1
00:00:00,000 --> 00:00:10,600
Hi everyone, this is the How to Lower Your Tax Bill Podcast.

2
00:00:10,600 --> 00:00:12,920
I'm your host Terence Hutchins.

3
00:00:12,920 --> 00:00:16,880
I'm a financial and tax advisor in the Dallas-Fort Worth area.

4
00:00:16,880 --> 00:00:21,440
And the goal of this podcast is to help you listeners get educated on different tax strategies

5
00:00:21,440 --> 00:00:26,200
as you can implement to improve your tax situation immediately.

6
00:00:26,200 --> 00:00:30,880
In this episode, we'll break down useful tax tips you can use to save money, no matter

7
00:00:30,880 --> 00:00:33,320
what your personal or business income situation.

8
00:00:33,320 --> 00:00:36,800
Because our motto is, keep more of what you are.

9
00:00:36,800 --> 00:00:44,440
So let's get into today's episode.

10
00:00:44,440 --> 00:00:47,440
Welcome to the How to Lower Your Tax Bill Podcast.

11
00:00:47,440 --> 00:00:49,680
I am your host Terence Hutchins.

12
00:00:49,680 --> 00:00:54,400
I'm a financial and tax advisor in the Dallas-Fort Worth area.

13
00:00:54,400 --> 00:01:00,320
The goal of this podcast is to help educate our listeners on tax strategies and offer

14
00:01:00,320 --> 00:01:06,760
concrete steps that they can implement to improve their tax situation immediately.

15
00:01:06,760 --> 00:01:11,760
Today is actually the first episode and I wanted to kick it off by sharing some insights

16
00:01:11,760 --> 00:01:17,760
on how I think people should approach their tax situation overall.

17
00:01:17,760 --> 00:01:22,400
Over the years, I've worked with many business and real estate investors with their tax

18
00:01:22,400 --> 00:01:27,760
planning and one of the first questions they come to me with is, how do I lower my tax

19
00:01:27,760 --> 00:01:29,760
bill?

20
00:01:29,760 --> 00:01:35,160
Whether you make $70,000 or you make $70 billion, everyone thinks they should be paying less

21
00:01:35,160 --> 00:01:36,160
to the government.

22
00:01:36,160 --> 00:01:40,240
It doesn't matter who you vote for, they might think their neighbors should pay more, but

23
00:01:40,240 --> 00:01:44,160
you personally should certainly pay less.

24
00:01:44,160 --> 00:01:49,080
You probably ask someone or talk about that to yourself and if you ask a professional,

25
00:01:49,080 --> 00:01:51,480
they would probably say it depends.

26
00:01:51,480 --> 00:01:53,200
And unfortunately, it does.

27
00:01:53,200 --> 00:01:57,440
But if you think about a concept that many of you are probably familiar with, it came

28
00:01:57,440 --> 00:02:00,840
from Robert Kiyosaki in his cash flow quadrant.

29
00:02:00,840 --> 00:02:04,920
It was in his book, "Rich Dad Poor Dad," and so he actually went to the concept loop further

30
00:02:04,920 --> 00:02:10,360
in a second book that he wrote, but he introduced the four types of ways that most people make

31
00:02:10,360 --> 00:02:11,760
money.

32
00:02:11,760 --> 00:02:17,360
And these ways are important because it will determine in part how you're taxed and what

33
00:02:17,360 --> 00:02:21,440
options you have to actually lower the taxes that you pay.

34
00:02:21,440 --> 00:02:27,520
Those four quadrants, if you're taking notes, the first one is as an employee.

35
00:02:27,520 --> 00:02:32,480
So as an employee, you are getting a paycheck, you're on a W2 salary, you're working for

36
00:02:32,480 --> 00:02:33,480
someone else.

37
00:02:33,480 --> 00:02:39,480
Secondly, you could be self-employed, meaning you have now separated from working for someone

38
00:02:39,480 --> 00:02:41,520
else and you work for yourself.

39
00:02:41,520 --> 00:02:47,200
However, you've just created a job, meaning your business doesn't really operate outside

40
00:02:47,200 --> 00:02:49,320
of you running it yourself.

41
00:02:49,320 --> 00:02:55,440
Thirdly, you could be a business owner, where you actually can run an operation that isn't

42
00:02:55,440 --> 00:03:01,560
depending on you being there and can actually exist beyond you being active in the business.

43
00:03:01,560 --> 00:03:03,240
Or lastly, you could be an investor.

44
00:03:03,240 --> 00:03:07,520
So at this point, you've actually accumulated money and you're actually using that money

45
00:03:07,520 --> 00:03:12,240
to invest it in different things that's actually designed to help you make more money over

46
00:03:12,240 --> 00:03:13,240
time.

47
00:03:13,240 --> 00:03:18,800
And so depending on how you make your money will determine which quadrant you fall in

48
00:03:18,800 --> 00:03:22,480
and that will ultimately determine how the government is going to tax you on that money

49
00:03:22,480 --> 00:03:23,480
that you make.

50
00:03:23,480 --> 00:03:28,520
And so whether you're an employee or an investor, you all have options, but you're going to

51
00:03:28,520 --> 00:03:32,080
just be more limited depending on which quadrant you fall in.

52
00:03:32,080 --> 00:03:34,280
So let's dive into each quadrant a little bit further.

53
00:03:34,280 --> 00:03:36,720
So most of us are employees.

54
00:03:36,720 --> 00:03:42,360
We go up a W2 job and so whether we make a modest salary and we get bonuses or whether

55
00:03:42,360 --> 00:03:47,520
we make a high salary and we have some type of profit sharing potentially, if we are on

56
00:03:47,520 --> 00:03:53,160
a W2 salary, then we are probably stuck with the highest taxes.

57
00:03:53,160 --> 00:03:58,080
And you don't have that many options really to lower your overall tax bill.

58
00:03:58,080 --> 00:04:01,000
If that's all you do and make money as an employee.

59
00:04:01,000 --> 00:04:02,680
Now that doesn't mean you don't have any options.

60
00:04:02,680 --> 00:04:04,200
It's just you're going to be limited.

61
00:04:04,200 --> 00:04:07,480
So we're going to be talking about what options do you have and then how can you possibly

62
00:04:07,480 --> 00:04:12,320
adjust based on options that are available to you, but you at least want to be taking

63
00:04:12,320 --> 00:04:26,840
advantage of the basics and then you want to be able to invest to where you can maybe transition out of just being an employee into transitioning into being self-employed or an investor over time and how that will actually help you lower your overall tax bill.

64
00:04:26,840 --> 00:04:33,240
Now if you're self-employed, we would also help educate you on how to maximize your deductions.

65
00:04:33,240 --> 00:04:36,360
How should you be reinvesting back into the business?

66
00:04:36,360 --> 00:04:43,320
How can you do it wisely that is tax efficient, but not driven primarily by taxes?

67
00:04:43,320 --> 00:04:57,560
And then hopefully how can you maybe duplicate yourself in the business so that it's not so much dependent on you and you can actually transition from being a self-employed to being a business owner where your business can operate without you being there.

68
00:04:57,560 --> 00:05:03,280
Thirdly, you could be a business owner already, meaning you don't have to be there per se for the business to run.

69
00:05:03,280 --> 00:05:08,160
And so you also want to be able to know, okay, what are the specific tax strategies that I have?

70
00:05:08,160 --> 00:05:10,280
How can I maximize my deductions?

71
00:05:10,280 --> 00:05:12,680
How can I reinvest back into the business?

72
00:05:12,680 --> 00:05:22,160
And then how can I maybe make outside investments that can help me to lower my tax bill or at least the percentage of taxes that I pay can come down over time?

73
00:05:22,160 --> 00:05:26,520
And then lastly, if you're an investor, we want to make sure that you're reinvesting your money wisely.

74
00:05:26,520 --> 00:05:37,880
You stay passive in the business and you also are conscious of if you're deferring taxes, let's say, how are you going to mitigate that tax bill potentially coming due?

75
00:05:37,880 --> 00:05:44,200
So we'll talk about how that is relevant and what you might be wary of if you're in that situation.

76
00:05:44,200 --> 00:05:53,600
And then one thing I also want to point out, if you are a business owner, there is a strategy where you can actually go passive in your business and how that can actually help you lower your tax bill.

77
00:05:53,600 --> 00:05:57,200
If you couple it with becoming an investor simultaneously.

78
00:05:57,200 --> 00:06:12,400
And so in our next episode, we're actually going to be diving into you as a W-2 employee, what options you have available, and then how you can start thinking about transitioning from being just a W-2 as far as how you make your money and how you can maybe start making money and want to deal with the three quadrants.

79
00:06:12,400 --> 00:06:14,880
And what are the tax advantages of those?

80
00:06:14,880 --> 00:06:18,160
And then each week, we're going to have a little different thing that we introduce.

81
00:06:18,160 --> 00:06:21,720
And so today, we're actually going to talk about a random tax fact.

82
00:06:21,720 --> 00:06:27,680
Okay. And it just is indicative that not everything is just black and white when it comes to taxes.

83
00:06:27,680 --> 00:06:36,800
So for example, Madison Square Garden located in New York City has been exempt from paying property taxes since 1982.

84
00:06:36,800 --> 00:06:39,880
Now, this agreement was actually only supposed to be for 10 years.

85
00:06:39,880 --> 00:06:48,360
So many times, as you'll notice in future episodes, is that the tax code is written more so as an incentive code.

86
00:06:48,360 --> 00:06:54,680
And so you can tell what the government is incentivizing you to do based on what laws are available to the public.

87
00:06:54,680 --> 00:07:02,120
And so this law was in place at the time to exempt Madison Square Garden from being taxed for 10 years.

88
00:07:02,120 --> 00:07:10,920
But because it was poorly written and it was kind of a loophole, I guess you can call it, they've never paid property taxes on the Madison Square Garden.

89
00:07:10,920 --> 00:07:17,240
And it was estimated as of last year that that has saved them about $946 million.

90
00:07:17,240 --> 00:07:21,200
All right. So would you like to be the byproduct of such an agreement yourself?

91
00:07:21,200 --> 00:07:23,040
But anyway, thanks for joining in.

92
00:07:23,040 --> 00:07:28,520
We look forward to talking to you in future episodes on how you can lower your tax bill, how you can implement some strategies

93
00:07:28,520 --> 00:07:32,240
to where ultimately you can keep more money in your pocket and less at Uncle Sam's.

94
00:07:32,240 --> 00:08:01,240
I'll look forward to talking to you soon.