Maximize the home Office deduction | Mark J Kohler LIVE |

everybody to this week's live facebook youtube instagram broadcast my name is mark kohler cpa attorney and i try to keep tax strategies understandable practical and real where i save you money sometimes it's easier to make money by saving it than going out and working so hard to earn it so my goal today is to save you some taxes and we're going to talk about the home office deduction so after that it's q a talk about anything you would like uh maybe the nfl playoffs i can give you my predictions no that's not worth your time but we can go into the q a that you might find helpful for you in your small business building your american dream so the home office deduction now this is a tricky one so we're going to go to the white board corey how are we looking on that that little flickering is just my monitor it's we're okay on the broadcast okay all right so we've got our whiteboard here so let's talk about the home office deduction how's the volume are we okay should i get closer oh okay i gotta come in a little lower okay i see that home office deduction all right now here's the plan with this the first thing we have to determine is what area in your home can qualify now the movie i'd love for this and this is so cool is the movie the accountant and uh oh my gosh i forgot his name at the moment corey ben affleck my hero i can't believe i've got a lot in my mind trying to organize this presentation for all of you um and do you want to put instagram a little closer i feel bad that they're catching my um side view here but um here's the deal in the movie the accountant with ben affleck in the first 15 minutes he sits down with this little couple and talks about the home office deduction i tried to talk to my director and producer into showing that clip today but we'd probably get blackballed by uh or blacklisted one of the two on youtube or facebook or instagram so i can't just show that without a copyright infringement but if you haven't seen the movie the accountant i think you should go see it and that first 15 minutes ben affleck the writers did a great job of nailing the simplified option now exclusive use of the home we're going to get to that was maybe a little push in the movie but we'll see all right so does this space qualify that is question number one does the space qualify now let's go through what is a two-part test first rule is this is right out of the code and this has been litigated all the way to the supreme court countless times and irs code sections revenue procs uh tax memorandum tax court memorandums this is good stuff and i'm bringing you the most current law on this so the first test is it has to be a regular space and regularly used and exclusively used for your business now this may seem difficult because some of you are like hold it i go into my home office and i return facebook messages in the middle of the night eating cereal in my underwear i didn't hear about that i don't want to visualize that neither does the irs so i want you to feel ethically confident in saying this space and we're going to come to the dollar amounts and how you figure it out but how much of this space do i use exclusively for my home office and there's a rule we're going to come to here in just a moment on the one foot office space and why we would want that but let's just say you can find that regular space in your home that's exclusively used for your business that's the first test garages can be used for storing things inside the walls of your home or you can have a storage shed that you use for equipment supplies for your business when i was going through college i had a janitorial business and i had this separate space that we put all of our tools and supplies to go out and clean buildings and restaurants now let's think about this let's step back for a minute too with the covid pandemic do you know before covid about three percent of america's workforce worked from home for either their own business or for companies now that estimate is over 40 percent now once all the pandemic concerns settle down the vaccine is out how much is that workforce is going to go back to the corporate office i don't know i think we're going to see a pretty good uh number of people staying at home and giving up on the main street office space that they may not need so this is an important topic and all of you that have a side hustle or a side gig or even drive for uber i want you to have a home office okay very very important so let me get the second rule out there and then we'll beat this up the second rule that you have to meet you got to do both is it's your principal place of business now for some of you that might be driving uber you'd be like well i don't have an office space downtown so that's easy check that's my principle place of business i get on my computer i do my bookkeeping i plan my day out for my business in this exclusive area for your small business but what about those of you that do have an office maybe you're a realtor and you share office space at the brokerage or maybe you're a dentist or a doctor or an engineer a plumber electrician a consultant and there's an office space that you can go to during the day but you also have the home office now this is where court cases in the past would when the irs would win in these court cases because the principal place of business was the main street office and so they said you can't have a home office well the ways and means committee and we could read it and all this and congress changed the law for this very issue and said hold it if you are going home to do administrative duties administrative office duties and i've got an article on this and it's more in depth but bookkeeping phone calls scheduling emails something like that you're able to go home and do those and call your home office the administrative office now one of the key rules is that these are tasks you don't do at the other office so let's say you meet your clients customers patients whoever at your principal place may be down on main street but you come home to return emails and da da da da that is your administrative office you now check off number number two or b in this example of the two tests to show that your office qualifies now on this exclusive thing i don't want you to stress out too much about this and make an important point two of them saying you're like mark it's not worth taking the home office deduction it's a red flag bull crap i want all my clients taking the home office deduction so don't stress out going it's not worth it because there's an additional side benefit many of you may not realize once you have a home office wherever you go for your business is now not commuting that's a business errand you're running from your home office for example let's say you're a realtor and you go to the office every day and you've never taken a home office so when you go to the brokerage office that's a commute you can't write that off because you're going from your personal home to the office down on main street well now that you have a home office oh now that's not commuting i'm just going to my other office let's say i did some math with this for fun let's say in that little example your home office to the main street office is 15 miles so 15 miles to get there and that's probably average around the country if not many of you have bigger commutes or shorter but then you got to go to the other office and come back so that's times two you've got 30 miles a day well what's the mileage deduction this year in 2021 it's 57 and a half cents per mile you multiply that out that's seven dollars and twenty seventeen dollars and twenty five cents right off every day so by converting your home space some home space and i'm gonna come to the one foot home office just to pass the irs test once you can get this home office deduction now all of these miles that would have been commuting to the other office are now business miles 17. and 25 cents a day times five days a week is 86 and 25 cents times 52 weeks a year that is 4 485 dollar write-off boom so with kovid working from home and taking the home office deduction when i do go to the other office on occasion maybe daily now i've got a pretty substantial tax write-off just for auto even if the home office deduction is smaller than you'd hope okay now here let's go back to this exclusive issue albert mills in a case back in 1983 had an apartment that was 485 square feet that's not too big you pace off the map that's like a new york city apartment flat right how could he have a exclusive area for his home office he was a rental property manager so in this case he said i had one cupboard that i dedicated that i had all my tools and supplies in or my books and my computer and i'd open up the cupboard and i'd sit down and work there with a small home de minimis rule if you have a smaller home and this applies to all homes frankly they said walking through the space does not ruin the exclusivity but if you say this is my office space and you go in there and do personal things like return facebook or whatever and facebook and social media to me is business but for some reason you're in that space and it's obviously personal like the kitchen table that's not going to work for the exclusivity test but walking through the area is okay so what albert mills did and this is a recommendation that many accountants will use is they'll say create a cupboard that you can close and it holds all of your business material it's exclusively used for your business it may be three feet but you now have a home office walking past it is okay now if you open up the cupboard and sit down and work well where you're sitting down doesn't count because that's that's a walking area and it's not exclusively used for your business so that rule actually opens the door to having the home office so i can back door in the auto deduction now guys i know this may sound a little anal and all this craziness but i think this is really important and fun because taxes are the number one cost in a small business owner's life you may have rent you may have employees and all that but the bottom line you're taking paying taxes every year year in and year out if i can cough up an extra four five ten thousand dollars in a home office and auto deduction and you're in a 25 tax bracket i just saved you 2 500 that's a cruise in the caribbean um so this is worth taking care of now so we've got our regular used principal place of off business and i'm going to use the administrative office so let's say all of you are like mark i got it i got a home office now maybe it's two feet maybe it's 500 feet but now what's the write-off for the home office okay so let's do part two here part two is or question two is how much can i write off now i've already gotten auto in the back door think of the home office back door get it i came in the back door of the home to get the auto right off okay how much can i write off now this is fun let's just go through this and i apolo now this is a chapter in my book do i have the book right here okay now for those of you here today i'm gonna give away probably two or three books today can we do that so so what happens if you guys share this message uh i'm sorry share this broadcast out on social media i will uh randomly choose two to three winners and is there any way to announce it during this broadcast can we figure that out okay but we'll try but i want to announce some winners today maybe we can randomly choose those based on shares and i'm going to give away the tax and legal playbook i have two or three pages in here just dedicated to home office whole section on paying your kids why do i need an llc why do i need an s corp should i have a trust how do i write off my auto all these freaking awesome strategies and i make it so you actually want to read it and it's an audio book and kindle all right now how much can i write off now this is important there's three ways for those of you that are an s corp an s corp doesn't have a home you're an employee of your s corp you have the home so we're going to go through that in just a moment the next way is the regular method which has been around for 50 years so the regular method we're going to talk about that and then the simplified method now for those of you where i'm slowly losing you and you don't want to listen anymore i'm going to start with the simplified method just so that's out there and then you can go i'm gonna go to the bathroom and make a sandwich and come back and listen to mark do open q a but the simplified method is this you can write off up to five dollars per foot of home office space up to five dollars a foot up to 300 feet so that's approximately a 15 by 20 foot space my studio right here is probably just right here my table to the wall in here is probably 15 by 20 feet that's a home office of 300 square feet so you get to take 1500 as a maximum write-off done that's it there's no other calculations i don't care what your rent is i don't care what your utilities are i don't care what the other square footage of the house is as long as you can say again that 300 square feet is exclusively used for my business and i'm using it as administrative office or it's my principal place of business remember those two rules a and b and they're in my book and you can study up more in my article boom you're done now here's where this is nice everybody now you know i do the trifecta if any of you have watched my videos before please get over to youtube you'll love them over here okay i want to make sure everybody can see this we have our trust and here's many of you have the side hustle and this is your little sole proprietorship so you might have a sole prop and some of you may have converted to an llc or graduated to an s corp so you can have the side hustle here and then the full-time small business is when you start making 30 or 40 grand a year we're going to get you over to the s corp other videos on that now over here we're going to have your iras your roth your 401 k all these goodies and then in this bucket is going to be your rental property and i like all my clients to consider trying to buy a little rental property every year once you're out of debt you own your own home if possible and then you're in a good area for that we're going to buy a rental property well look at this everybody you can take the home office deduction in your rental property business that's a side hustle owning rental property is a side hustle can everybody see that corey are we doing okay okay so there's our side hustle llc home office deduction now for those of you that are like well i have a side hustle over here i'm driving uber i'm selling crap on ebay um i'm doing uh grubhub or uh doordash okay that's cool you're selling uh consulting services on um upwork okay you can do the home office here you could actually take that fifteen hundred dollars remember the simplified it's up to fifteen hundred you could do seven hundred and fifty here and seven hundred and fifty here but you can't double dip i can't take the same space and write off 1500 here in 1500 here but why not take 750 in each one now it's lower risk boom boo to bang and i'm getting auto deductions every time i take off from the home to go look at my rental to go meet with customers clients or go to my other office boom pen drop all right now that's the simplified method all my clients at least take the simplified method i want all my clients to at least have a cupboard that's dedicated to their business supplies and materials and they can open it up and work as a home office but that cupboard is exclusive to their home office that's it you're in all my clients at least do this if your accountant isn't freaking doing this you've got a bad accountant talk to them say watch mark kohler's video on this all right now the regular method this is where things go back to probably what you thought generally existed and that is you take the square footage of your home okay let's say your home is 2 000 square feet okay then you take the square footage of your home office now that could be a portion of the garage it could be one room it could be part of one room part of another room and a part of the garage but let's say the home office square feet adds up to home office adds up to 500 so you've got 500 square feet of home office so you do the math 500 divided by 2 000 gives you 25 of the home is now home office so you need that percentage that's the first thing you do now with that 25 you multiply it by your mortgage interest if you're buying the home okay let's let me clean this up a little bit so you people can actually see this i'm using bad handwriting here i want to kind of get rid of this here so i have more space all right so let's say i go back and i take this home office and i multiply 25 percent times the mortgage interest the rent the utilities the property taxes those are the biggies you might have made you know lawn maintenance hoa fees all those things you add up all those and multiply it by 25 plus you get depreciation on a part of the home now i know some of you are freaking out mark when i sell a home i got depreciation recapture and i've got to gain i can get you out of those we're going to come to that but we're going to get depreciation and we're going to get the home office deduction and this freaking rocks now i've had clients in orange county california they're writing off a thousand dollars or more a month in home office or i've had clients in maybe a midwest little farm house and they're writing off 200 a month in home office it depends you're going to take a percentage of this times these expenses and if you rent that's okay you don't have to own the home you're going to take a percentage of that plus utilities hoa property tax depreciation blah blah blah okay now once we've got this number that's our home office write-off and if we're here we're going to take this home office right off in the llc or the sole proprietor or over in our site hustle for real estate we're not going to do that in the s corp i'm still coming back to that now let's do some math here this is where everybody and i get a little hate mail people go mark the home office is terrible because when you go to sell the home you're going to have recapture of the depreciation and you got to pay gain on that nope this is where revenue rev proc 20 2005-14 comes in and where i try to be a good cpa do the research and give you some ways out so let's say you bought this home for 200 grand and five years from now you go to sell it okay and it's now worth 300 grand all right so purchase price 200 sales price 300. you had a gain of 200 grand now when you have sell your own personal home and you've lived in it two out of five years you get code section 121 code section 121 says that if you're single i can exclude 250 000 and gain boom pay no tax if you're married 500 000 boom and you can do this every two years the rest of your freaking life as long as you live in it two years any gain up to 250 if you're single 500 if you're married done no tax but mark this little part here that 25 that was home office and i depreciated it and by calling it my home office that's a commercial building inside my own home so when i go to sell the home oh oh did i say gain of 200. boy i'm doing some of you are freaking out going mark your math is terrible i'm trying to explain my point here hopefully some of you laugh there and go mark uh you're we know you're a human okay so 300 minus 200 is a hundred thousand dollar game some of you were freaking out going mark is an idiot okay hundred thousand dollar gain well 25 of the house was commercial so what does that mean oh of this hundred thousand dollar gain 25 000 of it was business it's commercial so now i've got to pay capital gain on that well that's not good oh oh cap gain well this is where and i'll write it up there for you accountants out there rev proc 2005-14 says you can apply any of this gain under 121 that's excluded you can apply it to any home office gain so i get to use up to 250 or 500 and i can include this in the exclusion i pay no capital gain you want your accountant to reference reproc 2005-14 if there's any audit issues or when you report that so there's no gain well mark i did depreciation though so let's go make that red you know this is red very important we did depreciation for five years on this little home office and you got an extra thousand dollars a year write off let's say it's probably more than that but let's just say it's a thousand dollars a year times five that means you had five thousand dollars of depreciation and you got to recapture that mark 121 doesn't do us any good on that well this is where code section 1031 comes in so irc 1031 says if you go out and buy a new home of equal or greater value so you're going to go out and buy a different home and you're going to go in here and get this new home now you've got depreciation recapture that rolls into the new home and frankly the way that you would get by on this is as long as you buy a new home where the new section of the home is of equal or greater value allocated to this home office so think about it when i sold the home the home was three hundred thousand what's 25 percent of that let's just pull out our nifty nifty calculator here so i don't jack that up some of you are already typing it in the chat i know but 0.25 times 300 000 equals 75 000. so the home office was worth 75 000. so if the new home office in the new house i go get is 75 000 or more then i don't pay any tax on the depreciation recapture that's code section 1031. so if we do it right we've rarely had a client play anytime had a client pay any tax on this deal now let me point out something some of you may go mark this ain't worth it five thousand dollars in write offs it's not it's no good hold it what if i told you the irs would give you a thousand dollar write-off every year and you could use the tax savings any way you wanted but in five years you've got to give me the tax savings back well hold it so you're gonna give me an interest-free loan from the irs where i can use that tax savings any way i want for five years and then i just have to give it back in five years that's all no penalties no interest on the money sounds like a pretty good deal to me that's depreciation recapture it's not the end of the world people take the freaking write-off if the irs is going to give you a write-off take it give it back if you have to or you use your accountant that knows what the freak they're doing to get you out of it so that's the get out of jail free card oh i don't want to say get out of jail right but there you go okay now let's go over and now talk about finally the last piece of this is let's talk about the s corp well the s corp like i've said before can't have a home only an employee can have a home a person so what we do here and there's all sorts of methods that are out there you can rent the home to your s corp don't like it now you have rental income um a c corp has a different method which i hate c corps for small business owners the best method tried and trued amongst the cpas i really look up to around the country is the home office reimbursement and so what you do is you calculate what the home office expense would have been under form 8829 because when you go to do the regular method you're going to fill out a form called 8829 and you're going to attach it to your tax return but when you do the s corp there's no form like this but it's good to fill out fill out the form and figure out what would my home office deduction be if i would have done the regular method and then that's what the s corp reimburses you now what's cool is and let's go over here to our picture here in your s corp strategy let's make this blue what happens here is the s corp comes down here and gives you a reimbursement let's say it's 400 a month so you get 400 a month on the books you could have the s corp really give you 400 i don't care it could be a journal entry or it could be an actual 400 check but you get 400 every month out of your s corp tax free because it's just a reimbursement for you letting the corporation use your home office the s corp gets a write-off of 400 and you get 400 tax-free pretty cool multiply this out that's 4 800 a year of tax free income generated by your small business okay here's the catch what do i have to do to qualify for the s corp home office reimbursement well you still have to prove that it's exclusively used as a home office that area and that it's your principal place of business or you're using the administrative office exception so you still always got to do remember at the very top we talked about these you always got to meet those two exclusive regular principal place and the administrative office is your way out of option two or issue two okay so we go back here what do i have to do to make the s corp thing work it's very easy and i wrote it down here for you you gotta meet those two tests so i'm gonna put the two two normal tests you gotta do anyway you got to meet both of them okay you have to do an expense report and turn it into the corporation and that's if you're the owner of course you're going to do a report and put it in your corporate book and give it to your accountant so you have to do an expense report at the end of the year and substantiate what those expenses would have really been and this is where i like um that form 8829 because it's going to tell you kind of what that write-off should be and here's the big one you have to have an accountable plan now guys you're gonna love this what an accountable plan means is that in your minutes for your s corp whenever you have an s corp you've got bylaws you've got a corporate book you've got stock certificates you've got minutes and this is the same thing for you of you that have an llc taxed as an s corp you've got all this crap and if some of you have one sheet of paper from a legal zoom and legal zoom's great but if you just get one sheet of paper you don't have a full corporation you got to be doing your minutes every freaking year or your corporation is not going to give you protection in an audit or a lawsuit so in our company maintenance program that we do in our law firm we've done it for 10 plus years is every year we give you the questions to go have your board meeting in cancun or hawaii or detroit michigan or on the mountain skiing in denver i don't care you have your board meeting and in the board meeting minutes you include accountable plan language and it says i'm going to reimburse auto for my employee i'm going to do home office i'm going to do health care and all these little things should be in your minutes our company maintenance plan includes all that you don't even have to go buy it or set it up or worry about it it's already in there our company maintenance plan is 150 bucks a year now i you can do it anywhere you want this is not an infomercial but i'm just saying you got to do your minutes every year anyway when we include the accountable plan in your s corp minutes you turn in the report done you just substantiated the write-off irs is happy you're getting better asset protection for your s-corp finished completed so by the way in the month right now of january mid-january to mid-february in our law firm the company maintenance service is a hundred bucks it's our annual special we do it every january to help people out now if you're already on our plan it's a hundred dollars for any new company you put on the plan so it's a hundred bucks and if you want to sign up for it it's kkos lawyers.com just get over there the special you'll see a banner right there and sign up and guess what that'll take care of this home office accountable plan right there okay well my friends thanks for letting me explain all that that's the home office deduction it's a big deal with covet and more and more people working from home i hope that was helpful i've got articles and little youtube vids on that as well study up on it use it make sure your account is taking time taking advantage of it you're going to love it now it's time for q a i'm all yours now i'm going to start with facebook for just a moment oh look at all these people shared shared shared we got people that want to win some books should i give away more i should maybe i'll give away all my books one of each okay oh and the new calendar yeah the new calendar i'll give away a new calendar too all right everybody hang tight for a minute let's do some q a and then i'll give away some books and i want to say thanks to all of you for being here on instagram youtube uh and facebook i love the american dream i love small business it's hard i was up late last night working two but i love controlling my own destiny so i hope many of you find this helpful thanks so much all right let's look at the uh cameron's like backdooring it it does sound a little anal that was a good pun that's raring too yep we're being a little now in the accounting world anal means that you're being very technical and careful uh cameron liked to use that as a pun i appreciate that this is a pg show so i better leave that alone mike says awesome never had heard about this i love it claudia can you deduct home office used for several businesses in percentages according to the percentage of income each business brings in claudia here's the thing let's say again you have multiple businesses one two three i have clients with two or three or four businesses you get one home office deduction whatever that dollar amount is so claudia let's say you come up with a four thousand dollar home office deduction that's what you would be entitled to well write off 500 here 500 here a thousand here a thousand here and a thousand here you just spread it out now claudia says well should i spread it out based on the income of each company or the number of employee you freaking figure out the way you want to do it just spread it out and find a good reason for it now i'm going to come to instagram questions in a minute and i'm going to do a 60 second rapid fire answer for each instagram question uh sharia said loving this thank you so much anthony says i just bought the tax legal playbook thank you so much you're going to love it portia says she shared it anthony but i do not have your other ones hopefully anthony you're going to win today brazilian food shared share it share it keep going okay uh jan says can i write off buying your book abso freaking lutely and that is a tax term absolute freaking lutely you can look it up in the code um trey josh says uh tracy share da da da da da great information you guys are so kind let's look at a question here okay daniel says will you be doing a revised edition for your book with the new administration yes this was second edition after uh trump and the gop passed the tax cuts and jobs act joe biden and the new congress which is democrat controlled is going to do a new tax bill this year so stay tuned in fact many of you please if you haven't signed up for my newsletter it's free i've been doing it for 12 years tonight i've got to get it out um i've been working on an article all day for it but the newsletter you can sign up for it at mark j kohler.com and uh as joe biden and his team passes new legislation you'll get answers that you can understand there first uh mike says the gain is a hundred i know i know these are old comments i already caught my hundred thousand uh sanders says i have three restaurants each under its own s corp also i have an llc rental business can i use the simplified method to deduct home office sure but the problem is sandra you can only take the home office once so you're gonna spread it out over all your businesses by the way if you have three us three restaurants under its own s corp i would recommend you look at the q sub strategy what i like for that is you have one s corp that's the parent and you can have three q subs you only have to file one tax return and it saved you a ton in administrative cost but this is 1s 1s 1s and these are called q subs look into it get a consult with one of the attorneys in my office or talk to your own accountant or lawyer but this could save you a ton of money and make things more efficient uh inc 121 applies to residential housing not apartment or commercial housing five or more units if you live in it orson says irc 121 applies only to residential housing not apartment or commercial housing five or more units let me say this orson okay everybody this is important let's say you have a four plex okay and you've got four doors and you bought this four plex for 400 grand your purchase price and let's say it goes up in value to 600 grand and now you're gonna sell it i don't care how many units it is if you're the owner and this is you have to be the owner you can't i i get it you've got to think through this you can't do a 121 on an apartment because you're just a tenant but if you're the owner of this and this is your home but all the rest are rentals and and um when you go to sell it 25 of this will get the 121 exclusion um i don't care if this is four units or 40 units whatever your home is if you're the owner you can carve that out as 121. everything else is going to be commercial or a rental sale capital gain normal garbage so that's my opinion hope that you're okay with that okay i'm going to do two more questions and we're coming to instagram can i hire my husband who has a general contractor license to work on our home improvement yes but scott and sissary by hiring your husband to work on your home you don't get a write-off when you pay someone to do home improvements on your own personal house because it's just personal right there's no write-off there but what you did do is create income for your husband now if the goal is to take that income and fund a 401k i might go along with it but if your husband already has income as a contractor and you're just paying them all you're doing is creating more taxable income just tell your husband honey i'll take care of it it's the honey-do list come work on her house uh don't pay him in money do something else that he loves cook him a nice dinner all right james i'm a new startup and need a great cpa and tax lawyer how much do you guys cost for the year james here's what i say first of all and thank you if you're a startup and money's tight the first thing is get the books get my videos on my website listen to my podcast every week come out to the open forum every thursday at four learn what you sometimes you don't even know what you don't know start soaking it up now if you want us to prepare your tax return it could range anywhere from 400 to 1200 we have bookkeeping services we might set up an entity for you call my office and and figure out what you need and then call the office and they can give you prices i've got a lot of prices on our website but james just don't go say oh i'm going to hire a tax player just learn a bunch of stuff first i've got a lot of free content out there and you may end up using a local cpa but just making sure they do what i ask um dave says i've been watching you for years of love oh you oh my gosh i didn't even see that james says he's already been watching me for years freaking james call if any of you need your tax return prep for last year you can call my office and talk to maxwell rogers we turn people away soon we close the door for 2020 we get too busy and i'm already sick and tired of making promises to people and not turning it around quick enough and they get frustrated so if you want to get in the door for last year 2020 prep call done 435-865-5866 to the law firm and i'd probably say oh my gosh talk to drew love drew or you could talk to rosa lee or kika you could call any of the staff there to help schedule and you can call 435-586-9366 now most of us are all in the same building but we have two different numbers for the accounting firm law firm all right now it is time for 60 second answers to instagram questions corey is going to put up a timer and tell me how long i've got and i've got the questions here um and it's tricky so be patient with me as i try to answer these questions in 60 seconds or less all right are we ready ali okay this question is from dr john jonathan okay i think he's asked some questions before uh mom is retired has a traditional ira can she convert to a roth only has social security income absolutely uh anybody at any age can convert to a roth do the math find out um how much the tax bill will be and a lot of times i do chunking maybe only convert 10 000 a year if she goes into a higher bracket don't convert as much so you want to find the sweet spot for the conversion converting it to a roth is great and dr i'm going to tell you you're going to inherit mom's roth if she doesn't use it an inherited roth is awesome so even if you have to help mom pay the tax do it i want my mom converting to a roth and inherit it because i can play with that roth immediately and don't have to wait till i'm 59 and a half that was that was less than 60 seconds right okay all right next question get ready with the timer does a rental property owner get the second round of ppp that's the payroll protection program coveted relief ready go buy and hold guru the answer is no a rental property owner does not get the ppp now some people have said well pay yourself a management fee create some self-employment income and then you can calculate the ppp off that yeah but you just created self-employment tax and by the time you jump through all those hoops the ppp ain't worth it i mean it don't do it i've ran the math every which way doesn't work but here what here's what you rental property owners can get you can get the rental assistance that they're offering tenants that are behind on their rent now i've had clients as landlords literally get the paperwork go over to the rental property and have the tenant fill it out 10 seconds left submit it and help the tenant get the reimbursement so you can get paid back rent so look at the landlord rental assistance program google it boom 60 seconds all right maria says i opened an llc in delaware the construction work happens in pennsylvania and i live in california where do i file well maria i feel bad because at our law firm we would have never recommended that some bozo recommended delaware for a small business owner setting up in delaware nevada before you go out and start a small business in pennsylvania when you live in california is a scam it's worthless and i don't care anybody wants to go head-to-head with me on that i'll debate it all day long what i would do maria is i would convert your delaware llc to a pennsylvania llc it's called articles of domestication called susan compy in my office get rid of the delaware garbage you don't need it now delaware's great but not in your situation um then you're gonna because you're in pennsylvania doing the work you're gonna have to file taxes in pennsylvania on the money you earn in pennsylvania you want your llc registered in pennsylvania and domesticate the delaware one with california you're gonna have if you're a manager of the llc you're gonna have to at least pay the minimum franchise tax of eight hundred dollars i've got articles on that by the way get a consult with one of the attorneys in my office and let's clean it up by the time you pay them for an hour you're going to save that alone in the first year all right bonanno bonnino and maybe this is appropriate because we're talking about puerto rico he says or she says thoughts on the tax incentives like the ones puerto rico has well people start if you didn't know puerto rico has some amazing tax incentives you could pay your tax rates on everything you earn as low as three or four percent exemptions for property tax sales tax all sorts of goodies these are called proposition or article um 20 and 21. sorry it's act 20 and 22 act 20 and 22. just google puerto rico tax strategies there's several companies that provide hand-holding and walk you through the rules and get you qualified at our office we do not do that we have not got a puerto rico strategy that we're implementing for clients but it's legit it works ready everybody for the bad news if you call it bad news you gotta move to puerto rico you are not getting puerto rico tax benefits without moving your butt to puerto rico now i was just there for christmas i loved it puerto rico food people that the climate is wonderful but plan on moving to puerto rico if you want to save taxes in puerto rico all right there's our instagram questions was that good ali boom okay how much longer for some other questions okay i want to give away 10 minutes but i want to give away three books now and then i'll give away my calendar and another book after that so corey i need female and male names of those that shared and you tell me who they are first what your cpas are telling you the book that will be made into a movie literally i already have a screenwriter that's working on that tyler penrod tyler penrod you are the winner tyler now you have to message i'm going to tell you right now i'm going to write it right here do you want him to go to your email or corey's uh my email is good allison mark j kohler.com now she's going to know your names you people can't cheat and say alice and i won and you really didn't so the tyler penrod was that it you're travis yes tyler okay write those down for alison you're going to email allison at mark j kohler tyler your mailing information we'll get uh we'll get them taken care of um next book i'm gonna give away a tax and legal playbook i love this it's wonderful 38 34 36 game changing tax strategies who's the winner mary anne jones mary ann jones i have a feeling corey's looking for a pen here you go corey marianne jones tax on legal playbook email alison mark j kohler.com to get your mailing information now i'm gonna save the 99 tax and legal workbook that's amazing to build your business 60 videos you can start watching immediately downloadable business plan you can get it on amazon right now or my website i'm going to save that for last let and i'm going to save the calendar for last you're going to love this i'm going to give away a financial freedom the business owner's guide to financial freedom when you're making money in your business this is the book to read so i this was a huge project because so many clients came to us and said mark i'm saving taxes i'm making money what do i do next the book co-authored by randy lupke a certified financial advisor and more designations behind his name than i have the winner corey rhonda will walk rhonda willock you are the winner and i saw she shared the podcast thank you rhonda so email allison mark j kohler dot com now for those of you that can stick around of just 10 more minutes i will give away the calendar and the workbook all right q a don't use the pad for a second don't use the pad for a minute okay i'm just gonna have to answer questions without a whiteboard uh ally can you scroll me some questions here i don't see any oh i've got one here that you printed out before uh candace said sold a property and made 600 grand in profit to try and get rid of some of the capital gains since another home is not being purchased can an rv be a deduction to try and get that capital gains tax down yes absolutely rvs can be bonus depreciated and 100 written off in the year you put them into service as a rental unit so if you want to get an rv and park it in an rv um campground and rent it out nightly weekly whatever or put it in a pool and rent it out that rv is 100 right off what i'm worried about candace is that your profit probably came last year in 2020 and if you didn't buy the rv last year or put it in service last year as a rental you might be hosed for last year's taxes so if you made the 600 grand in this year in 2021 i got 12 months to freaking plan so let's figure it out judy said i have a sole proprietorship with his own bank account it's doing business i'm a realtor i do home care i also have an llc taxed as an s corp with its own bank account doing business as a consultant i would like to have all businesses in my llc for simplicity in multiple levels and oa and blah blah blah however i read as a realtor as a professional corporate in california i should not be using an llc as their way to put my realtor commissions in the llcs corp i am no longer doing the home care uh the answer is judy yes everybody out there what i'd like to do is i want you to have one s corp in your life that's all i have and judy hear me out i have my left side right side here's my s corp here's my llc's with reynolds and here's my ira very common now i've got a couple more llc's here and whatever but the point is it's the same concept my trust owns my llc my llc owns my rentals the s corp does business i get a w-2 and i get a draw in k1 we love this this is a very powerful strategy every dentist doctor engineer accountant lawyer realtor broker plumber electrician we're an s-corp this is the way to do it and i prove it in my books and everywhere i go now judy has multiple businesses i still want her to have one s corp now it could be an llc taxed as an s corp but don't tell me it's a freaking llc call it an s corp it's an s corp you're going to confuse your advisors if you call it an llc could you run your realtor business into that absolutely could you run your home care business consulting speaking writing selling jeans on ebay hair and nails drywall all of it can go in your s corp now if your broker in california or your broker in missouri or your broker in new jersey does not want to issue a 1099 to your s corp because they've got to stick up you know what or the state board doesn't like it or whatever the irs doesn't care i don't care if you get a 1099 to you personally i'm gonna move it into the s corp it's allowed talk to your accountant this is a tax strategy now i know you've got to keep the division of real estate happy most real brokers are gonna 1099 the s corp or llc just tell them give them the ein but judy do not stress about this if there's a will there's a way and i've been helping realtors for 20 freaking years so if your accountant is putting up a stink you got the wrong accountant there's a way to back door this 1099 in and in my s corp it owns a law firm it owns an accounting firm it owns a real estate deal it owns this so i've got multiple llc's also owned by my s corp i mark kohler only have one s corp in my life mark j kohler inc you can look it up it's registered in three or four states it's out there but you're not going to find my llc's that own my rentals i've hidden those for asset protection and privacy you don't even know what the name of my trust is let that sink in everybody judy and me i want to market my escort i want to market my businesses but these are shelves there's no real hard assets there they're over here in my llc's that are hidden for asset protection and privacy that's the next level that's what my tax attorneys are going to do on the phone with you in a very affordable manner all right uh let's go back up here question mike says i own a small hotel i'm helping a customer at work oh i was injured and broke my collarbone i'm going through physical therapy for the next four months my health insurance is high deductible um so can i write off my physical therapy from my taxes since it happened at work and i'm not covered under workers comp is there a creative way of doing it mike yes read my book tax legal playbook and the chapter on healthcare i'm going to just cut to the chase you're going to use an hra the fact that it happened at work is irrelevant doesn't matter uh the fact that you helped out a customer and hurt yourself doesn't matter you're going to use what's called an hra study up on that you can use the hsa as well because you have a high deductible plan so i'm going to use a combination of the hsa and the hra and mike my goal would to make sure all of your medical expenses including insurance co-pays and deductibles prescription drugs are all a write-off in 2021. you can do it mike uh david says i am look at david so handsome look at that beard a beautiful woman with him david i'm impressed very good i'm a realtor with a home office space about 400 square feet my wife has another home office 400 square feet no s corp last year but i'll be opening one this year which method is best for us okay so david and wife again we start with our trifecta the trust is going to ultimately own his s corp now david what i want is you and your wife to own the s corp together so that way you both can run your businesses through the same s corp if it's possible that's my first priority now for 20 this is 2021. get a hold of my attorneys tell us we charge 800 bucks you get an hour with one of my tax lawyers you'd love it even if you have to wait a week or so get in with my tax lawyers and we do s corpse in all the states in the country 800 plus 500 feet you'll love it they'll explain all this but for 2020 you're gonna do two sole proprietorships now i um i use little dashes here because there's no ass asset protection with a sole proprietor so you're going to have husband sole proprietor and wife sole proprietor wife home office and husband home office i'm okay with that if you literally your wife has a 400 square foot space you have a 400 square foot face space i'm going to do the math on form 8829 i'm going to find out what each of your write-offs are and you're going to push it through your 1040. that's the way to do it um so [Music] but in 2021 we're going to move all of this crap into the s corp 15 times less chance of an audit you're going to save more taxes and you're going to have protection you're headed in the right direction david um josh says if i'm look at that hat that guy looks ripped too a hat glasses you look good josh if i'm looking to buy rental property have an llc already should i start a different biz and s corporate or escort my current biz and buy the rental under it um josh let me i'm gonna not try to dissect your question but i know where you're headed everybody here's the thing this is what josh is facing josh has an llc and it's kind of sitting here in the middle he wants to buy a rental and he has a business so josh's question is basically do i keep the llc over here and set up a new llc or do i move the llc over here and set up a new llc here typically what i'm going to do josh is i'm going to say which one have you been using the llc for leave it there makes sense right so if you've been using this llc for your business leave it over here and make an s election we only charge 150 bucks done get a consult with one of my attorneys to understand the overall play here but i would do an llc here do an s election and set up a new llc for the rental and the reason too is josh i don't know when you're going to close on the rental um and i don't know if you're going to buy the rental if you live in missouri you might be buying the rental in kansas city i mean kansas city for those that don't know is is split in half half's in missouri halves in kansas i don't know why i'm talking about missouri today but josh may go well i live in missouri but i'm going to buy a rental in kansas well i'm going to set up a kansas llc and if his llc is over here and it's already a missouri llc i'm going to make an s election and keep it over here so josh probably leave the llc in your business make the s election new llc for your rental um tim fogerty fogarty tim sorry if i mispronounce your name can you get a write-off for your time when acting as a consultant for a non-profit you are a president and make no income first of all thank you for serving in a non-profit for no income i've done that served on the board of a number of non-profits uh by the way beautiful couple tim and his wife there it looks like or whoever your significant other is pardoned oh quite the mustache very manly there okay uh tim um everybody here's the deal when you're serving on a non-profit you get to write off all your miles as if it was a charitable deduction when i was a scout master i'd write off all my miles helping the scouts if you serve for united way or red cross or whatever whenever you're driving your auto mileage is a deduction in my calendar and this is why you're going to want the calendar i only printed 500 of these we're going to sell out in the next week and a half i go through all the mileage deductions for medical and moving charitable deduction this year is 14 cents a mile 14 cents for last year tim so you're going to add up all the miles driving back and forth helping with this charity if you spent any money helping the charity i would probably write it off as a charitable deduction if the money directly was used for the charity but i'll tell you the most audit proof way to do it and this is how doctors without borders do it sometimes a doctor says i'm going to go to haiti and help with the hurricane well if the doctor pays for the airfare and goes to haiti and does a bunch of service any supplies he taken is a write-off but he can't write off his time but the tragedy is the doctor paid for his plane ticket he didn't give money to charity he bought a plane ticket that's typically not a write-off the best thing and this is what doctors without borders do is they say hey you're gonna go to haiti coordinate with us give us two thousand dollars we'll buy your plane ticket now you get a write-off for two thousand dollars so you wanna give your money to the charity and have them pay for any of your expenses so tim you may have paid for a lot of stuff last year and didn't run it through the charity not good uh talk to your accountant see how aggressive you want to be there mileage will be a write-off but your time is not a write-off sorry i'm going to go to mike's already had a question i'm going to go to someone else i apologize uh go to south africa uh bulking i really hope this is all applicable in my country or in south africa uh bouquet first of all thanks for viewing this from another country we've had a lot of clients and customers from around the world buy rentals in the u.s and do business in the us even though they live in another country christy parker is our attorney that helps all of our international clients so if any of you want to meet with her her rates are just the same as our other tax attorneys and she does all of her international stuff so buchanan you may want to meet with christy our main number again since you're out of the country is 8880 oh my gosh eight zero one zero zero one zero um the general concept of a lot of this bouqueting is absolutely the same writing off expenses related to your business 99 of the countries in the world operate under that same process but the technical rules of irs code sections for home office or auto mileage those are going to be specific to your country but again owning a business taking write-offs and taking the profit same concept and i want you maximizing that all right a couple more questions and i'm going to give away two more bugs malcolm says can you get what a cute little family little baby there malcolm says can you give some advice on taking a board of directors meeting in march i love it like to get away for a few days to truly focus on the business well malcolm allison where are we going in march mexico mexico are we gonna have a board meeting yes give me five and you gotta see my beautiful daughter come over here allison this this daughter of mine is on my board of directors okay so here's allison on the board of directors and uh okay that's good bring our other our mascot bringing up our mascot now allison is on my board of directors and her husband jack they will be going to mexico with us we are going to hold a valid board of directors meeting for multiple companies of mine i don't know if we're going to bring our office mascot that this is winnie hey good girl so winnie comes around the office to help keep company morale at an all-time high you can write off your dog as a medical expense you could write off your dog as a watchdog for your business assets and equipment at the office or possibly an office pet uh or controlling rodents or security lots of good ideas i got articles on writing off your pet anyway so malcolm any of you out there with a small business even if you don't have the llc yet or the corporation set up your board of advisors in fact in my videos here in the eight steps and in your calendar i want you to write up your 10-year plan and you're going to build your strategic plan for 2021 i got little videos on how to do this and how to build your board uh if you want to write 10-year plan in utah and youtube you'll find my video on building your 10-year plan share it with your board of directors so malcolm i want to write off the airfare hotel dining for at least two days three days to get down there have your meeting and come back a business day is four hours or more of work so i want you to have a meeting take notes talk about your plan for the year and i've got videos on how to write off board of directors love it do it oh malcolm you're on it i hope that helps but i'm going to be in mexico consider pacifica bonita it's a great resort all inclusive all right um oh my gosh last book i mean last question then i'm giving away books miranda h if i only had a hundred dollar side gig income in 2019 fourth quarter oh no the hardest question of the day if i only had a hundred dollar side gig income in 2019 fourth quarter and started receiving only unemployment income in 2020 fourth quarter do i meet the 30 reduction for an idle targeted grant uh miranda i think it's not worth chasing with only a hundred dollars of side gig income by the time you do the math on any ppp or idle grant or all this stuff i think you're chasing your tail it wouldn't be worth it now if you had ten thousand or a hundred thousand add a couple zeros there we'd be talking strategies but also um unemployment doesn't help the cause unemployment means your business ended see you can't have a business and unemployment because if you have unemployment that if you're making money in your business you're generally not going to qualify for unemployment your business has to be dead and then you can get so that's a trick tricky issue plus idle grant i i'm embarrassed here i'm just going to say it it's all about ppp and employment retention tax credit now i thought the grant was gone it's over but i i'm gonna research that tonight now that you brought it up miranda so gosh she asked the hardest question of the day but i'm working on some um coveted relief articles tonight so everyone anyway everybody thank you for the kind words and the wows and the thank yous and i shared it and everything uh please tune in to our podcast every week it's called main street business main street business podcast matt and swords and i keep it funny and legit we had already already a million downloads you can get to it on stitcher itunes and spotify on youtube just type in main street business podcast you'll find us um and i'll be here next thursday doing this all right let's give away the calendar so and i want to stay uh gender uh fair here so i want a female and a male i don't care which one but i want a male and a female first the winner of the calendar we're going to mail out new calendars tomorrow you can buy them on my website markjaykohler.com i've got tables in here all the deadlines for the year little video messages for each month um calendars and tables and oh you're gonna love it corey who's the winner that would be your slack yorley slack wins the calendar yorly slack look at that coloring in your hair it looks beautiful yorly slack wins the calendar you've got to email alison at mark j kohler.com this is where you get send your information if you don't email allison you don't get the book and our winner grand prize of the 99 dollar eight steps to start or grow your business ken la the second ken lowe the second or ken law ken lo the second love workbooks he even said i don't know if that got you some extra love we do a random little thing over here on a app that corey finds our winner so make sure you email allison at marc j kohler everybody i'll be here next week thursday i'll give away some books again please pick them up they're attached right off you get my tax on legal library at marc j colder dot com lifetime access to all my videos i'm shooting new videos for the new year sign up for the newsletter everybody thank you keep living the dream see you next week

Channel: Mark J Kohler

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Id: fU88ndGx_kY

Length: 71min 2sec (4262 seconds)

Published: Fri Jan 22 2021