The Mark Perlberg CPA Podcast
The Mark Perlberg CPA Podcast
EP 128 - The BIG Lie About One-Time Tax Plans
If you're a high-income earner, real estate investor, or business owner, the answer is almost always no—and in this video, I break down exactly why.
I’m walking you through the BIG lie behind one-time tax plans, the opportunities most people miss after Year 1, and why ongoing tax strategy can unlock six- and seven-figure savings over your lifetime.
In this video you’ll learn:
✔️ Why one-time tax plans stop far too early
✔️ The hidden opportunities in Year 2 and beyond
✔️ Why cost seg, STR, REP, and basic write-offs are JUST the beginning
✔️ How to layer advanced strategies that compound over time
✔️ How new tax laws, income changes, and events create NEW planning windows
✔️ Why high earners lose the most when they “set it and forget it”
If you’re serious about reducing your taxes every single year — this will change how you think about strategy forever.
🔥 Want to see what YOU could save?
👉 Get your free Opportunity Report:
https://prosperlcpa.com/opportunityreport
I’ll personally record a video walking through your unique tax savings potential.
📘 Want a free tax planning starter kit?
👉 Download the Tax Planning Checklist:
https://taxplanningchecklist.com
I want to address a very prevalent, strong misperception that I see in our profession. And this is a misperception that I see not only from veteran tax firm owners, but also for potential clients, current clients, real estate investors in particular, or any high-income earner or business owner. And that misperception may wind up costing you hundreds of thousands or millions of dollars in taxes, or maybe even a couple thousand. So listen up, this is important. The topic I'd like to discuss today is when it comes to tax planning, do you need a one-time tax plan to get all your questions answered and build that framework? Or do you need continual support on tax planning? And I want to say this while it's incredibly important to have that conversation with your advisor, most people are stopping short. And I was just in a conference uh with a very smart and successful firm owner. Um, and he said, what a lot of people are saying is that the the attrition rate, a lot of their clients leave after the first year. They pay for a one-time plan and then they just kind of disappear. Their um their clients don't really follow up with a whole lot of questions, then they don't hear from them again. The client takes the AI idea, the ideas, and then they move on. And I'm surprised to find that this is so common, and a lot of folks will buy a tax plan, and anywhere from 20 to 50 percent don't return the next year for any further advisory. They feel like they have all the answers they need and then they move on. And I also get a lot of questions from other firm owners where they say, Well, hey, you do tax planning, that's fantastic. But what happens? Like, don't they like leave you after you do the plan? You have the plan. What else do they need for you? They have the plan. Don't so they should know what to do for the rest of the time. How do you keep them coming back? And I'm always surprised to hear that because we actually have a very high um continue uh continuation rate. Um, we have uh our clients, I would say a of our tax planning clients, probably somewhere around 80 to 90 percent, which is very high. Um, our retention rate is very high because we're always able to find new ideas. But you know, there maybe there are some instances for you where maybe you just need a one and done tax plan. So I want to talk you through this. Also, if you're a firm owner listening to my stuff, pay attention because this may help you out, it may change the way you look at some things. So, what we're gonna talk about today is why people believe that tax planning is really one and done. And what I also we're also gonna talk about, what can you do after your first year of tax planning and you've learned all the basics and you've built that foundation and you got some of those big ticket items done? What other opportunities may exist that you didn't cover in your first tax plan? And also, what are some potential reasons to stick around with your tax advisor? And what kind of new opportunities are you likely to find in year two in the continuation and the furthering of your tax plan and the continuation of your tax strategies? This is stuff that is often missed, especially if you're going to one of those folks who just does an hour-long tax plan and gives you templated guidance and doesn't really see how the big picture comes together with all the moving pieces involved in your 1040 and your situation. And at the end of this, you're gonna understand do I just need an hour or two with an advisor and some basic QA, or do I need to develop a relationship here? All right, so let's get into it. Let's talk about why, and in many instances, how people see it's that tax planning is a one-and-done type of engagement here. So, one of the reasons why maybe that you have a very significant event. So, let's say that you are selling your business and you're expecting an exit of hundreds of let's say a couple million dollars, life-changing event, and you realize now is the time to start thinking about taxes. Another common reason why I see people have these one and duns is they just got into real estate. This is extremely common with real estate. You get your first property, you want to know the tax treatment, you might have the ability to get real estate professional tax status, or you maybe have the short-term rental loophole in play, and you want to get down the basics of this to make sure you're not messing up, you can protect yourself, you're staying compliant, you have your hour logs, and you could actually take the losses. And because all you're really interested in doing is that short-term rental to offset your W-2, you figure, all right, I'm taken care of, we're good to go, not a whole else left to discuss, and then you don't reach out back to your advisor, and eventually you let the tax planning engagement run its course. Um, some other reasons is maybe you are just doing some very common uh tax reduction strategies and that involve retirement accounts, or maybe some foundational strategies like hiring the kids and things of that nature that are well known, and you just need someone to hold your hand, make sure you're doing it right. And at that point in your mind, you're all taken care of, you're set, you got the system in place, and you're ready to move forward. Now, I understand why you say that. And you know, for some of you where you have an anomalous transaction, or maybe you never get a short-term rental again, or maybe you're not really at risk of paying a lot in taxes, you may find, you may find that you just need a couple answers to make sure you're going down the right path. You can get that cost out, you get the retirement account set up, and you're you get the strategies, maybe the Augusta rule and hiring the family and all that basic stuff you see online and you're good to go. But this may not be the case for all of you guys. Now, let's just talk about some of these concepts here. So let's say we're a beginning level short-term rental investor. You've learned about the costs, how to do cost tags, you got your hour log, you're sure you're materially participating, you're pretty you're feeling pretty good. You create the tax savings. Okay, well, that's great. Now, let's say you can buy a property every year or so and you can do the cost tags. Well, that's fantastic. Bonus depreciation is phenomenal, and you could save a lot of money in your taxes. But what what are some other things that we can add to this? Because what we find here is when we get clients that have their first short-term rental, yes, we are gonna do those basic low-hanging fruit strategies. We're gonna make sure that they materially participate when we do the cost tag, we're gonna estimate the savings. But a lot of the times we have other ideas to consider, but maybe there's not enough time yet. Maybe they hire us in November or December. And there's other layers we can add, but there's simply not enough time because right now we're just getting down the basic. Some of those layers that we can add. We can, first off, we want to coach you through maximizing your write-offs. Yes, I get it. You can do the cost segregation study, create massive losses to offset your W-2, which is wonderful. But cost segregation isn't is not the only deduction that you can create with your short-term rentals. So, how can we be strategic and incorporate ways to create other write-offs to further our deductions? Like putting the kids in the business, hiring the spouse, and potentially creating a HRA, or maybe down the road when we're big enough, a more sophisticated entity structure that can save us money on taxes. Maybe consider creating a property management company. A lot of these things take time to develop. It's going to take time to consider or to create that position for your child. And then when they get the payment, how do we know the proper amount to pay them? Some other things that we want to consider here as well is it takes again, it takes time to create that position for the child. You may find that you have a partnership where we can do some advanced strategies there. Now, let's say we do all those things. What other things can we do? Now that we have that found that that plan in place, we know what we're gonna do to reduce our taxes. And let's say we're adding some additional write-off strategies and maybe some charitable strategies as well. And what you're gonna find if you're a high income earner, let's say you're earning over, I would say over 600, over really over 700, 750 is where this really becomes important for you guys. So listen up. A lot of the times that short-term rental isn't gonna be enough to really take give you the tax savings you need. Because there's something called excess business loss limitation. So if you're a high W-2, the most of a the most deduction you could take is 630 against your W-2. So if you're making over a million, you may not, you may still be paying a lot in taxes, even if you maximize the most allowable deduction you can. Or let's say you can't create so much of a deduction because it doesn't make sense buying a super expensive property. You may find that there are additional strategies to layer on top. You may consider oil and gas, you may consider an advanced charitable strategy, you may find other ways to create bonus depreciation outside of real estate to further reduce your taxes. There may be a credit strategy. So there's all these things that take time to consider. And if you start working with a tax player in November, you're not gonna have nearly enough time to further fully explore all these ideas. Now let's say we have, let's say we now know we want to do this idea on top of that idea, and we have a really firm grasp. Well, here's another way we can take it further. Well, now that we know what kind of deductions we can create, here's a way that we can really win the game. And this is really important for you, W-2 folks out there. We can now adjust what we make in our estimated payments. Now, for you business owners, you have discretion over how much you pay per quarter. But if you're a high W-2, here's what you can think of: you can adjust the withholdings from your W-2 paycheck to account for the deductions you're gonna create. So instead of waiting until April of the following year to create your tax savings, we are reducing the withholdings from your paychecks immediately so you see immediate benefit from the strategies. You have the cash in hand earlier, and now you may even have more cash to explore more strategies that'll further reduce your taxes because we've enhanced your liquidity. And at the very least, you can take advantage of the time value of money because we now have a firm plan in place. Now, when this happens, the question is what are you gonna do with your tax savings? Now that we're getting these refunds or we're taking more out of our paychecks. So these are things that take time to develop and materialize. And here's the thing: if you don't buy a short-term rental, what happens now? We may need to look into other strategies to replace that. If you don't buy another rental property with rep status, or you don't want to do oil and gas again, you don't like this charitable strategy anymore, or maybe you have a raise or an RSU or a significant event, or maybe your income spikes. Now, here's another thing. A lot of folks say, hey, you know what? I made like no money this year, business is terrible, I'm really struggling. I don't think I need planning this year. And I always say this never let a good tax bracket go to waste. So if you're operating at a loss or making very little money, this may be a great chance to move some of your money into a Roth. You're eventually going to be taxed on your IRAs and your 401ks. Why not take advantage of it being taxed at a low bracket? And you may even be able to phase in some additional deductions and credits when you do the rollover based on your circumstances and where your bracket is. So now we're playing for long-term tax savings. Other reasons why this is not gonna be a one and done, in my opinion, for most of you guys. Other significant events. Maybe you're gonna sell a rental and have a capital gain event or a stock capital gain event. Also, we want to consider the fact that there are always gonna be potential changes in tax law. So you found out that you don't need any more help with your taxes, but think about how the tax law has changed in recent years. We had the inflation reduct over under Biden. A lot of you guys ignored it, but you missed out on huge savings opportunities that we're doing with solar. And I'm not just talking about putting solar on your house, I'm talking about solar business investments, where we've we've literally created millions of dollars of tax savings for our clients by leveraging the changes in the tax law there. And then obviously the OBBBA, one big beautiful bill act and bonus depreciation, but not just bonus depreciation, the potential increase in state and local tax deduction is what we're considering. And also considering that we have a it's a little easier for us to fully take advantage of your QBI. That's a 20%, typically gonna be. I say typically, but there's all these moving pieces, but it could be 20% of your profits. So there's some changes there as well that we can potentially be strategic with. Some other things that we can consider here is that we're constantly looking for new strategies to consider with our clients. And a lot of them we find are total BS. We call BS on them all the time. But sometimes we find some really unique ideas that come together. There's a lot of very creative and resourceful people out there, and we work incredibly hard to protect you from these snake oil salesmen. So, whatever strategies we may have shared with you in the past, while they might be great, they may not be as suitable as potential opportunities we'll find in the future. Some of those may involve tax advantage investments, alternative investments, asset purchases, all sorts of business structures that we can create. And at the end of the day, we're always learning and becoming stronger and better, and learning about tax credits in different states, and coming up with new and identifying new potential strategies involving charitable, involving setting up your legacy. And there's there's just endless things. I was just telling one of my staff this that it's just like being an astronomer studying, studying the universe, uh and and and all the different galaxies. You never run out of stuff to learn. And there's so we're always looking to add layers and add layers to what we can do for with our clients. So maybe in the first year you you get those write-offs, you do your cost eggs, but then we can work together to get the the hiring agreements in place with the family. And then the following year we do some additional charitable strategies. So you can just see that as we continue, we try to add a new concept year after year, and the savings is enough to continue to justify continuing the conversation. Now, I want to go into now just some common questions I get on this topic and just share my opinion on these. First one, do I only need tax planning once or do I need it every year? For most of you, you're gonna need to have continuous tax planning because of the many changes in the tax law, the tax environment, your situation, and potential opportunities out there because of those reasons. If you need tax planning once, you're likely to use it to need it multiple times. Next question Is cost segregation a one-time strategy or something you need to revisit? Well, you can only do a cost segregation study once on a property. But there are many layers to consider with cost segregation, especially if you buy multiple rentals. You have flexibility in how you depreciate the property identified in that cost segregation study and the timing of what year you're going to identify those properties and put them on the tax return. So if cost segregation is your main strategy, that doesn't mean that you have it all figured out. If you work with someone who's really resourceful, you likely can identify all sorts of additional opportunities when you're really strategic with the implementation. By the way, on a side note, we've had instances where clients uh did the cost segregation studies before hiring us, which is fine, by the way. And then we did the tax planning, and we had a chance by being a little bit more resourceful and considering the client's current year and future year incomes, can take advantage of the timing to maximize the benefit of those cost segs. So we've had instances where clients had access to millions of dollars of deductions from their cost seg purchases, but we knew that they were gonna be able, they we didn't know if they were gonna buy those rentals year after year or if they were gonna stop. So a lot of the times when we're doing the return and we see how the dust settles on the return, we have some discretion over how much of the properties identified in the cost egg need to call need to elect into bonus. Because sometimes we elect out because we don't need all the write-off at once. And if you get a carry for it on those real estate losses, they're treated as passive in the future. They really lose their value. Or sometimes, like for this in particular client I'm thinking about, we looked at all the cost eggs, we looked at the results, and then we timed which building would report its cost segregation study in which year to optimize tax savings. Another question here: if I qualify for real estate professional tax status once, do I have to re-qualify every year? The answer is yes. It is a year-by-year determination of whether or not you have real estate professional tax status. We're gonna need to say that you own 5% of that real estate activity. We're gonna need to say that you put in at least 750 hours and at least 50% of your working hours were in that qualified real estate trade or business every year to get that status and the the benefits that come with it. Next question: How often do I need tax planning as a short-term rental investor? Again, this is gonna be similar to what I said earlier. Let me say that again. Sorry. How often do I need tax planning as a short-term rental investor? You're gonna need continuous conversations with your advisor if they're qualified to do holistic tax planning with you. While short-term rental investing is fantastic for tax savings, you really want to look at every potential opportunity that's gonna interact with you and your taxes. You may want to consider multiple strategies along with that short-term rental to maximize tax savings. So an ongoing conversation is most likely ideal here. Do I still need tax planning if I already have big depreciation losses for a cost seg? The answer is absolutely. If you're in a zero dollar tax bracket, you want to take advantage of that tax bracket to phase back in some deductions and take advantage of that bracket and maybe move some money into the tax-free bucket to create long-term savings. And if you need, even though you have big losses from big depreciation, you may find that you'll need additional losses to put yourself in paying a reasonable amount of taxes. So until you have that holistic tax plan and that conversation, looking at everything possible and the potential opportunities now and in the future, you really got to continue to have that support. What should I do once I've used up all my depreciation? Well, we have a lot of clients that have taken tons of depreciation and now they're having cash flow real estate. So obviously, the one opportunity is to buy more property at depreciation. But let's say you can't buy more property. There's so many other ways to reduce your taxes besides relying on bonus depreciation. And for those of you who are maybe not interested in taking any more debt, maybe the bonus depreciation as tax savings is not ideal for you. So consider some other tax savings opportunities that may involve timing, income shifting, maybe your family situation. Maybe there are charitable strategies that are going to give you tax savings that are more aligned and also gonna create more long-term tax savings where you don't have to worry about recapture. Can I still lower my taxes after a year end? There are a few ways to do this. You may be able to get tax credits that can carry back against prior years with the investment tax credit, which we do with solar. You can also contribute to a retirement account to create tax savings from the prior year, even if the year is ended. That retirement account has to be set up, that 401k or IRA. And also, you can still do a cost segregation study on a property as you do the return. It just has to be placed in the year that we're filing the return for. How often should I update my W4 to reduce withholdings? Well, you should update it as soon as you identify a change in what you need to withhold. So if you're using additional tax strategies and you find it appropriate to adjust your withholdings because you're entitled to that savings, you want to make that adjustment and address on a periodic basis of whether that amount is appropriate. What tax strategies can I use if I can't buy rentals this year? Well, there are hundreds of strategies to consider, but at the high level, those strategies are gonna likely create tax savings related to creating write-offs, depreciation, tax credits, charitable deductions, and potentially some savings involving how you design your entity. While there's so many ways to answer this question, to get the best answer, you really need to work with someone who is specialized and experienced in advanced tax reduction. A really popular one is oil and gas investing, similar to rentals, where you can create passive income and offset your W-2 andor ordinary income. But you the cool thing about oil and gas is you can be truly passive and do nothing at all. How awesome is that? On top of that, you may also want to consider strategies that involve depreciation that are not rentals, so other assets that can be depreciated, maybe entity structuring, maybe some expense strategizing, and maybe some charitable strategies and maybe some timing strategies. There's so many things to consider. Do I need tax planning whenever the law changes? The answer is it depends. How about that? Don't you love that cop out of answer? But it's absolutely true. If the changes in the law are going to impact you, the answer is absolutely. And if not, then maybe you can continue doing what you're doing. But make sure you're working collaboratively with someone collaboratively with someone. For all you know, there may be several opportunities for you to further explore. All right, well, I hope you enjoyed this conversation and at least got to see at a high level why it's so important to continue the conversation with a tax player every year because there are so many variables to consider. And even if nothing changes in what you're doing to reduce your taxes and in the tax law as it pertains to you, you're gonna still find that there may be opportunities to add a little bit of layers to it. Take it a little bit further, and that's why we really encourage having these on ongoing conversations and where we stay connected with our clients. Now, if you're listening to this and you think, wow, this really resonates with me, I gotta probably have a talk with someone. Well, if you want to get a free projection or an opportunity report from me sharing with you what may be possible based on your situation to reduce your taxes, go to Prosperal P R O S P E R L, Prosper with an L, Prosperal C B A.com slash opportunity report, so we can have a conversation and I will personally send you that video. All right, and also if you want to get an introductory course into tax planning, go to tax planning checklist for a free tax planning checklist and some case studies and guidance on how that can come together for you. All right, hope you enjoy the conversation and stay tuned. We got a lot more great content coming your way.