Simple Wholesaling with Brett Snodgrass and Jaren Barnes

Hey, Mister Cody, here’s my box of receipts. You’re just going to give me a box of receipts? I’m paying you money. What was this one? This is for the beanie babies. Is this a business expense? Yes. What about this one?–for new investment into beanie babies. What about this one in McDonald’s? I don’t eat at McDonald’s. I’m Vegan. How dare you accuse me? This must be your neighbors. My neighbors? You need to get your taxes right, man. Get it right. What’s wrong with you? You’re fired.

This is the “Simple Wholesaling” podcast: Episode 87. We’ve get a great show for you guys today. And because of the tax intro, we are interviewing a guy named Craig Cody today. He is a cop who has turned Certified Tax Coach and he talks about saving money on taxes and living a tax free life. He’s written a bestselling book on the “Secrets of a Tax Free Life” and talks about all these right off and really just talks about something and it gives you guys some knowledge about taxes which we don’t ever want to talk about but is so important to talk about because your biggest expense is taxes and you don’t feel like that it is because you’re not writing a check for it all the time.

But really it is, you know, the biggest expense sitting on your tax bracket. So that’s who we’re interviewing today, Craig Cody. But other than that, we got some cool stuff going on.

Wow simple tips and tricks that make real estate investing easier, faster and better inside of a week.

Huge. Why guys? We are so excited for today’s guest. We have Craig Cody from New York and now we’re going to be talking a lot about the thing that you guys love to talk about and that is taxes and how to save money on your taxes because Craig is a Certified Tax Coach. He’s a Certified Public Accountant, business owner and a former New York City police officer, which I would love to get into some of the stories with that. He served 17 years on the force and but now he is, like I said, a tax coach and he belongs to a select group of tax practitioners throughout the country who undergo extensive training and education on various tax planning techniques, strategies, and to remain certified. So with this organization, Craig has also co-authored a book that’s on the Amazon best seller list called “Secrets of a Tax Free Life”. What’d you like to be tax free, Jaren? Yes sir. I can’t wait to get in this, so thank you Craig for joining us today. How are you doing?

Great. Great. Thanks for having me on guys.

Yeah, man, me too. Thank you so much for serving on the force. Our audience probably doesn’t know this, but my dad was actually an Oakland police officer out in California for about 10 years so thank you–got a lot of love for them, police officers, so yeah. To kick this thing off, man, tell us your origin story. I mean, you hail from New York. How did you grow up? Why did you get into tax? It’s such an exciting career choice, you know, it’s like everyone in our audience is just like, what taxes?

Exciting. Trust me. But I followed in my dad’s footsteps. He was a New York City police officer, so I went to college and left after three years. I was an economics major, decided I was going to be kind of did what everybody else in the community did, you know, you went on to civil service and I did that for a number of years and at some point I said I need a little bit more control of my destiny. I went back to school, got my accounting degree. I left after 17 years and went to work for an international accounting firm. I always liked the estate planning because I was able to save people money on a number of years ago. They changed the rules and you know, basically it’s a married couple of these more than $15,000,000 to do, to really have some serious tax savings and a plan. So we started looking at other ways to save people and we stumbled upon tax planning. So here I am, you know, my firm has about maybe 15 years old, but I’ve really been growing it the last six or seven years.

That’s awesome. That’s so cool. Just for our listeners out there, you know, most of the people, I’m sure they see their accountant once per year. They go, they get their returns and that’s the one time they really ever see them. And you’re talking about tax planning. So what is the difference between, you know, go on and see your account and once per year doing your tax returns versus what your firm does in that as tax planning and kind of go in and dive into what that even means.

So what the typical Accountant does is he does very well is he puts the right numbers in the right boxes and he’s reactive. It’s kind of like he’s looking in the review mirror so you guys aren’t talking and you’re going to see him in March or April. And he’s recording history. And what a tax plan does is we’re proactive. We want to make history. So we look for legal ways to reduce your taxes and help you keep more of what you make. So it’s just a matter of being proactive in communicating a lot versus waiting around until March and April.

So on that, I mean, what would you suggest to an entrepreneur in real estate? How frequently should they be touching base with their accountant? I shouldn’t even be touching base like once a quarter. What do you think?

It depends on how many real estate deals they’re doing. If they’re doing a lot of deals, they should probably every month have a conversation. It doesn’t have to be a lengthy conversation, but they should have a conversation. You should know your numbers. If you communicate with your CPA on a regular basis, you’ll know your numbers.

So I wanted to ask because I actually just sat down with a CPA for the first time ever as like a 1099 last week actually last Monday and something that they were talking about is when you’re self employed, which probably the vast majority of our audience is at a 1099 self employed. What have you, you know, he was telling me that a lot of people, they’ll wait until paying their taxes just once a year even though they get penalized by the IRS because it’s really only a certain interest rate and penalty that they have to pay like 4% or something like that. Which for most entrepreneurs, if they had the convenience of waiting to just doing taxes once a year, they probably would be like, well, 4% just gives me more time and more leverage to do that. I just wanted to dive in on what your advice is. You think that that’s irresponsible or do you think that that’s okay if that’s how they want to do things? Because I know specifically in like transaction oriented businesses like wholesaling to do your taxes each quarter would be, you know, you might have a month or two that’s off right, but your taxes for the entire year would be easier in my mind to handle because you can actually see what you made for the year.

So the way it works is it’s really based on the year before. So depending on where your income is, you have to have somewhere between 100 or 110% of last year’s tax paid in by January 15. And the numbers can change slightly and if you don’t make those payments quarterly, like equally quarterly, you’ll get assessed that penalty. So now I’ve worked with clients where they don’t want to pay a dollar penalty or dollar interest.

And what about what is the penalty?

It’s a calculation, an interest penalty and I couldn’t really tell you what it is, but I don’t know 5%. Maybe it’s not a huge number but it’s enough that certain people would rather–I’d rather not pay that money. And then there are other people that just look at it as a cost of doing business. I have access to this money. Obviously you want to make sure you have the money because you don’t want to come to April and not have any cash to pay your taxes. So it’s a personal preference. We always give our clients the quarterly estimates if they choose not to make them, they’re doing it because they know that they’re choosing not to do it, so everybody kind of has their own personal preference.

Gotcha. Cool. You kind of talked about the difference between tax planning versus, you know, kind of being proactive versus reactive. I know that a lot of people, they just don’t really like to think about taxes because it’s kind of like not really thinking about it and you’re eating, you know, if you’re trying to lose weight, but you’re eating a bunch of pizza and Ding dongs all the time you just don’t want to sit on the scale. You know, you just want to just kind of come back from the Florida bunch of food. No one else, I know Brett Snyder, I just want to kind of ignore it and whatnot, but it kind of takes us into tax planning. Where do you start with a client in? What are some of the first key highlight write offs that you might talk about? Kind of give us, you know, a little bit of a breakdown of where do you start at.

The first thing that we do, and we basically deal with real estate investors and small business owners, we don’t do a lot of individual returns for people that are not our business clients. So the first thing we do is we take a look at last year’s taxes and we do an analysis and we look for missed opportunities and missed deductions. From there, we figure out, you’ve lost; you’ve missed, you know, $40,000 in deductions. That could be, you know, $10-12-15,000 a year in extra taxes that you’ve overpaid. We put together a plan if they’re interested in it and they pay us for our plan. Our plan fee is 100% refundable and in over six and a half years, no one has ever asked for a refund. It’s instant gratification, that’s really what it is you’re talking about. ROI is over 400%. So from there we go forward, but it all starts with the plan.

So what are some ideas, right? What are some ways clients out there can you, our Listeners can save some money?

So the number one thing is plan. That’s the biggest problem is people fail to plan. Number two is having the wrong business entity, depending on what they’re doing, are they in the right entity for their circumstances. So two people could be in the same business and they’ll see me be good for one and S Corp may be good for the other. So there’s a lot of things that go into it. Then we talk about retirement plan, which is kind of like I say, I’m not going to tell you about our retirement plan because you know the guy at Fidelity at your bank is going to tell you about retirement plans.

That’s a kind of a ground ball–medical benefits. You know we have something called a medical expense reimbursement plan, which is depending on the type of entity you’re in, let you write off your kid’s braces, where most people don’t get the benefit of those deductions on their personal return. Hiring your kids, if you could do it legitimately and documented, tax court actually ruled you can hire your children as young as seven. I typically don’t recommend it until they’re about 11. You just have to document everything she does and then here’s one. The Home Office, we’ve all heard it. A Home Office deduction, maybe our accountants, CPAS said it’s a red flag. It’s not a red flag, it’s not a huge deduction, but what it does is it opens the door to a lot of other things. If you have a Home Office, then travel between your Home Office and other places of business is the deductible. It also allows for what we call home athletic facility, which could be your pool, your home gym, so now that becomes adoptable, so those kinds of things. (EFFECTIVE 1/1/2018 THE HOME ATHLETIC FACILITY IS NO LONGER DEDUCTIBLE) There’s obviously meals and entertainment, your car expenses, stuff like that, and a lot of these things are in my book that I’m actually going to offer your Listeners, “The Ten Most Expensive Tax Mistakes that Cost Business Owners Thousands”, we’ll  give you a link where you can get the book for free.

That’s really awesome. Thanks so much for that Craig.

Listen to the full episode here.

Get a copy of me free book here.