The Mark Perlberg CPA Podcast
The Mark Perlberg CPA Podcast
EP 100 - Tax Planning Isn't Just for the Rich
PS. Whenever you're ready, here are some ways we can help with reducing your taxes...
Ready to slash your tax bill? Schedule your free consultation and let's strategize your tax savings together! Book now at: https://www.prosperlcpa.com/apply Or, if you still need more time, here are some other ways to begin winning the tax game...
Take our free Tax Planning Checklist & learn about what tax savings may be available for you in our minicourse at https://taxplanningchecklist.com
Tax planning isn't just for the wealthy—it's a vital strategy for people at all income levels that can accelerate the path to financial freedom through systematic wealth creation.
• Tax savings are more valuable than income because they represent pure wealth creation without taxation
• The tax code incentivizes certain behaviors regardless of income level, making strategies accessible to everyone
• For middle-income earners and new entrepreneurs, tax savings can provide critical capital for growth and investment
• Real client examples show how tax planning helped eliminate taxes and generate refunds for reinvestment
• Don't let "zero tax" years go to waste—use them for Roth conversions and harvesting capital gains
• Strategies like hiring family members, the Augusta rule, and HRAs can save tens of thousands without costing extra money
• Solar panels and other energy investments can simultaneously reduce costs and create tax benefits
• No fancy software or expensive advisors needed—educational resources make tax planning accessible
• Every hour spent learning tax strategy typically yields higher ROI than hours worked at your regular job
• Tax planning habits developed early create a powerful compound effect on long-term wealth
Visit prosperalcpa.com/taxnavigator to learn about our accessible tax education resources designed to help everyday Americans take control of their tax situation.
Okay, so I am in Thailand right now and I'm having a tricky time getting a good system to record my podcast with my laptop's acting all funky, so I'm going to just do this all on YouTube live and maybe someone will watch this maybe not, but anyways. So I want to talk about let's get into this conversation. As I pull my notes. This is a really important conversation, by the way, and hopefully some of you guys will listen in. All right, let's get into it here.
Speaker 1:So there is a common belief, common belief. There's a common belief out there that you have to be super wealthy. Let me think of a better way to say this. All right, so you guys know that we specialize in doing some really amazing stuff for our clients and the really affluent real estate investors and entrepreneurs out there. Really affluent real estate investors and entrepreneurs out there. They play life by a different game, especially when it comes to taxes, and I have a secret for you that game is a lot more in their favor than yours. And you may be thinking to yourself with all these fancy tax strategies out there, I'm sure you hear that folks like Elon Musk and Jeff Bezos never pay taxes. You probably think to yourself well, what about me? Right? So you're probably thinking to yourself oh well, tax planning is really just something reserved for the affluent, and while it can be more impactful simply because they're at risk of paying more taxes, I want to challenge the belief today that tax planning is only for rich people, the wealthy, in fact, I will argue for, in many instances, tax planning is more important for middle America, and I'm going to give you three examples, or just three concepts I want you to think about, to challenge this belief you may have on whether or not it makes sense to do tax planning if you aren't super rich. Now, a lot of our audience is people who a lot of our clients are seven-figure earners, very successful people who you know. A lot of our clients are seven-figure earners, very successful people, and if you're listening and you are successful, you're going to find this valuable, and I also think you may know someone who will really appreciate this information as well. So please share it with anyone who would be interested in learning about how and why it is important to tax plan, even if you aren't a super high income earner.
Speaker 1:So let's get into it here. The first thing I want to talk about is the tax planning isn't just for the rich, because it is a system that anyone can use. Because it is a system that anyone can use, okay, let's change the way we look at this. Yes, there are these fancy things out there and yes, we are doing some for the super affluent. There are some very unique entity structuring and things at play here, but a lot of the things that we're doing for affluent clients, which they love, you're going to love too, and you may love even more, because, especially for our earlier stage entrepreneurs and real estate investors, when it comes to reaching your goals and having that holistic wealth, one of your greatest bottlenecks is going to be access to capital, and one of the easiest and most predictable ways to free that up is tax savings. Now, the idea here that only the rich can do this. Let's talk about this for a second here, because the tax code here is really meant to incentivize behaviors, regardless of your income position. So what are some of those behaviors? Buy real estate, own real estate to employ people, and maybe those people are your children.
Speaker 1:There's a lot of tax planning opportunities that really result in a net effect of not really spending anything at all on taxes as well. So let me give you some examples to clarify what I mean here. So we had one client here who, when we first got to him, he was just frustrated that his accountant wouldn't let him ride off his car, and so we connected with him. Our poll was really a thing that I was so excited about and blogging about. I didn't really think it would be applicable to so many of our clients, but anyways, we realized that this would apply to him and it would have a really incredible impact on him. So when we did this, when we realized that he really was trying to transition out of his job his full-time job and he wasn't an incredibly high-income earner when we realized that the short-term opportunity was there, we completely eliminated his taxes and he was stressing because his real estate portfolio was pretty successful, cashflow positive, making lots of money, and he was thinking to himself he hasn't made any quarterly payments, how am I going to afford all his income? And I want to reinvest it.
Speaker 1:When we did the cost segs and took advantage of the short-term rental loophole for this client, not only did he not owe money, he got a $35,000 refund, and that's really exciting stuff, especially for someone just starting out who just shelled out a ton of cash into his new real estate investment and this client did not pay any federal taxes for the next three years. And what did he do with his tax savings? Reinvested to buy more short-term rentals and more short-term rentals, and as a result of that, he was able to quit his job that he didn't like very much. He made a decent amount under $300,000 between him and his wife Not incredibly rich, but we were able to create six figures in tax savings over the course of three years, and that gave him the liquidity to continue to purchase more rentals and not pay taxes on the revenue. This is life-changing. Now, $100,000 over three years is really nice if you're a high-income earner, but when you're just starting out, you really need that money. One of the greatest constraints for you getting to that top 1% is your ability to access capital, and tax planning is one of the most predictable, reliable ways to help you free up capital. You don't have to worry about profitability and stocks going up and down. You're not subject to all those factors.
Speaker 1:Another thing I want you guys to think about here I got another story here. A guy came to us out of Tennessee and he said hey, I want you to look at what I'm doing here and I want you to give me some feedback on my return. And so we looked at his return and what we saw was he didn't pay any taxes at all. So us you know me being a tax nerd, which I am I said if you're not paying taxes at all, what kind of missed opportunities, what kind of insight can I provide for this guy? And you know he was paying for us to look at his stuff too. So one thing I noticed a couple of things here, and missed opportunities, would you believe it. We saw missed opportunities in a 1040 with no taxes. So when we had a deeper conversation with the client and we learned more about his situation, what we found was that he actually had a 401k with a couple hundred thousand dollars in it and he had some unrealized gains in his stock portfolio.
Speaker 1:Well, if your business is operating at a loss and you're paying no taxes at all, you may think to yourself that the tax planning is done. Well, let me tell you something you don't want to let a good tax bracket go to waste. Here are some things that he missed out on. Actually, before I rant on that, what we said we would have done had we advised him. One of the things we would have done is we would have converted some of that 401k into a thing. That would have been an easy win and your standard deduction first $25,000 roughly on tax, and then you're taxed at a 10% bracket Not that bad and then it grows tax-free, then you take the money out tax-free, you can self-direct, self-direct and invest into crypto or index funds, et cetera, et cetera, or real estate.
Speaker 1:Here's another really cool missed opportunity with the unrealized gains. When you have a $0 AGI, $0 income, your first $90,000 of income is completely untaxed. Sorry, so your first $90,000 of capital gains is completely untaxed. Forgive me, I'm in Thailand and a little jet lagged here, but anyways, by the way, if you're enjoying this, put a chat in the comments and I'm interested to hear your feedback. See who's listening in. Because I'm just honestly, I'm just going live, cause I wanted to get used to filming more content and I can't find a system here. Um, my, my tech stack is, is is acting up and I'm not home, but anyways, um, your first 90, roughly $90,000 of your married filing joint is your first roughly $90,000 of your married filing joint.
Speaker 1:When it comes to capital gains long-term capital gains is completely untaxed. Why would we want to do this? Imagine, let's say, you hear this and you say well, that sounds really cool, but why would I want to have any cap gains at all? I want to keep this stock. I want to keep my Apple and my Tesla stock. Well, you can buy it back. That's totally fine. You could sell it, recognize $90,000 in gain and then buy the stock right back. Except now the basis in the stock is $90,000 more and now you're preventing future capital gains in the amount of $90,000. For all we know, that could mean in the future, we don't know what your income is going to be. You can get up to a 20% cap gain bracket plus 3.8 net investment income. This could be a 30% tax you're completely avoiding on close to $100,000. Missed opportunity. So it's not just about planning for your current year, but preventing future taxation, and this was a missed opportunity.
Speaker 1:Another thing I want you to think about here is and I'm just going to be straightforward here is that we charge a lot for what we do, and the reason why is because it takes an intensive amount of research to really understand the intricacies of advanced tax reduction strategies, which is what we do and because our staff has to train close to 100 hours a year to meet our standards, we can't serve a tremendous amount of clients. So to access our ideas, one may think that you have to be incredibly affluent and able to afford at least $10,000, $20,000 a year in tax services, but the truth is you can still access these ideas if you're willing to be proactive. And in fact, I would argue that, for those of you who are interested in becoming financially free and winning the tax game but not just winning the tax game, but really have an abundance mindset and being in control of your finances and seeing your money grow and compound year after year after year the journey you're going to take to do tax planning by really taking charge and not making us your daddy and making all the decisions for you is going to really allow you to be more in control of your finances and your situation here, and so what I would say is we are now offering lots of resources where you can access the same level of advisory and guidance and a lot of the favorite ideas the ideas that our Affluent clients really love are about as applicable to them as to you. We were just talking to one of our clients, augusta hire the family. Two strategies the Augusta rule and hiring the family.
Speaker 1:I've been riffing on this a little bit for mid-year planning as well. That could be a $100,000 tax write-off. If you're affluent in a 40% bracket, that's $40,000. But let's say you're in a 20% bracket. $20,000 is awesome and $20,000 means a lot, especially when you're starting off or you're not super rich. Why not learn these things and develop the habits now? In fact, I would argue it's really it's even more important that you develop the habits and the understandings now, because that tax savings is going to grow and compound over time. So when you're in the higher income bracket, well, first off, you can get to that place faster because you have more capital, but also it's going to allow you to grow into that role faster and really understand what's going on here.
Speaker 1:Some examples I also want to share here of when we had clients who didn't know squat and control this control of enjoy, uh, and understand what we're doing. So one of our clients here, um, just learned about the real estate professional tax status, is using his rentals and he's in her real offset, the w-2 income. Really wonderful strategy there. And the client, um, would think that that's all that they needed. But obviously we have the cost segregation studies and we met with them in one of our lower tier offers, where we're not going to know every single detail of their lives, and we have very interrelationships with all of our clients when we have the high level packageships, with all our clients at the highest level when we have the high level packages. But you know, in a quick conversation we were able to identify a handful of ideas where we were reducing their taxes and they didn't have to spend any more money to access those savings, and they were ecstatic about it and they're taking action right now.
Speaker 1:So what are those things? Sole proprietorship, hire, hire the spouse, create an HRA health reimbursement account. This is going to allow you to turn your medical write-offs into business write-offs, and business write-offs are more impactful than itemized deductions, which have all these restrictions. How about this? Solar panels for the rentals, solar panels for the primary residence? You're replacing your energy costs with the financing costs of the panels. Not only are you saving money in taxes, you're actually reducing your energy costs. So there are ways, in fact, it is possible, to reduce the cost of your energy or other costs in your business while actually driving down taxes at the same time.
Speaker 1:And then another thing that we consider here and this is just a financing strategy, because we talk to people all day about their finances and the real estate is a second home mortgage. So they had a handful of mid-year and short-term rentals and what they were able to do is, if you live I believe it's 50 or 60 miles away from the residence, you only have to put 10% down instead of 20%. So you have a higher lever. You're pulling here. You don't need the 20% down. You do the cost seg. I mean, do the math here. If you're only putting 20% down and you do a cost seg with 100% bonus, you're getting a good chunk, if not all that, back with the cost seg, and you don't have to be super affluent to understand these concepts.
Speaker 1:We have another client, first time entrepreneur. He's an architect, doesn't know anything about finances, and we are already educating him on the S-corp. And let me tell you something it is, while architects are pretty brainy people, we are already educating him on the S-Corp. And let me tell you something it is, while architects are pretty brainy people, we're talking about third grade level math here and we're going to save this guy, the concepts that we're explaining are going to save him probably maybe $30,000 a year. Probably maybe $30,000 a year, and that $30,000, when reinvested and compounded, especially in a tax advantage manner, with things like real estate or oil or gas and life insurance, can mean millions of dollars over the next several years. So these are folks that have been able to take charge and, with only a little bit of communication and guidance, we were able to present to them ideas that are going to be transformational.
Speaker 1:Another thing I would point out here is there's this idea that you need a fancy piece of software or you need to invest tens and tens of thousands of dollars into a fancy tax attorney or even someone like us, to do something to reduce your taxes, right To be in control of your taxes, and this is another false belief. This is another false belief. We have started to offer group sessions and live open calls and workshops, and for those of you who are really serious about taking control of your finances, this has really been a wonderful opportunity where we can help people that we normally couldn't afford to help, just because it's really hard to find people who can communicate these ideas, and the fact is that we just do so much research. We have to invest a lot into our staff, but some of the things that we've been able to share in a group setting and we have so many resources and the fact is that if anyone in our sessions doesn't understand it or they find the material is missing information, they can contact me and I will simply update and add more clarifying details. So you guys are pretty much steering the ship here and being my boss in some ways much steering the ship here and being my boss in some ways, but anyway. So some of the things that we've been able to share in these conversations and open calls, some really neat strategies, like some college financing strategies, that where you can buy oil and gas, gift it to your child and now you get the write-off. But then they see the economic benefits of the oil and gas and it's taxed at a lower bracket and now they can access the American Opportunity Tax Credit. So that's under the way.
Speaker 1:With one of our group clients, we also were able to share just some foundational concepts that most of you guys, business owners, never had a chance to learn, like how to maximize your travel and what documentation do you need to survive the scrutiny of the IRS audits and while we've shared this in our one-on-ones with our clients, we've now had a chance to really dive deep into the minutiae of this stuff so you guys can feel in control. We have like a whole hour and a half hour hour and a half workshop just on meals and travel, and that's it. There's no way, as CPAs, we can dedicate an hour and a half just talking about only meals and travel with our clients. So now everyone has the ability to access this stuff and it's just a video with Excel sheets and workshops and you can access me on a weekly basis. Some other concepts here where really we're just talking about taking control and not needing any fancy, high-tech or expensive things here, really just understanding the foundations here and going back to being knowledgeable of what you're entitled to as for write-offs and really being able to understand what the IRS defines as a write-off and how can you be resourceful in understanding the law and how can you find opportunities to create more write-offs. This may involve not only hiring your children, but it may involve partnering with your spouse or even partnering with your parents.
Speaker 1:One idea we shared in one of our resources, which I know people are going to be very excited about is you can gift as part of your strategy to support your parents. Gift them real estate. You have real estate. That's cash flowing. You've already done the cost seg and seen the benefits on the tax side. Gift them it. Or you can gift them a portion of it, interest in a partnership. Now they're going to be able to receive the cash in the tax advantage mirror, not pay FICA on it, and eventually you'll inherit it from your parents and get a step up basis and then the depreciation starts all over again, but from a higher amount. Or if you were to sell it at that time, you likely would pay no capital gains tax. This might be. This may allow you to avoid literally hundreds of thousands of dollars in taxes.
Speaker 1:So we get to riff on all these strategies and you know, even though we really emphasize, we're very relationship driven and with our clients, we have to know them very intimately because we now have the opportunity to dive deep into each of every one of these subjects where you don't need to have all these special tax attorneys and lawyers. You simply watch the video, you download the worksheet, you plug in the information, you get the savings and then, if you have any questions, you just tune in. So it's been really fun and we feel like we're kind of going back to our roots here, in that when I started this company, I wanted to bring tax planning to the masses. I really wanted to share with everyone that this thing called tax planning can change your life and get you to financial freedom. If you can just save an extra 10 grand a year and invest and compound that or put it back into your personal development or into your businesses or into an asset that'll produce value or into a coaching program, this stuff could be life-changing.
Speaker 1:And what I found was, over time, we were short on resources, so we found folks making 100, 200,000. And we had so many clients and not enough staff at one point that we realized that we had to drive up price and drive up price because we just couldn't afford to serve everyone we wanted to. We couldn't meet with everyone. We were all working around the clock like crazy. So as a solution now and we're very excited about this we do two to three workshops per month. We did one on health expense strategies, we did one on hiring your family and family, business-related strategies, and we're doing a follow-up where we're going to dive into individual case studies and meet with our clients and coach them through setting up the jobs and the compensation on these things, and coached them through setting up the jobs and the compensation on these things, and it's just really exciting to be able to have the greatest impact we can now by switching our focus where we're not really switching our focus away from our client relationships, because they love this stuff. They love that they have a chance to not deal with us schedule. With us, they can listen to us really dive deep into things that matter to them, like Augusta, like healthcare-related strategies, like estate planning, like asset protection, but also these are things that are really important to everyone who has a write-off or who wants to reduce their taxes.
Speaker 1:So if you want to learn more about this or you know someone who may be interested in learning about what we do more, you can go to prosperalcpacom slash tax navigator. You're going to see a little more information on our tax navigator system, which is more around having access to all the greatest insight you can find in a more affordable manner, where you're going to be taking charge. We're going to give you the resources. We're going to break down where you have to go and write out your curriculum, but you're going to have to be a self-starter and really take control here, and we're going to help you along the way, and I'm accessible every week. So if you want to learn more, go to that site.
Speaker 1:Prosperalcpacom slash tax navigator, because it's never too soon to start thinking about taxes and regardless of your situation whether it's 10 grand or 10 million dollars that amount of money is really important. And what I tell everyone at every bracket is for every when you look at how much you make at your job, whether you're you know, let's say, you're making tens of millions a year and your dollar per hour is a really high amount. Or let's say, compare that to someone whose dollar per hour is $40 an hour. Whatever hour you spend into understanding your taxes, you're always going to find that the ROI is greater than what you make in your business or at your job. Because tax savings is more valuable than income. Because if you make I mean think about it you make $10,000 a year, you're in a 25% bracket. You're only taking home $7,500. A 25% bracket, you're only taking home $7,500.
Speaker 1:$10,000 a year in tax savings is $10,000 a year of wealth creation, pure wealth creation. So I hope this makes sense. I mean, there's so many ways we can go Thinking about Roth conversions, putting money you know you don't have to be affluent to have an HSA put money into the Roth budget for taxes and start thinking about these things. And it's not just about saving money on taxes, it's about what you can do with the tax savings to eventually achieve what you're looking for in life. All right, well, I hope this conversation is valuable for some of you guys. Again, you can go to prosperolcpacom slash tax navigator to learn more, and we try to help out as many people as we can. If you have any questions on tax planning strategies for the everyday American, the everyday entrepreneur, real estate investor, feel free to reach out. We love hearing from you. Have a wonderful day. Happy tax savings.