Okay, today, on the episode,
I'm gonna answer, if you were to ask me,
as a business owner, someone who is retired,
an investor, really, any United States citizen that files their tax return,
we're in the middle of the year. So, we're in July.
What could you be doing related to your taxes that could help you avoid
a headache at the end of the year? So, I'm going to very specific
things that if you were to come to me, if you were one of
our clients, what we would want to do with you and some things that
you could do. To help, help you get prepared because,
and we're not only just, we're not just preparing for next year.
But you're preparing potentially to reduce your withholding,
increase cash flow, but there are quite a few things you could do.
So it's mid-year. One of the first things we would do if we're,
if you were meeting with a tax advisor at the firm is we,
you, we need to know where you're at for the year so far.
And I'll explain how to do that. And then we need to. It's really
a two parts, and then we need to project out the future.
So where you've come for the year so far,
and then projecting. for the, say,
the next six months. So, to get to the point,
to understand where you're at for the year so far,
if you are an employee,
this is looking at your pay stub. So, this is looking at your year-to-date
income. You go, okay. Say you had a $100,000 salary and you're halfway through
the year, you're probably at about a $50,000 salary.
So, say you're, you're paying. PageTel will show year-to-date pay,
$50,000. And then you're looking for two numbers related to that.
We need those for your projection. You're looking at,
ah, year-to-date federal withholding and year-to-date state withholding.
You don't need to look at payroll taxes. Even though they are a big
chunk that you're paying in, but it's withholding specifically.
These are the amounts that you're pre-paying.
So that's if you're an employee, you're looking at your pay stub.
And then the projection part for you is just.
You're saying if your salary doesn't change and say you're,
say you just looked at your June 30th pay stub, you can literally just
double that. Double the income amount of whatever the year-to-date is,
and then double your federal withholding, double your state withholding.
We've got tools internally that we use that will calculate this,
and if we need to make some changes, we can, we can do that.
But as the W-2 employees. That's somewhat simple if you're on a salary.
Uhm, and then you'll do the same with your deductions.
We're usually looking at last year,
say you have a mortgage, say you're, you're making charitable contributions.
You can really just get. Get a feel for where you're going to end
up. And then once we know what your like net income is,
then we can calculate your, your taxes. And come up with where we think,
whether you need a refund or whether you're going to owe at the end
of the year. So W2 employees, it's a little simple.
It's a little simpler, but it's still a good process.
Uhm, I'm going to do business owners,
investors, and then I'll do someone that's on retired,
like taking retirement distributions. So if you're a business owner,
it's a little harder. You need to have up-to-date books,
like your bookkeeping, your, your profit and loss,
your balance sheet, if you're like working with an accountant or bookkeeper or you're
doing anything at yourself, that's the year-to-date net income number that we're looking for.
So that's where we take your profit and loss numbers. Your total income,
that's the top-line revenue. And then we gotta, you gotta account for all your
expenses. And basically what you're taking home,
like what's that net remaining profit, you need that number through.
The date that you're doing this estimate,
so say through June 30th, you need financials through June 30th,
get to that number. And then you do the projection for the rest of
the year. Sometimes if you have a pretty steady business,
you can just double it. But like in our, our business,
with the tax business, uh, we have a very heavy spring,
like tax season. Uh, it's kind of lumpy revenue.
A net income, if your business is like that, you might need to,
instead of just doubling your June 30th year to date net income.
You might need to come up with some more in-depth calculations,
but, uhm, that's for the business owners.
You've got to, you've got to estimate out the next six months.
If you don't, if you think it's about the same,
I wouldn't spend that a ton of time into it. At least start with
something basic, a rough estimate to just see where you're ending up.
So that's it. That's the business owner side. There's a lot more,
like once you, once you get the projection. So there's a investors.
Once we kind of estimate where you're at, that's your baseline.
And so when we're doing strategy, with people, when we're brainstorming what
ideas there might be, what deductions you might be missing, what are what tax-saving
opportunities there might be, we want to start from somewhere,
and that's what we call the baseline. So we start from there.
Okay, if you leave things as is,
you're going to owe $25,000 in tax,
or whatever the number is. Do that specific calculation,
and then we add in all these potential tax-saving ideas and opportunities.
You go, okay, well if you do these ten things,
your tax goes down to $5,000. You save $20,000 in tax.
And if you go, no, I'd rather, I don't want to do this one,
I want to do this one. That's where we can kind of like fine-tune
the numbers. And,
It really can get to a point of, like, how much do you want
to owe, if, by doing these strategies.
So you can You can substantially reduce them if you want,
but there's usually steps you need to take. And Give them ideas and opportunities.
It's, yeah, whether, whether you're buying a vehicle,
whether you're. Paying your kids, whether you're setting up a different company,
whether you're pre-paying insurance, or you're buying a vehicle,
all sorts of All sorts of different, all sorts of different things.
Those are kind of the basic strategies. Or if you need to do something
more, more involved, or you need to put money in investments and create some
of these deductions, uhm,
that's for the business owners. So it's, it,
it creates. You get to a point of like where you're at,
and then it opens up that opportunity for brainstorming and seeing really what's possible.
So the last one, with someone that's retired,
uhm,
you don't have to be retired. A lot of times our retired clients have
a lot of other things going on that might still be business owners.
But if you, if you've got some flexibility with that, with retirement distributions,
so say you're over 60, you can pull out retirement distributions without the need.
penalty. We can have a lot of fun with the planning here because you
can really pull out as much as you want. We can,
we can plan with your tax brackets. We can do a little bit of
this with, uh, individuals and,
and businesses. Business owners, investors, but it gets really fun when you're retired because
we can say, okay, this year, pull out $300,000.
$300,000 from retirement because you have a big loss from,
say, a rental property accelerated depreciation.
Or this business that you own, you've got a big loss coming in,
so you can, you can afford to take out more income because you're taxing
it. It's going to net out and your tax,
you're going to be in a lower tax bracket anyways. But then there might
be some years like, okay, the business. If it's sold or something sold,
let's cut back on your retirement distribution.
So it becomes more of a timing game of when you put pull income
out and when you're taking distributions because your average tax bracket,
like on one extreme end. You could be paying 45% federal and state tax
on retirement distribution. That's basically half.
Or, in a low-income year,
if you've got other opportunities, you could be paying,
like, 10 to 15%. And,
in some cases, zero tax if you're in those, if you're under the standard
deductionary of other programs. So,
it's a huge swing of things just in the timing of it.
So, I know sometimes people think, when they're retired,
they don't need to do quarterly tax planning,
because they're not paying quarterly payments. But sometimes that's one of their,
you've got the greatest opportunity for tax savings.
So hopefully that, that makes sense. But that's the mid-year tax checkup.
Do your projection,
like understand where you're at for the year so far,
estimate your estimate the year, like the rest of the year of what's going
to happen. Let's put it all together. We've got tools and things where we're
tracking all this, we're doing the exact tax calculations,
and then you can get to that point of brainstorming with what's possible.
So that's, that's, like, where the planning begins and the strategy begins.
You've gotta get, if you're a business owner, books cut up,
you need to understand where you're at, and then it opens up all sorts
of opportunities. So that's it for today. Have a good rest of the day.
See ya.
