 1: the specifics that people need to think through when it 329 00:17:43,080 --> 00:17:46,800 Speaker 1: comes to tax specific issues, I kind of want to 330 00:17:46,800 --> 00:17:49,960 Speaker 1: ask you something. A question is just a little more broad. Uh. 331 00:17:50,000 --> 00:17:52,639 Speaker 1: If we put I think maybe too much emphasis on 332 00:17:52,760 --> 00:17:56,560 Speaker 1: tax planning, are we potentially letting the tail wag the dog. 333 00:17:56,600 --> 00:17:58,679 Speaker 1: I know that that's a concern that some people have, 334 00:17:58,840 --> 00:18:01,280 Speaker 1: is that maybe they're thinking about out taxes too much, 335 00:18:01,320 --> 00:18:04,480 Speaker 1: they're overthinking it, They're they're trying to get their tax 336 00:18:04,480 --> 00:18:06,639 Speaker 1: bill down so hard that they're forgetting some of the 337 00:18:06,680 --> 00:18:09,439 Speaker 1: other things that are important in life. How much of 338 00:18:09,480 --> 00:18:11,840 Speaker 1: an emphasis should we be putting on tax planning in 339 00:18:11,920 --> 00:18:15,080 Speaker 1: our lives. Very much agree that we don't want to 340 00:18:15,160 --> 00:18:18,640 Speaker 1: let the tax tail wag the dog. Right, So your 341 00:18:18,760 --> 00:18:23,040 Speaker 1: goal is something like financial independence. Maybe it's retirement at 342 00:18:23,080 --> 00:18:26,320 Speaker 1: a certain age, maybe it's funding the purchase of a home. Right, 343 00:18:26,560 --> 00:18:29,480 Speaker 1: you have financial goals. Your goal isn't to get the 344 00:18:29,560 --> 00:18:32,280 Speaker 1: latest and greatest tax planning technique and get that on 345 00:18:32,359 --> 00:18:35,000 Speaker 1: your tax return. Right. That's a tactic that, in many 346 00:18:35,040 --> 00:18:38,400 Speaker 1: cases maybe a great tactic. I'll give you one example, 347 00:18:38,920 --> 00:18:41,920 Speaker 1: tax planning for your kids. I see this a lot 348 00:18:42,200 --> 00:18:45,719 Speaker 1: in the world as I talked to prospective clients social media. 349 00:18:46,280 --> 00:18:50,000 Speaker 1: Folks want to do tax planning that would benefit their children, 350 00:18:50,600 --> 00:18:53,280 Speaker 1: and I think that's okay, But I think you should 351 00:18:53,280 --> 00:18:56,240 Speaker 1: take care of your own finances first. I think that's 352 00:18:56,240 --> 00:18:59,879 Speaker 1: the sort of thing if you're a financial independence go ahead, 353 00:19:00,000 --> 00:19:02,560 Speaker 1: and start thinking about tax planning for your kids. But 354 00:19:02,640 --> 00:19:05,440 Speaker 1: if you're you know, in your late twenties, early thirties, 355 00:19:05,840 --> 00:19:07,800 Speaker 1: you've got a four year old and a two year 356 00:19:07,920 --> 00:19:10,119 Speaker 1: year old at home, and you're doing fine, but you're 357 00:19:10,160 --> 00:19:13,680 Speaker 1: nowhere near financial independence. Any tax planning that's for your 358 00:19:13,800 --> 00:19:17,800 Speaker 1: children I would put off, even if it's for college savings, right, 359 00:19:17,840 --> 00:19:21,040 Speaker 1: I would invest in your own taxable brokerage accounts. You 360 00:19:21,080 --> 00:19:24,760 Speaker 1: can mentally segregate that is, that's for junior's college education, 361 00:19:25,000 --> 00:19:27,919 Speaker 1: but it's in our name, and it's our asset. And 362 00:19:27,960 --> 00:19:30,960 Speaker 1: if we do really good financially and they turn eighteen 363 00:19:31,000 --> 00:19:33,600 Speaker 1: and they need money for college, we can tap into 364 00:19:33,680 --> 00:19:37,160 Speaker 1: that resource and pay for some or all of their college. 365 00:19:37,240 --> 00:19:40,760 Speaker 1: But maybe at age eighteen, we aren't doing so well. 366 00:19:40,840 --> 00:19:43,800 Speaker 1: Mom and Dad's finances aren't so good. Isn't it good 367 00:19:43,800 --> 00:19:46,199 Speaker 1: that we've put that in our own accounts so that 368 00:19:46,280 --> 00:19:49,600 Speaker 1: we can help ourselves. The best gift you can give 369 00:19:49,680 --> 00:19:54,600 Speaker 1: financially to your children is stabilizing your own finances. Your 370 00:19:54,680 --> 00:19:57,040 Speaker 1: kids have plenty of time to pay for their own college. 371 00:19:57,480 --> 00:20:00,199 Speaker 1: You want to make sure your finances are stabilized. And 372 00:20:00,240 --> 00:20:03,120 Speaker 1: once that happens, you get to say financial independence, then 373 00:20:03,160 --> 00:20:05,600 Speaker 1: start thinking about maybe some tax planning for your kids 374 00:20:05,720 --> 00:20:09,080 Speaker 1: if you qualify. And it's the right answer. I love it. 375 00:20:09,160 --> 00:20:11,600 Speaker 1: That's a great example, and so shout, let's let's talk. Now, 376 00:20:11,720 --> 00:20:15,040 Speaker 1: let's shift to right that there are some specific tax 377 00:20:15,080 --> 00:20:18,080 Speaker 1: issues that have come up because of the year that 378 00:20:18,400 --> 00:20:22,000 Speaker 1: is formally known as I guess now referring to it 379 00:20:22,040 --> 00:20:24,080 Speaker 1: down the review, I don't know, but uh so, first, 380 00:20:24,359 --> 00:20:26,919 Speaker 1: for tax paper payers out there who haven't received their 381 00:20:26,960 --> 00:20:30,240 Speaker 1: full stimulus payment, how do they go about receiving what 382 00:20:30,359 --> 00:20:33,879 Speaker 1: they are entitled to? So there is an opportunity to 383 00:20:33,960 --> 00:20:37,600 Speaker 1: potentially receive more of the stimulus. Right, everybody thinks of 384 00:20:37,640 --> 00:20:40,480 Speaker 1: the stimulus as those checks or direct deposits that came 385 00:20:40,480 --> 00:20:44,399 Speaker 1: from the I R S during but it turns out 386 00:20:44,600 --> 00:20:46,959 Speaker 1: what it is is it's a tax credit on your 387 00:20:47,000 --> 00:20:51,280 Speaker 1: tax return that was essentially prepaid by the I R S. 388 00:20:51,680 --> 00:20:53,639 Speaker 1: And so what you want to be thinking about is 389 00:20:54,200 --> 00:20:58,800 Speaker 1: how much money did I make in twenty and if 390 00:20:58,840 --> 00:21:01,959 Speaker 1: I made less money twenty than I did in nineteen, 391 00:21:02,359 --> 00:21:05,240 Speaker 1: that's one example there might be an opportunity to actually 392 00:21:05,280 --> 00:21:08,119 Speaker 1: get more stimulus tax credit. Let me give you a 393 00:21:08,160 --> 00:21:10,800 Speaker 1: brief example. I've written about this on my blog. But 394 00:21:10,880 --> 00:21:14,360 Speaker 1: let's just say in twenty nine in you know, it's 395 00:21:14,359 --> 00:21:16,960 Speaker 1: a married couple no children. They did really well in 396 00:21:16,960 --> 00:21:20,199 Speaker 1: twenty nineteen, so they had two D twenty thousand of 397 00:21:20,200 --> 00:21:24,119 Speaker 1: adjusted gross income. Based on that adjusted gross income number, 398 00:21:24,359 --> 00:21:27,080 Speaker 1: they got no stimulus check from the I R S. Right, 399 00:21:27,160 --> 00:21:30,280 Speaker 1: Let's just assume that's all true. Let's also say that 400 00:21:30,440 --> 00:21:34,439 Speaker 1: one of those spouses in lost their job for a 401 00:21:34,440 --> 00:21:39,000 Speaker 1: while because of coronavirus. Okay, so they're adjusted gross income 402 00:21:39,440 --> 00:21:43,480 Speaker 1: went from two D twenty thousand to one fifty six 403 00:21:43,520 --> 00:21:48,720 Speaker 1: thousand dollars. Okay, when they filed their twenty twenty tax return, 404 00:21:49,280 --> 00:21:52,840 Speaker 1: they're gonna get a whole lot of that stimulus because 405 00:21:52,880 --> 00:21:57,240 Speaker 1: they're below the phase out ranges forgetting the stimulus. And 406 00:21:57,280 --> 00:22:01,800 Speaker 1: not only that, they may have an additional tax planning opportunity. 407 00:22:02,000 --> 00:22:04,880 Speaker 1: Let's just say they got no stimulus money. There's they've 408 00:22:04,960 --> 00:22:09,119 Speaker 1: drafted their tax return. It says one fifty six thousand 409 00:22:09,160 --> 00:22:13,760 Speaker 1: of adjusted gross income. What could they do? They could 410 00:22:14,000 --> 00:22:16,879 Speaker 1: if one of them was not covered by an employer 411 00:22:17,080 --> 00:22:21,200 Speaker 1: retirement plan, which is very possible stay at home spouse. 412 00:22:21,640 --> 00:22:24,159 Speaker 1: It could be you work for a small employer. They 413 00:22:24,160 --> 00:22:27,199 Speaker 1: don't have a retirement plan. That couple could write a 414 00:22:27,240 --> 00:22:30,760 Speaker 1: six thousand dollar check to a deductible traditional I RA 415 00:22:31,600 --> 00:22:35,000 Speaker 1: that would lower their adjusted gross income to a hundred 416 00:22:35,000 --> 00:22:40,240 Speaker 1: and fifty thousand. They would save probably federal income tax 417 00:22:40,280 --> 00:22:43,320 Speaker 1: because they just have a deduction, but because the way 418 00:22:43,320 --> 00:22:46,680 Speaker 1: of the way the stimulus was structured, they would save 419 00:22:46,720 --> 00:22:51,840 Speaker 1: an additional ten percent on their federal income tax because 420 00:22:51,840 --> 00:22:55,240 Speaker 1: they would get six hundred dollars in that example of 421 00:22:55,359 --> 00:23:00,440 Speaker 1: six thousand as additional stimulus. So in though they're in 422 00:23:00,440 --> 00:23:04,800 Speaker 1: the federal income tax bracket, by writing that six thousand 423 00:23:04,840 --> 00:23:08,080 Speaker 1: dollar check to the traditional IRA and deducting it before 424 00:23:08,119 --> 00:23:11,280 Speaker 1: April fift and again this assumes that this is the 425 00:23:11,320 --> 00:23:14,240 Speaker 1: spouse who is not covered by a workplace plan. They 426 00:23:14,280 --> 00:23:20,160 Speaker 1: save one thou on their federal income tax orty. That's 427 00:23:20,240 --> 00:23:23,280 Speaker 1: pretty good. And here's what they could even do after that. 428 00:23:23,960 --> 00:23:26,880 Speaker 1: For one, they could convert that back to a roth 429 00:23:26,960 --> 00:23:32,080 Speaker 1: IRA and assuming they are still in the tax bracket, 430 00:23:32,560 --> 00:23:35,960 Speaker 1: that would come back into income at a two percent hit. 431 00:23:36,280 --> 00:23:39,760 Speaker 1: That's one thousand, three twenty dollars, so they would save 432 00:23:41,040 --> 00:23:46,719 Speaker 1: twenty on tax return. They would pay Uncle Sam twenty 433 00:23:47,080 --> 00:23:50,880 Speaker 1: on the one tax return. They would net six hundred 434 00:23:50,880 --> 00:23:54,760 Speaker 1: dollars uh in federal tax savings, and the money winds 435 00:23:54,800 --> 00:23:57,600 Speaker 1: up in a roth IRA anyway, So there's certainly some 436 00:23:57,640 --> 00:24:01,960 Speaker 1: planning opportunities to maybe max mise your stimulus if you 437 00:24:01,960 --> 00:24:05,520 Speaker 1: didn't get the full check back in Yeah, I feel 438 00:24:05,520 --> 00:24:08,440 Speaker 1: like sean, lowering your adjusted gross income has always been 439 00:24:08,480 --> 00:24:13,320 Speaker 1: an important tactic, right, Taking advantage of those tax advantaged 440 00:24:13,359 --> 00:24:16,600 Speaker 1: accounts retirement accounts to lower, you know, the income that 441 00:24:16,600 --> 00:24:19,800 Speaker 1: you report on your tax return is a great move 442 00:24:20,000 --> 00:24:22,640 Speaker 1: to lower your tax burden in the here and now, 443 00:24:22,880 --> 00:24:25,200 Speaker 1: But it feels like it's it's even more important these days, 444 00:24:25,359 --> 00:24:27,399 Speaker 1: kind of like you were just talking about the implication 445 00:24:27,440 --> 00:24:30,439 Speaker 1: that it can have on stimulus payments or healthcare subsidies 446 00:24:30,800 --> 00:24:33,040 Speaker 1: or you know, maybe what what you're able to qualify 447 00:24:33,160 --> 00:24:36,840 Speaker 1: for in financial aid from colleges. So yeah, like, can 448 00:24:36,880 --> 00:24:40,560 Speaker 1: you talk more about maybe how the added importance of 449 00:24:40,720 --> 00:24:43,000 Speaker 1: lowering your AGI these days? And then yeah, are there 450 00:24:43,000 --> 00:24:45,320 Speaker 1: any uh, with a month left to go before the 451 00:24:45,440 --> 00:24:48,919 Speaker 1: tax filing deadline, how can people um basically lower their 452 00:24:48,960 --> 00:24:52,640 Speaker 1: a GI even more? Uh? Legally of course? Yeah, So 453 00:24:53,440 --> 00:24:57,240 Speaker 1: a g I adjusted gross income or a related concept, 454 00:24:57,400 --> 00:25:00,840 Speaker 1: modified adjusted gross income. It's sort of test in the 455 00:25:00,840 --> 00:25:05,639 Speaker 1: eternal Revenue Code for many different benefits, qualification perhaps to 456 00:25:05,840 --> 00:25:10,919 Speaker 1: contribute to a roth IRA, UM premium tax credit for 457 00:25:11,200 --> 00:25:14,960 Speaker 1: UM Affordable Care Act subsidies, right, these sorts of things 458 00:25:15,440 --> 00:25:19,720 Speaker 1: UM the ability to to deduct certain things. So you know, 459 00:25:19,760 --> 00:25:22,320 Speaker 1: I think what you want to be thinking about is, yeah, 460 00:25:22,400 --> 00:25:26,680 Speaker 1: are there ways to advantageously lower my adjusted gross income 461 00:25:26,960 --> 00:25:29,480 Speaker 1: because that's going to have a sort of a ripple 462 00:25:29,520 --> 00:25:34,600 Speaker 1: effect on other tax benefits that will help me realize 463 00:25:34,680 --> 00:25:38,520 Speaker 1: more tax savings. And so you know, there are different 464 00:25:38,560 --> 00:25:41,120 Speaker 1: ways to do it, but by you know, by now 465 00:25:41,680 --> 00:25:44,960 Speaker 1: March of it could be a little difficult. But you 466 00:25:44,960 --> 00:25:47,000 Speaker 1: want to be looking at things like, hey, did I 467 00:25:47,040 --> 00:25:50,480 Speaker 1: have a high deductible health plan back in could I 468 00:25:50,560 --> 00:25:53,840 Speaker 1: maybe write a check to it for any uncontributed amount? 469 00:25:54,240 --> 00:25:57,480 Speaker 1: Things like do I qualify for a deductible traditional IRA 470 00:25:57,640 --> 00:26:00,160 Speaker 1: and doesn't make sense in my case? Right, There's all 471 00:26:00,280 --> 00:26:02,960 Speaker 1: some planning that could be done, something like maybe a 472 00:26:03,000 --> 00:26:05,440 Speaker 1: set by array or solo for one K if I'm 473 00:26:05,480 --> 00:26:09,040 Speaker 1: self employed. There's limited opportunities there, but there can be 474 00:26:09,080 --> 00:26:13,000 Speaker 1: some opportunities. So there are things that are still available 475 00:26:13,080 --> 00:26:16,840 Speaker 1: in twenty one for the tax year. But you also 476 00:26:16,880 --> 00:26:18,960 Speaker 1: want to be thinking about that going forward. Right, Maybe 477 00:26:18,960 --> 00:26:23,440 Speaker 1: I want to be thinking about that now fore, someone 478 00:26:23,520 --> 00:26:26,640 Speaker 1: I mean in a even better position for those years 479 00:26:27,480 --> 00:26:29,280 Speaker 1: I'm thinking too. Does it make sense for folks to 480 00:26:29,359 --> 00:26:32,639 Speaker 1: file their taxes as soon as possible if they did 481 00:26:32,720 --> 00:26:36,119 Speaker 1: see their income dramatically declined last year, in order to 482 00:26:36,160 --> 00:26:39,159 Speaker 1: show that they're eligible for for any additional stimulus. So 483 00:26:39,240 --> 00:26:41,520 Speaker 1: let me give you the example of somebody who did 484 00:26:42,040 --> 00:26:45,560 Speaker 1: much worse in than they did in. Right, there was 485 00:26:45,600 --> 00:26:50,320 Speaker 1: a layoff that person might want to accelerate filing their 486 00:26:50,400 --> 00:26:53,639 Speaker 1: tax return for so as to get that to a 487 00:26:53,840 --> 00:26:56,639 Speaker 1: g I on record with the I R S. And 488 00:26:56,640 --> 00:26:59,040 Speaker 1: the flip is true too, Right, So it might be 489 00:26:59,240 --> 00:27:02,919 Speaker 1: that economy change in ways that very much benefited you 490 00:27:02,960 --> 00:27:06,439 Speaker 1: in your income went way up. Maybe you want to 491 00:27:06,440 --> 00:27:10,400 Speaker 1: delay filing your tax return. So any stimulus is based 492 00:27:10,440 --> 00:27:14,920 Speaker 1: on depends on each person's facts and circumstances. One thing 493 00:27:14,960 --> 00:27:17,919 Speaker 1: to keep in mind, you can file an extension of 494 00:27:17,960 --> 00:27:21,880 Speaker 1: time to file your tax return to October fifteen. Everybody 495 00:27:21,920 --> 00:27:24,600 Speaker 1: is allowed to do that. One thing you're not allowed 496 00:27:24,640 --> 00:27:27,760 Speaker 1: to do is to delay the payment of any taxes due. 497 00:27:28,560 --> 00:27:30,800 Speaker 1: So if you want to extend the time to file 498 00:27:30,840 --> 00:27:34,040 Speaker 1: the tax return. Go ahead and do that, but remember 499 00:27:34,200 --> 00:27:37,399 Speaker 1: by April fifteenth, regardless of whether you file your return 500 00:27:37,560 --> 00:27:40,720 Speaker 1: or you extend your return, you gotta pay in to 501 00:27:41,000 --> 00:27:44,240 Speaker 1: Uncle Sam and your state taxing authority. So make sure 502 00:27:44,320 --> 00:27:46,639 Speaker 1: you make that payment. You know, do an estimate of 503 00:27:46,680 --> 00:27:51,000 Speaker 1: your tax your taxbill, income and your taxes and make 504 00:27:51,040 --> 00:27:53,320 Speaker 1: a sufficient payment just to make sure you're paid in 505 00:27:53,600 --> 00:27:57,200 Speaker 1: by April. Well, we've talked here about some of the specifics. 506 00:27:58,560 --> 00:28:00,360 Speaker 1: Next here, right after the break, we're going to ask 507 00:28:00,440 --> 00:28:02,960 Speaker 1: some higher level questions maybe about and you kind of 508 00:28:02,960 --> 00:28:04,439 Speaker 1: touched on this a little bit earlier and you kind 509 00:28:04,440 --> 00:28:05,800 Speaker 1: of got us thinking, but we want to talk to 510 00:28:05,840 --> 00:28:08,000 Speaker 1: you about I guess when it makes sense to pay 511 00:28:08,160 --> 00:28:10,480 Speaker 1: tax now versus you know, paying tax later. We're gonna 512 00:28:10,520 --> 00:28:13,000 Speaker 1: kind of get to some of those questions surrounding optimization 513 00:28:13,240 --> 00:28:14,719 Speaker 1: right when it comes to your taxes. So we'll get 514 00:28:14,720 --> 00:28:26,400 Speaker 1: to that right after the break. All right, we're back. 515 00:28:26,440 --> 00:28:30,040 Speaker 1: We're still talking taxes and tax planning with Sean Mulaney 516 00:28:30,320 --> 00:28:32,520 Speaker 1: and U. Sean, you did touch on this earlier, but 517 00:28:32,560 --> 00:28:33,880 Speaker 1: I want to kind of go back to it and 518 00:28:34,000 --> 00:28:37,160 Speaker 1: dive just a little bit deeper. Most people think about 519 00:28:37,160 --> 00:28:39,400 Speaker 1: taxes on a year by year basis, like what do 520 00:28:39,440 --> 00:28:41,000 Speaker 1: I owe this year? What will I own next year? 521 00:28:41,360 --> 00:28:44,120 Speaker 1: And they're not thinking about it as holistically as they 522 00:28:44,120 --> 00:28:47,680 Speaker 1: could be. Um, maybe about taxes across a multiple year 523 00:28:47,760 --> 00:28:51,080 Speaker 1: span or even potentially across their entire lifetime. Right, But 524 00:28:51,080 --> 00:28:54,880 Speaker 1: but how can we keep the our future tax liability 525 00:28:54,960 --> 00:28:59,760 Speaker 1: in mind so that we can make smart tax planning moves? Now, Joel, 526 00:28:59,800 --> 00:29:03,400 Speaker 1: let's a great question. I like to think about reducing 527 00:29:03,680 --> 00:29:07,480 Speaker 1: total lifetime taxes, and that's especially true in this new 528 00:29:07,600 --> 00:29:12,040 Speaker 1: environment for W two workers. Right, there are some deductions 529 00:29:12,080 --> 00:29:15,440 Speaker 1: you can add onto a tax return today, but for 530 00:29:15,480 --> 00:29:18,280 Speaker 1: the most part, it's not about hey, I save so 531 00:29:18,440 --> 00:29:20,920 Speaker 1: much this year because I got this great new deduction. 532 00:29:21,280 --> 00:29:24,920 Speaker 1: It's really about what can I do to reduce total 533 00:29:24,960 --> 00:29:30,239 Speaker 1: lifetime taxation? And so some of that is retirement savings planning, right, So, 534 00:29:30,320 --> 00:29:33,320 Speaker 1: whether that's a raw I R, a so called backdoor 535 00:29:33,480 --> 00:29:36,680 Speaker 1: roth IRA A UH four oh one KS four or 536 00:29:36,680 --> 00:29:39,760 Speaker 1: three B S four fifty seven's at work things like 537 00:29:40,480 --> 00:29:43,320 Speaker 1: solo four one case and self employment and those sorts 538 00:29:43,320 --> 00:29:45,280 Speaker 1: of things. I think what you want to do is 539 00:29:45,320 --> 00:29:48,800 Speaker 1: think about what are those ways that I can optimize 540 00:29:49,160 --> 00:29:52,680 Speaker 1: so that later in life when I'm getting passive income, 541 00:29:52,720 --> 00:29:57,400 Speaker 1: I'm getting distributions from retirement accounts, social Security, those sorts 542 00:29:57,400 --> 00:30:00,640 Speaker 1: of things. How can I make sure that later in 543 00:30:00,720 --> 00:30:04,280 Speaker 1: life I'm in a relatively low tax bracket and so 544 00:30:04,360 --> 00:30:07,880 Speaker 1: some of that, some of that is opportunistic planning. Right, 545 00:30:07,920 --> 00:30:10,760 Speaker 1: So maybe I have a low tax year, right, something 546 00:30:10,800 --> 00:30:14,040 Speaker 1: like happens, I get laid off. Maybe I do some 547 00:30:14,120 --> 00:30:17,440 Speaker 1: ROTH conversions in that year, right, Um, maybe I just 548 00:30:17,520 --> 00:30:20,520 Speaker 1: make sure that I'm contributing lots to h S A 549 00:30:20,680 --> 00:30:23,760 Speaker 1: S four one ks roth dior raise. It's just thinking 550 00:30:23,960 --> 00:30:27,720 Speaker 1: long term as opposed to that instant gratification of I'm 551 00:30:27,720 --> 00:30:30,240 Speaker 1: going to go search for the latest and greatest tax deduction. 552 00:30:30,560 --> 00:30:32,320 Speaker 1: I think long term planning is the best type of 553 00:30:32,400 --> 00:30:34,880 Speaker 1: tax planning. Yeah, and you know you just you mentioned 554 00:30:34,960 --> 00:30:37,520 Speaker 1: roth conversions. This is something we've talked about maybe on 555 00:30:37,560 --> 00:30:39,480 Speaker 1: the show a while ago. And obviously that's when you 556 00:30:39,640 --> 00:30:42,360 Speaker 1: convert funds from a traditional IRA to a ROTH. But 557 00:30:42,400 --> 00:30:45,080 Speaker 1: can you explain to our listeners what the advantage is 558 00:30:45,160 --> 00:30:47,920 Speaker 1: of doing that specifically, Like you said, if you had 559 00:30:47,960 --> 00:30:49,680 Speaker 1: a down year, maybe when you didn't make quite as 560 00:30:49,760 --> 00:30:53,360 Speaker 1: much money. Yeah, So two points on that one is 561 00:30:53,400 --> 00:30:57,720 Speaker 1: just a simple tax arbitrage play, right. So maybe you 562 00:30:57,720 --> 00:31:00,360 Speaker 1: had a coronavirus type year you got laid off off, 563 00:31:00,480 --> 00:31:03,360 Speaker 1: or maybe you went back to grad school, right, or 564 00:31:03,440 --> 00:31:06,440 Speaker 1: maybe you're an earlier retirement, and so when you do 565 00:31:06,520 --> 00:31:08,800 Speaker 1: your tax return, it doesn't show a whole lot of income. 566 00:31:08,840 --> 00:31:11,440 Speaker 1: Maybe it shows a little part time job, a little 567 00:31:11,440 --> 00:31:14,520 Speaker 1: interest from the bank, and it's like, oh, actually, I'm 568 00:31:14,520 --> 00:31:16,880 Speaker 1: not reporting much taxbill income at all. Here. I'm in 569 00:31:17,120 --> 00:31:20,080 Speaker 1: maybe the ten percent federal tax bracket. Where I should 570 00:31:20,120 --> 00:31:24,240 Speaker 1: do before your end is convert some old traditional retirement accounts, 571 00:31:24,560 --> 00:31:27,480 Speaker 1: usually a traditional irara to a rath I r A. 572 00:31:28,080 --> 00:31:31,600 Speaker 1: In many cases that's fully taxable, right. But the idea 573 00:31:31,800 --> 00:31:35,440 Speaker 1: is I'm gonna affirmatively get taxed in a year I'm 574 00:31:35,480 --> 00:31:38,120 Speaker 1: subject to, say a ten percent or twelve percent federal 575 00:31:38,160 --> 00:31:41,400 Speaker 1: income tax bracket, so that years down the road, when 576 00:31:41,400 --> 00:31:44,320 Speaker 1: I withdraw that, it's gonna be tax free as long 577 00:31:44,360 --> 00:31:46,320 Speaker 1: as I do it right. But let's assume I'm gonna 578 00:31:46,360 --> 00:31:48,800 Speaker 1: withdraw that years down the road, I shouldn't have any 579 00:31:48,880 --> 00:31:51,360 Speaker 1: problem as long as I'm withdrawing it after age fifty 580 00:31:51,400 --> 00:31:53,480 Speaker 1: nine and a half, and I likely may not even 581 00:31:53,560 --> 00:31:55,760 Speaker 1: have any problem if I withdraw it before age fifty 582 00:31:55,840 --> 00:31:57,480 Speaker 1: nine and a half. You gotta threw the needle a 583 00:31:57,560 --> 00:32:00,840 Speaker 1: little more there. But regard list, what I'm trying to 584 00:32:00,880 --> 00:32:04,120 Speaker 1: do is move my income into those years when I'm 585 00:32:04,160 --> 00:32:06,800 Speaker 1: on at a low tax bracket. The other piece of 586 00:32:06,800 --> 00:32:10,640 Speaker 1: this is growth. Right, So let's say I have a 587 00:32:10,680 --> 00:32:14,720 Speaker 1: half million dollars in a traditional retirement account today. Who 588 00:32:14,720 --> 00:32:16,760 Speaker 1: knows what that thing is going to grow to? Right, 589 00:32:16,880 --> 00:32:19,720 Speaker 1: Maybe that thing grows to one point five million, two 590 00:32:19,720 --> 00:32:22,840 Speaker 1: million if I live long enough. That's very possible. Wouldn't 591 00:32:22,840 --> 00:32:25,920 Speaker 1: it be nice to get that growth outside of taxable, 592 00:32:26,120 --> 00:32:29,160 Speaker 1: outside US taxation. One of the ways I do that 593 00:32:29,280 --> 00:32:33,440 Speaker 1: is through Roth conversions, So you know, there it may be, Hey, 594 00:32:33,480 --> 00:32:36,240 Speaker 1: you know, I'm affirmatively leaning into paying a lot of 595 00:32:36,280 --> 00:32:39,880 Speaker 1: tax today to get all that growth out. Now, again, 596 00:32:40,040 --> 00:32:43,320 Speaker 1: your your circumstances may vary on that, but again, getting 597 00:32:43,360 --> 00:32:47,800 Speaker 1: that growth out of taxation is also very valuable. Let's 598 00:32:47,840 --> 00:32:50,280 Speaker 1: talk about like business taxes here for a second, to 599 00:32:50,400 --> 00:32:54,520 Speaker 1: and business retirement plans specifically you mentioned earlier on in 600 00:32:54,520 --> 00:32:57,720 Speaker 1: the podcast Solar Foreign Case and set by Raise And 601 00:32:57,880 --> 00:33:00,040 Speaker 1: you know, Matt and I we've actually, you know, I 602 00:33:00,040 --> 00:33:02,360 Speaker 1: I recently left the corporate world. I had the suite 603 00:33:02,480 --> 00:33:05,200 Speaker 1: access to a Vanguard four oh one K. No longer 604 00:33:05,320 --> 00:33:08,000 Speaker 1: have that, UM, But now we're talking about what it 605 00:33:08,040 --> 00:33:10,600 Speaker 1: looks like to have our own business retirement plan. We've 606 00:33:10,600 --> 00:33:13,120 Speaker 1: batted around solo four oh one K set by RA. 607 00:33:13,480 --> 00:33:15,440 Speaker 1: So yeah, I'd love kind of your opinion, Trunks. I 608 00:33:15,440 --> 00:33:17,560 Speaker 1: think you're actually in the middle of writing a book 609 00:33:17,680 --> 00:33:21,000 Speaker 1: about solo four one ks and so yeah, how would 610 00:33:21,040 --> 00:33:25,440 Speaker 1: you suggest businesses think through which plans they which plan 611 00:33:25,520 --> 00:33:28,760 Speaker 1: the institute UM, A solo preneurs or you know, a 612 00:33:28,840 --> 00:33:31,360 Speaker 1: joint effort like Matt and I. Yes. So the first 613 00:33:31,360 --> 00:33:34,320 Speaker 1: thing you need to think about, Joel is qualification. Right, 614 00:33:35,000 --> 00:33:37,600 Speaker 1: you are able to do a solo four one K 615 00:33:38,000 --> 00:33:40,959 Speaker 1: or set by r A as long, generally speaking, as 616 00:33:41,000 --> 00:33:43,680 Speaker 1: you have no other employees and there's actually there's tax 617 00:33:43,760 --> 00:33:46,080 Speaker 1: rules on that and their plan rules on that. So 618 00:33:46,360 --> 00:33:48,960 Speaker 1: there's a tax rule in terms of what an employee is, 619 00:33:49,200 --> 00:33:51,520 Speaker 1: but it may be that the plan has a different 620 00:33:51,600 --> 00:33:53,760 Speaker 1: rule for what an employee is. I know of at 621 00:33:53,840 --> 00:33:57,520 Speaker 1: least one solo four one K. Any non spouse employees 622 00:33:57,840 --> 00:34:01,320 Speaker 1: for one minute, is an employee? Right, That's not the taxual, 623 00:34:01,360 --> 00:34:02,920 Speaker 1: that's a plan rule. So you always want to be 624 00:34:03,080 --> 00:34:06,640 Speaker 1: thinking about qualification. But let's assume you qualify for both 625 00:34:06,640 --> 00:34:08,759 Speaker 1: a set BI or A and a Solo for one K. 626 00:34:09,400 --> 00:34:13,120 Speaker 1: In such cases, I generally prefer the Solo four one K. 627 00:34:13,640 --> 00:34:16,160 Speaker 1: Why do I say that the solo for one K 628 00:34:16,320 --> 00:34:21,640 Speaker 1: has both employe and employ your contributions. The SETPI RA 629 00:34:21,840 --> 00:34:25,840 Speaker 1: only has employ your contributions. And so it's going to 630 00:34:25,960 --> 00:34:28,640 Speaker 1: be the case that you're generally able to contribute more 631 00:34:29,080 --> 00:34:31,600 Speaker 1: to a Solo four one K than you are to 632 00:34:31,680 --> 00:34:34,600 Speaker 1: a set BI or a other feature. About a solo 633 00:34:34,680 --> 00:34:37,600 Speaker 1: for one K, it has the Rath option, right, Different 634 00:34:37,640 --> 00:34:40,840 Speaker 1: plans may not offer that, but you can find solo 635 00:34:40,880 --> 00:34:43,560 Speaker 1: for one K plans that have the Wroth option. So 636 00:34:43,600 --> 00:34:47,040 Speaker 1: maybe you do a Roth employee contribution and then a 637 00:34:47,040 --> 00:34:51,000 Speaker 1: deductible employer contribution. I've blogged about this issue. There's a 638 00:34:51,000 --> 00:34:53,640 Speaker 1: blog post on my site that talks about the set 639 00:34:53,640 --> 00:34:57,000 Speaker 1: BI RA versus the solo for one K. Long story short, 640 00:34:57,120 --> 00:35:01,160 Speaker 1: If you qualify for both, you ought to very seriously 641 00:35:01,200 --> 00:35:04,280 Speaker 1: consider the Solo four one K. And here's one last point. 642 00:35:04,920 --> 00:35:08,160 Speaker 1: October is a big month for this, right If you 643 00:35:08,280 --> 00:35:11,200 Speaker 1: haven't thought about solo four one case, set BI or 644 00:35:11,280 --> 00:35:15,799 Speaker 1: a retirement plans. No later than October. Would I say, 645 00:35:15,880 --> 00:35:18,040 Speaker 1: all right, let me see how much money I've made, 646 00:35:18,600 --> 00:35:20,800 Speaker 1: and should I set up a solo four one K 647 00:35:21,040 --> 00:35:23,440 Speaker 1: for the year. If you have an S corporations, probably 648 00:35:23,440 --> 00:35:26,880 Speaker 1: earlier than October. But if you're self employed or you 649 00:35:26,880 --> 00:35:29,840 Speaker 1: have a partnership, maybe it's more like, all right in October. 650 00:35:29,880 --> 00:35:32,520 Speaker 1: I'm gonna be very intentional around this. I'm not gonna 651 00:35:32,520 --> 00:35:34,480 Speaker 1: wait to the next tax year. I'm not gonna wait 652 00:35:34,520 --> 00:35:37,080 Speaker 1: till the filing deadline. I'm gonna get out in front 653 00:35:37,120 --> 00:35:40,640 Speaker 1: of this before year end. I'm gonna make my arrangements, 654 00:35:40,719 --> 00:35:42,960 Speaker 1: make sure everything is in place so that way I'm 655 00:35:42,960 --> 00:35:45,600 Speaker 1: not scrambling before I file my tax return. So get 656 00:35:45,600 --> 00:35:48,080 Speaker 1: out in front of this stuff. Especially if you're self employed. 657 00:35:48,160 --> 00:35:51,240 Speaker 1: October is sort of a good um place or time 658 00:35:51,280 --> 00:35:54,000 Speaker 1: to do that. For an S corporation, it's probably as 659 00:35:54,040 --> 00:35:56,719 Speaker 1: early as possible in the year. Um, just a few 660 00:35:56,760 --> 00:35:59,239 Speaker 1: thoughts on that whole solo four one cave versus set 661 00:35:59,239 --> 00:36:03,960 Speaker 1: by Ray uh discussion, gotcha, Yeah, that's that's good to note. 662 00:36:04,120 --> 00:36:06,520 Speaker 1: You make sure you get ahead of this thing before 663 00:36:06,560 --> 00:36:09,799 Speaker 1: this fall. But you know, set, speaking of scrambling, you know, 664 00:36:09,840 --> 00:36:12,360 Speaker 1: folks are often kind of scrambling at the end of 665 00:36:12,360 --> 00:36:15,319 Speaker 1: the year to make tax moves, oftentimes just because we've 666 00:36:15,360 --> 00:36:18,759 Speaker 1: forgotten to to do proper tax planning throughout the year. 667 00:36:18,960 --> 00:36:21,239 Speaker 1: And so what can people start doing right now so 668 00:36:21,280 --> 00:36:24,279 Speaker 1: that they aren't freaking out calm December at the end 669 00:36:24,320 --> 00:36:26,279 Speaker 1: of the year or even come April, you know, right 670 00:36:26,320 --> 00:36:30,600 Speaker 1: before actual tax filing deadlines. A couple of things on 671 00:36:30,640 --> 00:36:33,520 Speaker 1: that one, like we talked about earlier, is get your 672 00:36:33,560 --> 00:36:37,080 Speaker 1: tax return file for okay, and let's assume you're able 673 00:36:37,120 --> 00:36:40,200 Speaker 1: to do that relatively soon. Then take a week or 674 00:36:40,239 --> 00:36:43,799 Speaker 1: two off, and then review that tax return. Where are 675 00:36:43,840 --> 00:36:46,920 Speaker 1: the weaknesses? Where is it, Oh, we took distributions from 676 00:36:46,920 --> 00:36:48,799 Speaker 1: a H S A and that sounds like that might 677 00:36:48,840 --> 00:36:51,919 Speaker 1: be tax and efficient. We've we have high capital gain 678 00:36:52,000 --> 00:36:54,560 Speaker 1: distributions or did we not make a raw IRA A 679 00:36:54,760 --> 00:36:59,040 Speaker 1: contribution for and why was that right? So I'd say 680 00:36:59,239 --> 00:37:01,840 Speaker 1: take some time off once you get your tax return filed, 681 00:37:02,320 --> 00:37:04,799 Speaker 1: then in a couple of weeks, pull it out, look 682 00:37:04,800 --> 00:37:08,479 Speaker 1: at it strategically, and then you know, I think part 683 00:37:08,520 --> 00:37:10,319 Speaker 1: of it needs to be a shift away from year 684 00:37:10,440 --> 00:37:13,359 Speaker 1: end planning to like I said, October is a great 685 00:37:13,400 --> 00:37:15,799 Speaker 1: time to do tax planning, right, Why don't we get 686 00:37:15,880 --> 00:37:18,520 Speaker 1: in front of that versus, Hey, we're gonna do this 687 00:37:18,600 --> 00:37:21,640 Speaker 1: in conjunction with the holidays, in conjunction with year end. 688 00:37:22,000 --> 00:37:24,080 Speaker 1: Let's see where we are in October, because at that 689 00:37:24,080 --> 00:37:28,239 Speaker 1: point we're gonna have of our year in and we're 690 00:37:28,280 --> 00:37:30,640 Speaker 1: gonna have a pretty good idea of what November and 691 00:37:30,640 --> 00:37:33,680 Speaker 1: December might look like. Let's do some tax planning then. 692 00:37:34,000 --> 00:37:35,960 Speaker 1: I think those would be sort of the two big things. 693 00:37:36,000 --> 00:37:39,759 Speaker 1: Look at your old tax return strategically and move year 694 00:37:39,880 --> 00:37:43,120 Speaker 1: end up to something more like October where you've got 695 00:37:43,239 --> 00:37:46,839 Speaker 1: enough information where you could do some really good tax planning. Sean, 696 00:37:46,920 --> 00:37:49,560 Speaker 1: this has been an awesome conversation. Lots of helpful and 697 00:37:49,640 --> 00:37:53,319 Speaker 1: actionable advice for our listeners. Where can work in how 698 00:37:53,320 --> 00:37:55,200 Speaker 1: the money listeners find out more about you and what're 699 00:37:55,280 --> 00:37:58,120 Speaker 1: up to. Thanks so much, Um, you can find me 700 00:37:58,320 --> 00:38:02,120 Speaker 1: my financial planning firm. Website is Moline Financial dot com. 701 00:38:02,160 --> 00:38:06,959 Speaker 1: My blog is five tax guy dot com. Awesome, well, Sean, 702 00:38:07,040 --> 00:38:08,719 Speaker 1: thanks again so much, and you know we'll put links 703 00:38:08,719 --> 00:38:11,600 Speaker 1: to both of those websites in our show notes. And yeah, man, 704 00:38:11,840 --> 00:38:14,279 Speaker 1: we really appreciate you taking the time today. Matt and 705 00:38:14,360 --> 00:38:17,200 Speaker 1: Joel It's been a tremendous honor and pleasure to be 706 00:38:17,280 --> 00:38:20,600 Speaker 1: with you today. Alright, Joel, So, taxes not the most 707 00:38:20,600 --> 00:38:23,640 Speaker 1: exciting thing to talk about, right, It's it's something that 708 00:38:23,719 --> 00:38:25,840 Speaker 1: we have to talk about. It's something and there's a 709 00:38:25,840 --> 00:38:27,319 Speaker 1: good reason for it too. You know. There's a reason 710 00:38:27,360 --> 00:38:31,319 Speaker 1: that Sean has dedicated his life to helping people when 711 00:38:31,320 --> 00:38:33,680 Speaker 1: it comes to their personal finances. When it comes to taxes, 712 00:38:33,760 --> 00:38:35,880 Speaker 1: is because of the massive impact that it has on 713 00:38:35,920 --> 00:38:38,799 Speaker 1: our money. And so even though it's not something that 714 00:38:38,880 --> 00:38:41,319 Speaker 1: we necessarily want to spend time talking about, it is 715 00:38:41,360 --> 00:38:43,399 Speaker 1: so important and I'm glad that we were able to 716 00:38:43,440 --> 00:38:45,560 Speaker 1: sit down here with Sean and talk about taxes. What 717 00:38:45,600 --> 00:38:47,960 Speaker 1: was your big takeaway from this episode? Man? All Right, 718 00:38:48,000 --> 00:38:50,120 Speaker 1: So there was certainly a lot to take away from 719 00:38:50,160 --> 00:38:53,399 Speaker 1: this episode, but I think my big takeaway was about 720 00:38:53,480 --> 00:38:56,600 Speaker 1: when you should d I y uh. Taxes are not 721 00:38:57,080 --> 00:38:59,280 Speaker 1: and that was something we covered early on in the episode. 722 00:38:59,560 --> 00:39:03,799 Speaker 1: But if you have a basic situation that remains unchanged 723 00:39:04,200 --> 00:39:07,600 Speaker 1: from last year, and it was basically your W two worker, 724 00:39:07,719 --> 00:39:10,000 Speaker 1: you have a four oh one K and and really 725 00:39:10,040 --> 00:39:13,480 Speaker 1: that's the extent of the craziness. Your financial life really 726 00:39:13,520 --> 00:39:16,040 Speaker 1: isn't all that complex, you should probably be doing your 727 00:39:16,040 --> 00:39:18,239 Speaker 1: own taxes. And you know he didn't mention this, but 728 00:39:18,280 --> 00:39:20,200 Speaker 1: in all likelihood you can and should be doing your 729 00:39:20,239 --> 00:39:23,080 Speaker 1: taxes for free, right and UM, we've talked about that before. 730 00:39:23,120 --> 00:39:24,920 Speaker 1: To I R S is free file program is one 731 00:39:24,920 --> 00:39:27,200 Speaker 1: place you can turn. Credit karma is another place to turn. 732 00:39:27,520 --> 00:39:31,320 Speaker 1: But the more complex your situation gets, the more likely 733 00:39:31,640 --> 00:39:34,120 Speaker 1: you're gonna want to hire somebody. And I feel like, 734 00:39:34,320 --> 00:39:36,880 Speaker 1: especially when we were talking about your A, G I 735 00:39:36,960 --> 00:39:39,640 Speaker 1: and stimulus payments, UM and all these kind of things, 736 00:39:39,680 --> 00:39:42,520 Speaker 1: in particular in the tax your twenty, there could be 737 00:39:42,560 --> 00:39:45,279 Speaker 1: even more reason for you to hire somebody this year 738 00:39:45,400 --> 00:39:47,920 Speaker 1: than even in previous years. There's more on the line. 739 00:39:48,160 --> 00:39:50,839 Speaker 1: So yeah, that was my big takeaway is that, you know, 740 00:39:51,040 --> 00:39:53,440 Speaker 1: if you have a simple situation, file your own taxes, 741 00:39:53,560 --> 00:39:56,480 Speaker 1: that's fine. If your situation gets complex at all, you 742 00:39:56,560 --> 00:39:59,040 Speaker 1: really probably want to start reaching out to attacks prepared 743 00:39:59,080 --> 00:40:00,640 Speaker 1: to make sure that you're doing it right, that you're 744 00:40:00,640 --> 00:40:03,600 Speaker 1: not overpaying in taxes or you know, potentially leaving money 745 00:40:03,640 --> 00:40:05,719 Speaker 1: on the table. Sure, yeah, that's right, and a quicker 746 00:40:05,760 --> 00:40:08,120 Speaker 1: mind or two for folks, stimulus payments are not taxed, 747 00:40:08,160 --> 00:40:10,279 Speaker 1: So just because you received a stimulus payment. Don't think 748 00:40:10,280 --> 00:40:13,600 Speaker 1: that that overly complicates your situation, right right? Uh one, Okay, 749 00:40:13,600 --> 00:40:15,440 Speaker 1: So my big takeaway is gonna be towards the end 750 00:40:15,480 --> 00:40:17,760 Speaker 1: of the episode, he talked about starting to prepare for 751 00:40:17,840 --> 00:40:21,359 Speaker 1: that year's tax return in October. So before the year 752 00:40:21,400 --> 00:40:24,640 Speaker 1: even ends, October hits you've had seventy of the year, 753 00:40:24,640 --> 00:40:26,799 Speaker 1: realizing that it's pretty easy to forecast what you're gonna 754 00:40:26,800 --> 00:40:28,840 Speaker 1: be making, you know, the next three months. But I 755 00:40:28,880 --> 00:40:31,399 Speaker 1: just like how that leaves margin basically, right. It leaves 756 00:40:31,440 --> 00:40:32,880 Speaker 1: time at the end of the year for you to 757 00:40:33,040 --> 00:40:37,200 Speaker 1: make any tweaks, any changes, uh that might be better made. 758 00:40:37,480 --> 00:40:40,600 Speaker 1: Uh you know that year versus waiting until that you know, 759 00:40:40,680 --> 00:40:43,719 Speaker 1: special period of time between January and April when you 760 00:40:43,719 --> 00:40:45,440 Speaker 1: can make some tweaks. You can make some changes, you 761 00:40:45,480 --> 00:40:47,839 Speaker 1: can contribute to a roth ira, right, but there are 762 00:40:47,840 --> 00:40:49,799 Speaker 1: gonna be other things that you cannot do. So I 763 00:40:49,840 --> 00:40:51,440 Speaker 1: do like the idea of starting to kind of get 764 00:40:51,480 --> 00:40:54,160 Speaker 1: wrap your head around your tax game towards the end 765 00:40:54,160 --> 00:40:56,359 Speaker 1: of the year. Uh, not waiting until the next year, 766 00:40:56,440 --> 00:40:59,000 Speaker 1: and not waiting until December fifte when you're like a 767 00:40:59,080 --> 00:41:01,279 Speaker 1: chicken with your head cut off trying to figure things out. 768 00:41:01,520 --> 00:41:03,160 Speaker 1: When you have a couple of months really to to 769 00:41:03,239 --> 00:41:05,799 Speaker 1: plan things out, you have enough information, you know, at 770 00:41:05,800 --> 00:41:07,440 Speaker 1: the ready, and you have enough runway to make the 771 00:41:07,480 --> 00:41:09,640 Speaker 1: changes that you need to make. I agree when you 772 00:41:09,680 --> 00:41:12,000 Speaker 1: said that. I was like, that's right. October, of course 773 00:41:12,120 --> 00:41:13,640 Speaker 1: is the perfect time to do tax plan. That makes 774 00:41:13,640 --> 00:41:15,439 Speaker 1: so much sense. I mean, I think most people don't 775 00:41:15,440 --> 00:41:18,799 Speaker 1: think about taxes until they start getting forms in the mail, right, 776 00:41:18,840 --> 00:41:21,000 Speaker 1: so end of January they're they're not really thinking about 777 00:41:21,000 --> 00:41:23,680 Speaker 1: taxes at all until then, but in some circumstances, by 778 00:41:23,680 --> 00:41:26,239 Speaker 1: then it can be too late. So yeah, that's something 779 00:41:26,239 --> 00:41:27,680 Speaker 1: that he mentioned that. Yeah, like you said, I was 780 00:41:27,719 --> 00:41:30,480 Speaker 1: just like, well, duh, of course that makes so much sense. 781 00:41:30,480 --> 00:41:32,719 Speaker 1: I don't know why I've never personally done that. And 782 00:41:32,840 --> 00:41:35,440 Speaker 1: I'm gonna sneak in one other takeaway, which was that 783 00:41:35,560 --> 00:41:37,440 Speaker 1: if you live in California, you can get to Hawaii 784 00:41:37,520 --> 00:41:40,000 Speaker 1: for four hundred bucks. Oh my gosh, that's pretty good. 785 00:41:40,160 --> 00:41:42,799 Speaker 1: I mean, yeah, that's that's really good considering I've never 786 00:41:42,840 --> 00:41:44,640 Speaker 1: been to Hawaii, so hearing him talk about it, I'm like, 787 00:41:44,680 --> 00:41:46,400 Speaker 1: oh man, one of these days I'm gonna make it 788 00:41:46,440 --> 00:41:47,960 Speaker 1: out there. How do money trip, let's do it. I 789 00:41:47,960 --> 00:41:49,839 Speaker 1: don't know about how do money trip? Hown't like trip 790 00:41:49,880 --> 00:41:52,640 Speaker 1: with me and my wife. I'll watch you kids. Got 791 00:41:52,640 --> 00:41:55,160 Speaker 1: a big anniversary coming up next year, so that might 792 00:41:55,160 --> 00:41:56,680 Speaker 1: be it. We'll see. Are your kids can hang out 793 00:41:56,680 --> 00:41:59,799 Speaker 1: with us? All four of them? Oh? Yeah, I got this. 794 00:42:00,000 --> 00:42:04,040 Speaker 1: Would you imagine? That? Sounds like madness? It's just like 795 00:42:04,080 --> 00:42:06,080 Speaker 1: the Brady Bunch. Man, we can do it, all right. Well, 796 00:42:06,120 --> 00:42:07,239 Speaker 1: let's get back to the beer we had on the 797 00:42:07,239 --> 00:42:08,840 Speaker 1: show too. Man. The beer that we drank on the 798 00:42:08,840 --> 00:42:12,279 Speaker 1: show today was called Peka Juice Slushy x l x L. 799 00:42:13,480 --> 00:42:16,399 Speaker 1: So honestly, um, I was saying, my neighbor Mark brought 800 00:42:16,400 --> 00:42:18,400 Speaker 1: this over yesterday and he was like, hey, yeah, here 801 00:42:18,480 --> 00:42:19,840 Speaker 1: have a couple of beers. And I was like, all right, 802 00:42:19,880 --> 00:42:21,440 Speaker 1: we'll have him on the show. And this one is 803 00:42:21,480 --> 00:42:24,359 Speaker 1: by four fifty North Brewing Company. I've never heard of. 804 00:42:24,400 --> 00:42:25,840 Speaker 1: Have you ever had any of their beers? No, but 805 00:42:25,840 --> 00:42:27,640 Speaker 1: I've read about them. I think they're like, they're famous 806 00:42:27,680 --> 00:42:31,160 Speaker 1: for their fruit slushy beers. Um. But I will say, man, 807 00:42:31,200 --> 00:42:32,920 Speaker 1: it looks like a juice box can. And I do 808 00:42:33,000 --> 00:42:35,200 Speaker 1: not like labels like this. My kids would assume they 809 00:42:35,239 --> 00:42:38,200 Speaker 1: could drink this and saw in the pantry. Um, and 810 00:42:38,239 --> 00:42:39,640 Speaker 1: I'm not down with that for your one year old 811 00:42:39,640 --> 00:42:42,719 Speaker 1: sitting there just like pointing up juice. Juice. Yeah exactly, 812 00:42:43,000 --> 00:42:45,359 Speaker 1: but um, yeah, what were your thoughts on this beer? Man? Well, 813 00:42:45,360 --> 00:42:47,239 Speaker 1: as soon as we cracked it and poured it, I 814 00:42:47,280 --> 00:42:49,200 Speaker 1: will give you credit for this tasting, you know, but 815 00:42:49,239 --> 00:42:51,080 Speaker 1: you're like, dude, this most just like a banana runt. 816 00:42:52,040 --> 00:42:54,560 Speaker 1: I couldn't agree with more. Man as we're pouring it 817 00:42:54,560 --> 00:42:57,440 Speaker 1: as I mean, the banana and it was overwhelming. That's 818 00:42:57,440 --> 00:43:00,320 Speaker 1: so it's got lemon, pineapple, and banana in the spear. 819 00:43:01,000 --> 00:43:02,879 Speaker 1: I don't think either one of us have ever had 820 00:43:03,120 --> 00:43:05,319 Speaker 1: a beer with banana in it. It's never not your 821 00:43:05,360 --> 00:43:10,120 Speaker 1: typical fruit, you know. Raspberry, sure, blueberry, yeah, cherry of course, 822 00:43:10,480 --> 00:43:12,920 Speaker 1: Banana not so much. Yeah, I don't know about that. 823 00:43:12,960 --> 00:43:14,920 Speaker 1: And so I think you never both a little hesitant 824 00:43:14,960 --> 00:43:16,960 Speaker 1: when it came to this beer. But it turns out 825 00:43:17,080 --> 00:43:19,920 Speaker 1: I like it. It definitely had some over the top 826 00:43:19,960 --> 00:43:22,920 Speaker 1: banana flavors, but the you know what I pulled out 827 00:43:22,960 --> 00:43:26,359 Speaker 1: though the lemon. The lemon was clutched, so it kind 828 00:43:26,360 --> 00:43:29,240 Speaker 1: of ended with almost like this lemon, uh, like pith, 829 00:43:29,560 --> 00:43:31,800 Speaker 1: like a lemon bitterness. It reminded me of like a 830 00:43:31,880 --> 00:43:34,359 Speaker 1: lemon meringue pie a little bit, where like you've got 831 00:43:34,640 --> 00:43:36,600 Speaker 1: the sweetness from the fruit, but it also kind of 832 00:43:36,640 --> 00:43:40,120 Speaker 1: finishes and ends with a slight sour bitterness. I think 833 00:43:40,160 --> 00:43:42,960 Speaker 1: that's a part of what makes it not taste just 834 00:43:43,000 --> 00:43:45,600 Speaker 1: like a smoothie. So yeah, but yeah, I really liked it. Man, 835 00:43:45,600 --> 00:43:47,319 Speaker 1: I'm glad, glad we could share this one on the show. 836 00:43:47,360 --> 00:43:49,000 Speaker 1: What were your thoughts. I do think the lemon and 837 00:43:49,000 --> 00:43:52,040 Speaker 1: pineapple saved it from being too banana, But but that 838 00:43:52,120 --> 00:43:53,600 Speaker 1: was the first taste I got in my mouth, and 839 00:43:53,640 --> 00:43:56,520 Speaker 1: that was the overwhelming sent too of it. It did 840 00:43:56,560 --> 00:43:59,520 Speaker 1: smell like banana runs to me, and that's my least 841 00:43:59,560 --> 00:44:04,080 Speaker 1: favorite hunt no way. Yeah, the banana on a slightly 842 00:44:04,120 --> 00:44:08,160 Speaker 1: delayed reaction there because I was finishing my beer. Well, yeah, 843 00:44:08,320 --> 00:44:10,160 Speaker 1: I love the banana runts as a kid, like I 844 00:44:10,160 --> 00:44:12,000 Speaker 1: would spend I would say this for last because I 845 00:44:12,080 --> 00:44:14,239 Speaker 1: love I love them so much. So there's there's a 846 00:44:14,239 --> 00:44:15,719 Speaker 1: reason we're best friends, because I would have like picked 847 00:44:15,760 --> 00:44:16,919 Speaker 1: them out and given them to you, and I would 848 00:44:16,920 --> 00:44:19,719 Speaker 1: have eaten the other one. I would have gladly taken them. Well, yeah, 849 00:44:19,719 --> 00:44:21,960 Speaker 1: at first it was off putting to me, but then 850 00:44:22,120 --> 00:44:23,319 Speaker 1: I kind of got used to it, and I was like, 851 00:44:23,320 --> 00:44:25,120 Speaker 1: you know what, banana in a beer? I guess because 852 00:44:25,160 --> 00:44:27,200 Speaker 1: I've never had banana in a beer before. I was like, 853 00:44:27,239 --> 00:44:29,680 Speaker 1: this is this is weird, this isn't normal. And then 854 00:44:29,880 --> 00:44:31,320 Speaker 1: the more I got into it, I was like, Okay, 855 00:44:31,360 --> 00:44:33,920 Speaker 1: I can dig it. Um. It's still probably wouldn't be 856 00:44:34,000 --> 00:44:35,800 Speaker 1: like a beer that I would grab off the shelf 857 00:44:35,800 --> 00:44:38,160 Speaker 1: and flock to, you know, on the regular basis, but 858 00:44:38,239 --> 00:44:39,560 Speaker 1: it definitely grew on me, and I think the lemon 859 00:44:39,600 --> 00:44:41,919 Speaker 1: and pineapple really salvage this one. And a big thanks 860 00:44:41,920 --> 00:44:44,600 Speaker 1: to my neighbor Mark for donating this beer to the show. Yeah, 861 00:44:44,640 --> 00:44:47,040 Speaker 1: thanks Mark and Joel. That's gonna be it for this episode. 862 00:44:47,040 --> 00:44:49,480 Speaker 1: Listeners can find our show notes up on our website 863 00:44:49,760 --> 00:44:52,680 Speaker 1: at how to money dot com. No doubt, happy tax preparing. 864 00:44:52,719 --> 00:44:55,720 Speaker 1: You got one month left and uh, clocks sticking, clock sticking. 865 00:44:56,120 --> 00:44:58,960 Speaker 1: So that's it for now until next time, Best friends out, 866 00:44:59,040 --> 00:45:02,160 Speaker 1: Best of friends out. M