Tax Law Changes On Accelerate Your Business Growth with Diane Helbig

I have a question for you that I should have asked you before. Your book, “Secrets of a Tax Free Life,” is it on Audible?

No, it’s not on Audible. I coauthored this a couple of years ago with nine other people, so it is on Amazon. I don’t believe it’s on Audible. I’d have to check that out. I’ve moved on, I’ve come up with two books since then, and one of them I will be actually offering your listeners for free. They can go to our website and get that for free.

Wow, okay.

And the most recent one is actually updated for the new tax changes, so that’s really interesting.

Wow. Man, worked pretty hard on that.

I just want to talk about the new tax bill and I know we’ve heard so many different things about the … And as it pertains to business owners, this new pass through deduction, Section 199, which is a 20% deduction on their pass through income is huge. Everybody should be communicating with their CPA to make sure that they’re doing everything they need to do to take full benefit of that for 2018.

Okay. What are some things that we should be looking at to take full advantage of that?

Different types of businesses are phased out, depending on what their income level is, so you want to make sure that if you’re one of those phased out type of businesses, you’re doing the right planning so you don’t get phased out. There are wage limitations that you have to overcome, so you want to make sure that you overcome those wage limitations. Those are the two big things.

Then, there’s some real estate information on there for real estate investors, but the two big things are, “Am I one of those people that was classed out almost under this Section 199, that I have to be really careful, see where my net income’s going to be, and see where my taxable income’s going to be?” Or, “Am I also making sure that I do all the things I need to do, so when I quality, I get the full benefit?”

But you know what? Get on the phone with your accountant. Talk to them. Make sure you’re doing it right.

Yeah. And this is for this year? Not for the taxes we’re doing … This is for 2018.

Correct. 2018.

Okay, great. We have an opportunity to be talking with our CPA and making sure that through the year, we’re doing the things we need to do.

You should be starting that now, and talking with him or her throughout the year. I tell people don’t look at your accounting bill as an expense item, look it as an income item. If you’re working with the right person, and you’re communicating with them, they could actually save you a lot more money than they’re costing you.

Yeah, right. Okay. That’s great advice. Okay. I’m going to take a quick sponsor break, and then I’ve got some more questions for you.

Great.

Well, there’s been some changes. There’s also some changes that the IRS hasn’t fully explained yet, so we’re still rubbing our eyes a little bit about it. As far as entertainment is no longer deductible, the jury’s out whether meals are actually deductible, how they have to be taken in order to be deductible. There’s a lot of things we’re still waiting for the IRS to come out with some guidance on, but they made the tax laws much simpler, we all have to remember that. I call it the Full Employment Act.

For CPAs?

I think for anybody in that whole industry, because there’s just, whether it’s legal or whatever, there’s going to be so much litigation and IRS gobbledygook going on to figure out what they actually meant by some of this stuff. The biggest thing is talk to your accountant, your CPA, and really use them as a valuable member of your team.

Yeah, because I could have sworn they said you were going to be able to pay your taxes with a postcard.

Yeah, yeah. That too, that too. And then there was the whole real estate thing with real estate taxes being capped, and everybody was telling you, “Okay, go pay your 2018 taxes now.” There was a line down the block where we are to pay taxes, and it was freezing out and I felt bad for these people because really they’re not going to deduct them. If they weren’t actually on the books, you’re not going to deduct them.

There’s a lot of stuff out there. It’s just a lot on changes and if you’re a business owner, you need to make sure you’re really working with your CPA or accountant on a regular basis.

Yeah. Okay, so I have a couple of specific questions that I am curious about, and one of them is mileage, but not just mileage, I’m curious about if you think one is better than the other, doing mileage or doing gas and maintenance.

You have actual versus the mileage expense, and the way that works is if you’re driving that BMW and you choose to use mileage, you have to use mileage until you get rid of that BMW. You can’t switch from year to year, that’s a big thing. Then, that first year, you have to look and see what’s it costing you? And what makes the most sense?

Because if you use mileage, you don’t get to depreciate your vehicle, so depending on a vehicle you have, and we tend to see for most of our business clients, actual works a lot better for them than the mileage rate. You have to look at that, but more often than not we see it’s take the actual expense, track your expenses. If you’re tracking your expenses, you’ll be okay typically, because when people don’t track their expenses, they typically at the end of the year, they don’t recapture all their expenses. They can’t find them all. They wind up losing it.

Yeah, exactly. Right.

And if you take actual, then if you have a lease vehicle and you’re using it 80% of the time for business, you get to write-off that 80% of the time. Typically it’ll work out in your favor.

Okay. Is there a tipping point with how much you drive? You know what I mean, where-

Obviously if you do no driving, the actual is going to far exceed the mileage rate ’cause you have no miles to multiple by about 55 cents a mile, but just when you’re figuring the cost of gas, the depreciation of the vehicle, the lease cost and stuff like that, any kind of repairs, and then you remember you’re locked in. Once you choose that system you’re going to use, you have to use that for the whole time you have the vehicle.

Okay. This may sound like a strange question, but I’m going to ask it anyway. If you sell your vehicle in June, and you get a new vehicle, then you can change, like for the old vehicle, you still do it for the old way, but you could say for the new one, “I want to do it differently?”

Correct. Yes, exactly.

Okay. I got it.

Because it’s based on that vehicle.

YOU SHOULD REVIEW THE THE NEW TAX LAW CHANGES WITH YOUR CPA BEFORE IMPLEMENTING ANY TAX PLANNING STRATEGIES.

Get your copy of my book the 10 Biggest Tax Mistakes That Cost Business Owners Thousands HERE!

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