WEBVTT 00:00:05.969 --> 00:00:09.250 Hi, everyone. This is the How to Lower Your Tax 00:00:09.250 --> 00:00:12.449 Bill podcast. I'm your host, Terrence Hutchins. 00:00:12.910 --> 00:00:15.410 I'm a financial and tax advisor in the Dallas 00:00:15.410 --> 00:00:18.190 -Fort Worth area. And the goal of this podcast 00:00:18.190 --> 00:00:20.789 is to help you listeners get educated on different 00:00:20.789 --> 00:00:23.589 tax strategies that you can implement to improve 00:00:23.589 --> 00:00:26.710 your tax situation immediately. Each episode 00:00:26.710 --> 00:00:29.769 will break down useful tax tips you can use to 00:00:29.769 --> 00:00:32.369 save money. no matter what your personal or business 00:00:32.369 --> 00:00:35.350 income situation. Because our motto is, keep 00:00:35.350 --> 00:00:38.570 more of what you earn. So let's get into today's 00:00:38.570 --> 00:00:47.270 episode. Welcome to another episode of How to 00:00:47.270 --> 00:00:49.750 Lower Your Tax Bill. I'm your host, Tarrin Touchings, 00:00:50.009 --> 00:00:53.490 and we are going to play a recording today of 00:00:53.490 --> 00:00:56.649 a webinar that I did with my tax partner, David 00:00:56.649 --> 00:01:00.070 Stevens. This is going to be going over the new 00:01:00.070 --> 00:01:03.170 one big, beautiful bill, the tax revisions in 00:01:03.170 --> 00:01:06.170 it, how it impacts individuals and also businesses. 00:01:06.469 --> 00:01:08.569 We will get into some of the strategy on future 00:01:08.569 --> 00:01:12.250 episodes around how it might affect you specifically 00:01:12.250 --> 00:01:14.329 in relation to keeping more of what you earn. 00:01:14.549 --> 00:01:16.489 So we're going to split this up into two different 00:01:16.489 --> 00:01:19.090 sections. So we'll play part one this week and 00:01:19.090 --> 00:01:21.890 part two next week. So hopefully this is educational 00:01:21.890 --> 00:01:26.329 and we will talk to you soon. Hey folks, David 00:01:26.329 --> 00:01:28.689 Stevens here from Stevens Capital Partners. I've 00:01:28.689 --> 00:01:30.650 got Terrence Hutchins who's joined me today. 00:01:31.010 --> 00:01:33.689 And Terrence is our managing director of business 00:01:33.689 --> 00:01:36.250 and tax planning here at Stevens Capital Partners. 00:01:36.629 --> 00:01:39.069 So happy to have Terrence. He is a wealth of 00:01:39.069 --> 00:01:42.310 knowledge. We're going to walk through the one 00:01:42.310 --> 00:01:44.049 big, beautiful bill. Is that right, Terrence? 00:01:44.609 --> 00:01:47.090 That's it. Yes. And we're not going to be political. 00:01:47.189 --> 00:01:48.930 We're not talking about any politics here. We're 00:01:48.930 --> 00:01:50.569 just talking about how it's going to affect your 00:01:50.569 --> 00:01:52.489 pocketbook. We're going to be talking to several 00:01:52.489 --> 00:01:55.159 different types of people. whether it's an individual 00:01:55.159 --> 00:01:57.560 tax return, which we all have that, but also 00:01:57.560 --> 00:01:59.799 business owners. And then, of course, also real 00:01:59.799 --> 00:02:01.359 estate as well. So we're going to be speaking 00:02:01.359 --> 00:02:03.859 to all different types of client profiles, if 00:02:03.859 --> 00:02:06.180 you will, as we walk through this information. 00:02:06.459 --> 00:02:08.759 So let's kick it off with some of the things 00:02:08.759 --> 00:02:10.460 that have been extended. What are the items that 00:02:10.460 --> 00:02:12.560 have been extended? So Terrence, I'll start us 00:02:12.560 --> 00:02:14.099 with the first one. Give us some of your thoughts 00:02:14.099 --> 00:02:16.639 here. We've got tax rates are now permanent, 00:02:16.639 --> 00:02:20.039 right? So the pre -tax rates from before 2018, 00:02:20.599 --> 00:02:23.460 we were going to refer to the higher level. being 00:02:23.460 --> 00:02:27.699 at 39 .6 is the highest prior to 2018, right? 00:02:27.979 --> 00:02:30.919 But now we're in the seven bracket system between 00:02:30.919 --> 00:02:34.560 10 and 37%. That is now permanent. Is that right? 00:02:34.759 --> 00:02:38.159 That's correct. In fact, prior to 2018, about 00:02:38.159 --> 00:02:41.599 90 % of people roughly saw their taxes go down 00:02:41.599 --> 00:02:45.199 once the tax and jobs cut act started in 2018. 00:02:45.419 --> 00:02:47.919 And so we were going to go back to that old system. 00:02:48.199 --> 00:02:50.740 And so everybody mostly was going to actually 00:02:50.740 --> 00:02:54.099 see their tax. bill go up just as a byproduct 00:02:54.099 --> 00:02:56.300 of going back to the old rules. So this is a 00:02:56.300 --> 00:02:59.500 big change for us as it relates to our personal 00:02:59.500 --> 00:03:01.719 planning where, hey, instead of me having to 00:03:01.719 --> 00:03:04.680 pay an extra one or 2 % in taxes next year, I'm 00:03:04.680 --> 00:03:07.159 going to pretty much stay the same outside of 00:03:07.159 --> 00:03:08.780 some of the other provisions that were adjusted. 00:03:09.300 --> 00:03:10.860 Excellent. Okay. And then how about the standard 00:03:10.860 --> 00:03:12.719 deduction? We know that the standard deduction, 00:03:13.520 --> 00:03:15.539 the enhanced standard deduction as it's known 00:03:15.539 --> 00:03:18.439 as remains permanent now. Is that correct? That 00:03:18.439 --> 00:03:22.379 is correct. So prior to 2018, many people actually 00:03:22.379 --> 00:03:24.639 itemized on their tax returns. So they added 00:03:24.639 --> 00:03:27.560 up the mortgage interest, their taxes, their 00:03:27.560 --> 00:03:29.379 state and local taxes, their charitable giving. 00:03:29.580 --> 00:03:32.699 Now about only about 20 to 30 % of people actually 00:03:32.699 --> 00:03:35.240 itemize because of this change to the standard 00:03:35.240 --> 00:03:38.819 deduction. So now the first $31 ,500 that you 00:03:38.819 --> 00:03:41.439 make, you actually don't pay tax on that to the 00:03:41.439 --> 00:03:44.259 IRS. That's another nice change for a lot of 00:03:44.259 --> 00:03:46.300 folks. If we had gone back to the old way of 00:03:46.300 --> 00:03:47.939 doing it, potentially a lot more people would 00:03:47.939 --> 00:03:50.120 have saw their taxes go up as well. Excellent. 00:03:50.639 --> 00:03:52.599 And then how about personal exemptions? Talk 00:03:52.599 --> 00:03:55.020 to us about personal exemptions, Tarrant. So 00:03:55.020 --> 00:03:58.199 the personal exemption is essentially when I 00:03:58.199 --> 00:04:00.919 claim anybody on my tax return, including myself, 00:04:01.400 --> 00:04:04.300 my spouse, my kids, my parents, I was going to 00:04:04.300 --> 00:04:06.960 get like a flat tax deduction for each person 00:04:06.960 --> 00:04:09.699 that I claimed. Well, that went away in 2018 00:04:09.699 --> 00:04:12.520 and now they've just set it permanently. is going 00:04:12.520 --> 00:04:15.259 away. So that higher standard deduction essentially 00:04:15.259 --> 00:04:18.579 just prevents the need to have that extra personal 00:04:18.579 --> 00:04:20.660 exemption. So that was just cleaning up the law 00:04:20.660 --> 00:04:22.459 there. Excellent. And then, of course, we have 00:04:22.459 --> 00:04:24.939 the child tax credit. That got increased by a 00:04:24.939 --> 00:04:26.720 couple hundred dollars as well, right? Yeah. 00:04:26.959 --> 00:04:30.079 So it was 2000. So prior to 2018, it was a thousand. 00:04:30.199 --> 00:04:33.480 Then it bumped up to 2000. And now they've increased 00:04:33.480 --> 00:04:36.040 it to twenty two hundred dollars. So I know all 00:04:36.040 --> 00:04:37.920 of our kids only cost twenty two hundred dollars 00:04:37.920 --> 00:04:40.199 a year. So we get a tax credit for each of them 00:04:40.199 --> 00:04:42.560 up to the twenty two hundred. And then it's also 00:04:42.560 --> 00:04:45.000 adjusted for inflation moving forward. Correct. 00:04:45.160 --> 00:04:47.639 That is correct. Yeah. So it was a flat number. 00:04:47.779 --> 00:04:49.920 So that's a good point where, hey, that number 00:04:49.920 --> 00:04:52.800 could increase over time with inflation as well. 00:04:53.000 --> 00:04:55.439 Let's talk about mortgage interest deduction. 00:04:55.759 --> 00:04:57.579 So let's speak about that. Well, the mortgage 00:04:57.579 --> 00:04:59.779 interest, that used to be a million dollars. 00:04:59.860 --> 00:05:02.120 So I know, I know you have your five million 00:05:02.120 --> 00:05:05.279 dollar compound there in Omaha. Well, hey, you 00:05:05.279 --> 00:05:07.540 pay for it cash, of course, but for us common 00:05:07.540 --> 00:05:11.139 people, if we financed it, then we had a mortgage 00:05:11.139 --> 00:05:15.850 that was more than $750 ,000, that extra amount 00:05:15.850 --> 00:05:18.569 of mortgage, we actually don't get any additional 00:05:18.569 --> 00:05:20.949 interest deduction for it. So they just made 00:05:20.949 --> 00:05:24.670 that a permanent extension now. And so yeah, 00:05:24.790 --> 00:05:26.209 so anyone that's buying a house, if you have 00:05:26.209 --> 00:05:28.350 a mortgage more than 750, you're not getting 00:05:28.350 --> 00:05:30.910 any additional tax benefit from having it. If 00:05:30.910 --> 00:05:32.569 you don't own a business that is. Excellent. 00:05:32.730 --> 00:05:35.649 Okay. Very good. And we've got the state and 00:05:35.649 --> 00:05:38.410 gift tax exemption. This is a big one. this with 00:05:38.410 --> 00:05:41.449 a lot of talk about this one over the last really 00:05:41.449 --> 00:05:44.449 four, five, six years. So let's talk a little 00:05:44.449 --> 00:05:47.790 bit about that one. So with the estate tax exemption 00:05:47.790 --> 00:05:51.110 that was just under 14 million going into this 00:05:51.110 --> 00:05:53.350 year, they're basically just bumping it up to 00:05:53.350 --> 00:05:55.970 15 million per person. So the biggest change 00:05:55.970 --> 00:06:00.149 was prior to 2018, it was closer to half that 00:06:00.149 --> 00:06:02.689 number and it was potentially going to revert 00:06:02.689 --> 00:06:05.189 back to that. And so a lot of people who had 00:06:05.189 --> 00:06:07.649 estates that are in the 15 to 20 million dollar 00:06:07.649 --> 00:06:10.350 range were thinking, hey, I don't have a tax 00:06:10.350 --> 00:06:13.089 estate problem or estate tax problem today. If 00:06:13.089 --> 00:06:14.930 the numbers go back to where they were prior 00:06:14.930 --> 00:06:18.470 to 2018, I will. So now this just provides clarity 00:06:18.470 --> 00:06:20.790 to say, hey, a lot more people aren't going to 00:06:20.790 --> 00:06:23.550 have estate tax issues. It also allows them to 00:06:23.550 --> 00:06:26.189 understand planning around trust to where, hey, 00:06:26.209 --> 00:06:28.550 do I need to do a revocable trust? Do I not? 00:06:28.709 --> 00:06:30.410 Where am I going to be at? And then that number 00:06:30.410 --> 00:06:32.480 is also inflation protected. So it'll just give 00:06:32.480 --> 00:06:34.779 us more clarity around who's going to have a 00:06:34.779 --> 00:06:37.819 taxable estate moving forward. Very good. How 00:06:37.819 --> 00:06:41.660 about ABLE accounts? So an ABLE account is similar 00:06:41.660 --> 00:06:45.040 to a 529 plan, but these are designed for people 00:06:45.040 --> 00:06:48.300 who are disabled because many times they don't 00:06:48.300 --> 00:06:50.819 have the ability to go to college due to the 00:06:50.819 --> 00:06:53.759 disability that they have. And so this is just 00:06:53.759 --> 00:06:56.180 something that allows an increased contribution 00:06:56.180 --> 00:06:58.740 limit. This isn't going to impact the vast majority 00:06:58.740 --> 00:07:00.699 of people per se, but this was just more of a 00:07:00.699 --> 00:07:03.699 provision. This is a disabled account. It's going 00:07:03.699 --> 00:07:05.680 to allow you to put money away for your kid if 00:07:05.680 --> 00:07:08.120 they're disabled. And the biggest benefit is 00:07:08.120 --> 00:07:11.300 it doesn't impact the benefits that they get 00:07:11.300 --> 00:07:13.759 from the government. So if you have a disabled 00:07:13.759 --> 00:07:16.540 kid, even if you have millions of dollars, that 00:07:16.540 --> 00:07:18.639 kid themselves won't be prevented from getting 00:07:18.639 --> 00:07:20.899 governmental assistance if they have this ABLE 00:07:20.899 --> 00:07:22.759 account. So that was just something that the 00:07:22.759 --> 00:07:24.319 government kind of just cleaned up as far as 00:07:24.319 --> 00:07:26.139 the increased contribution limits that you could 00:07:26.139 --> 00:07:28.600 put in there. And speaking of kids and education, 00:07:28.740 --> 00:07:30.519 what are some of the other education related 00:07:30.519 --> 00:07:33.819 changes? So with the 529 plans, a few of the 00:07:33.819 --> 00:07:36.660 provisions that they adjusted were before you 00:07:36.660 --> 00:07:39.540 could use money for private schools. So K through 00:07:39.540 --> 00:07:42.360 12 education, you can take out up to $10 ,000 00:07:42.360 --> 00:07:45.720 for that. Now they increase that to $20 ,000. 00:07:46.339 --> 00:07:49.000 So if you have a kid that is in a private high 00:07:49.000 --> 00:07:50.439 school, private middle school, and you have a 00:07:50.439 --> 00:07:53.800 529 plan, you can use more of that money to go 00:07:53.800 --> 00:07:56.560 towards that. In addition, instead of just having 00:07:56.560 --> 00:07:59.819 it devoted strictly towards college or room and 00:07:59.819 --> 00:08:02.459 board expenses, they extended it out to things 00:08:02.459 --> 00:08:05.779 like trade schools and even professional certifications. 00:08:06.089 --> 00:08:08.949 Now they're going to clean up what's allowed 00:08:08.949 --> 00:08:11.750 under that, but professional licenses, even potentially 00:08:11.750 --> 00:08:14.870 the CFP. If I want my kid to take the CFP and 00:08:14.870 --> 00:08:17.250 I have a 529 fund, I can actually use the money 00:08:17.250 --> 00:08:20.709 towards that. So that is one area where it just 00:08:20.709 --> 00:08:23.790 expands the scope of what a 529 can be used for. 00:08:23.970 --> 00:08:27.689 In addition to if your employer gives you assistance 00:08:27.689 --> 00:08:31.009 for education, sometimes there's tax. They basically 00:08:31.009 --> 00:08:33.210 said, Hey, if you're in school, we'll give you 00:08:33.210 --> 00:08:36.759 52 50 towards your school. and it's not taxed. 00:08:36.779 --> 00:08:38.940 That provision has been extended. So if you have 00:08:38.940 --> 00:08:41.399 an employer that provides educational assistance, 00:08:41.600 --> 00:08:43.759 then you're able to continue to get that tax 00:08:43.759 --> 00:08:46.320 free under the extension of the law. Yeah, that's 00:08:46.320 --> 00:08:47.919 a wonderful benefit. And then of course, you 00:08:47.919 --> 00:08:50.860 have student loan forgiveness, right? It's also 00:08:50.860 --> 00:08:53.399 excluded from taxable income. And that's what? 00:08:53.600 --> 00:08:55.740 Permanent now, correct? Correct. Yeah. So if 00:08:55.740 --> 00:08:58.809 you passed away early or you were disabled, and 00:08:58.809 --> 00:09:00.610 your student loan got forgiven, that's not going 00:09:00.610 --> 00:09:02.950 to be a taxable event. So that's just something 00:09:02.950 --> 00:09:05.450 that was excluded. Those are provisions that 00:09:05.450 --> 00:09:07.850 you would think would just have gotten permanently 00:09:07.850 --> 00:09:10.129 carried on. So the law just confirmed that point. 00:09:10.549 --> 00:09:13.049 That's great. We are going to pivot to the next 00:09:13.049 --> 00:09:15.269 topic here, which is going to be on business 00:09:15.269 --> 00:09:17.990 tax changes. All right. So what does the one 00:09:17.990 --> 00:09:20.850 big, beautiful bill say about your business, 00:09:21.110 --> 00:09:23.029 your pocketbook directly? How is it going to 00:09:23.029 --> 00:09:24.610 affect you? Let's walk through this together, 00:09:24.750 --> 00:09:27.889 Terrence. Topic number one. A big topic here, 00:09:28.049 --> 00:09:31.309 bonus depreciation, right? So let's talk a little 00:09:31.309 --> 00:09:33.710 bit about that. The bonus appreciation for those 00:09:33.710 --> 00:09:37.429 who weren't aware back in 2018, they brought 00:09:37.429 --> 00:09:39.730 this into the law and they essentially said, 00:09:39.769 --> 00:09:42.990 Hey, if you have property that has a shelf life 00:09:42.990 --> 00:09:46.389 of 20 years for less, you can take and deduct 00:09:46.389 --> 00:09:48.830 a hundred percent of it. And so this introduced 00:09:48.830 --> 00:09:52.070 big things for real estate investors in particular, 00:09:52.710 --> 00:09:54.710 because now they were able to do what are called 00:09:54.710 --> 00:09:57.419 cost segregation studies. where they can actually 00:09:57.419 --> 00:09:59.840 break out their buildings into four different 00:09:59.840 --> 00:10:03.200 components. Normally, roughly 30 % of the building, 00:10:03.360 --> 00:10:05.960 they can actually depreciate and deduct it 100 00:10:05.960 --> 00:10:08.320 % upfront. And with the way bonus depreciation 00:10:08.320 --> 00:10:11.460 works, you can actually take a tax loss as a 00:10:11.460 --> 00:10:13.320 result. So imagine if you have a million dollar 00:10:13.320 --> 00:10:15.220 building and you're able to take a $300 ,000 00:10:15.220 --> 00:10:18.580 tax loss against that building, that could actually 00:10:18.580 --> 00:10:20.879 reduce your other income. So they've made this 00:10:20.879 --> 00:10:24.580 a permanent extension. of the law. So that's 00:10:24.580 --> 00:10:26.659 something that it will be interesting to see 00:10:26.659 --> 00:10:29.100 how that continues to impact the real estate 00:10:29.100 --> 00:10:32.120 industry. No, that's a big change. That's phenomenal. 00:10:32.480 --> 00:10:34.840 Thank you for sharing that. How about section 00:10:34.840 --> 00:10:38.299 179 expensing? This is very attractive as well. 00:10:38.419 --> 00:10:41.100 Let's walk through that. Yeah. So section 179 00:10:41.100 --> 00:10:44.399 is another component of the tax while relating 00:10:44.399 --> 00:10:47.519 to depreciating fixed assets. So things like 00:10:47.519 --> 00:10:50.360 computers, equipment, all that kind of stuff. 00:10:50.820 --> 00:10:54.289 Well, They increased the amount of that deduction 00:10:54.289 --> 00:10:56.669 that you can take so not to get too much into 00:10:56.669 --> 00:10:59.409 the nitty -gritty But right now you can deduct 00:10:59.409 --> 00:11:02.149 up to two and a half million dollars of equipment 00:11:02.149 --> 00:11:05.210 without it being phased down Alright, so if I 00:11:05.210 --> 00:11:06.970 have a two million dollar piece of equipment 00:11:06.970 --> 00:11:09.230 I can deduct a hundred percent of that up front 00:11:09.230 --> 00:11:11.570 now one of the biggest differences between section 00:11:11.570 --> 00:11:15.710 179 and Bonus appreciation is that bonus appreciation 00:11:15.710 --> 00:11:19.590 can create a tax loss section some 179 cannot 00:11:19.950 --> 00:11:23.090 All right. So if you're a very profitable business 00:11:23.090 --> 00:11:25.470 though, it really gives you the ability to do 00:11:25.470 --> 00:11:27.909 a lot of equipment up front off your normal income, 00:11:28.090 --> 00:11:29.730 which you probably couldn't get to a negative 00:11:29.730 --> 00:11:32.029 number. Excellent. That's really good. Okay. 00:11:32.370 --> 00:11:36.529 Let's go to 1099 miscellaneous reporting thresholds. 00:11:36.529 --> 00:11:39.070 Let's talk through that. Yeah. So in the past, 00:11:39.309 --> 00:11:42.450 if I'm a contractor or if I own a business and 00:11:42.450 --> 00:11:45.509 I employ contractors and I had to send out a 00:11:45.509 --> 00:11:49.240 1099 whether that's an NEC or a non -employee 00:11:49.240 --> 00:11:51.899 compensation form or a miscellaneous form, generally 00:11:51.899 --> 00:11:54.200 that's going to be normally health care providers 00:11:54.200 --> 00:11:56.720 send them to their physicians or if you're a 00:11:56.720 --> 00:11:58.320 property management company and you're collecting 00:11:58.320 --> 00:12:00.779 rent, you're going to send a 1099 miscellaneous 00:12:00.779 --> 00:12:04.759 to your landlord. Before the minimum threshold 00:12:04.759 --> 00:12:08.000 to receive that was $600. So it actually increased 00:12:08.000 --> 00:12:11.940 that to $2 ,000. So you don't have to send out 00:12:11.940 --> 00:12:14.679 as many 1099s unless you're paying them at least 00:12:14.679 --> 00:12:17.470 $2 ,000 a year. So this is just something that 00:12:17.470 --> 00:12:19.590 administratively is going to reduce the burden 00:12:19.590 --> 00:12:22.710 for business owners and for the IRS to process 00:12:22.710 --> 00:12:24.929 all these tax forms. And then one other thing 00:12:24.929 --> 00:12:28.090 to note, a lot who were getting unaware around 00:12:28.090 --> 00:12:32.470 things like Venmo, Zelle, where if you were actually 00:12:32.470 --> 00:12:35.710 sending out the same $600, you were actually 00:12:35.710 --> 00:12:39.370 getting a 1099K from those electronic providers. 00:12:39.809 --> 00:12:41.769 That was going to be a new, they had said, hey, 00:12:41.870 --> 00:12:43.350 we're going to do this. We're going to give you 00:12:43.350 --> 00:12:45.690 two years to adjust. In the past, you had to 00:12:45.690 --> 00:12:49.769 get like $20 ,000 from 1099K. So like Square, 00:12:49.889 --> 00:12:51.750 things like that. Now they basically went back 00:12:51.750 --> 00:12:53.750 to that $20 ,000 threshold and didn't bring it 00:12:53.750 --> 00:12:56.210 all the way down. So that's once again, going 00:12:56.210 --> 00:12:58.769 to just administratively relieve a lot of burden 00:12:58.769 --> 00:13:01.889 for the third party transactions. And also for 00:13:01.889 --> 00:13:03.850 taxpayers having to keep up with all the forms 00:13:03.850 --> 00:13:05.940 they're supposed to get. plus the IRS for having 00:13:05.940 --> 00:13:08.399 to process. That's great. That's great. And let's 00:13:08.399 --> 00:13:11.419 talk about QBI or qualified business income deduction. 00:13:11.980 --> 00:13:14.700 First, explain what it is, Terrence. And then 00:13:14.700 --> 00:13:17.139 let's talk a little bit about how they've extended 00:13:17.139 --> 00:13:19.759 those permanently, what that looks like, some 00:13:19.759 --> 00:13:21.539 of those different levels, the phase outs, et 00:13:21.539 --> 00:13:24.399 cetera. So if you recall, one of the big things 00:13:24.399 --> 00:13:28.320 in the news for the 2018 tax and Dobson Act was 00:13:28.320 --> 00:13:31.419 C corporations. The C corporations. used to pay 00:13:31.419 --> 00:13:34.960 taxes at 35%. Now they're paying taxes at 21%. 00:13:34.960 --> 00:13:37.679 And so the little guys like us, we said, hey, 00:13:37.820 --> 00:13:39.659 if you're going to give Apple corporation a tax 00:13:39.659 --> 00:13:41.600 break, where's our tax break going to come in? 00:13:41.779 --> 00:13:44.659 That's where the QBI provided a tax break for 00:13:44.659 --> 00:13:46.779 your small business. There's a few components 00:13:46.779 --> 00:13:50.559 to this, but simply you can get up to a 20 % 00:13:50.559 --> 00:13:53.720 deduction on your qualified business income or 00:13:53.720 --> 00:13:57.039 QBI. For most businesses, If I make $100 ,000, 00:13:57.159 --> 00:14:00.500 I can qualify to get up to a $20 ,000 tax deduction. 00:14:00.899 --> 00:14:03.500 However, if I make quote unquote too much money 00:14:03.500 --> 00:14:07.159 and I'm in what's called a specified service 00:14:07.159 --> 00:14:09.960 trade or business. So folks like us who are in 00:14:09.960 --> 00:14:12.779 finance or in accounting, attorneys, physicians, 00:14:13.279 --> 00:14:16.519 if you were in higher than a 24 % tax bracket, 00:14:17.659 --> 00:14:21.700 that deduction started going from 20 % down to 00:14:21.700 --> 00:14:24.980 less than that over time. In this provision, 00:14:25.279 --> 00:14:28.299 if you were $100 ,000 more than the 24 % tax 00:14:28.299 --> 00:14:30.460 bracket, you didn't qualify at all. So they just 00:14:30.460 --> 00:14:32.779 raised the bar to say, hey, it's actually gonna 00:14:32.779 --> 00:14:36.559 be up to $150 ,000. So if you're phased out, 00:14:36.580 --> 00:14:38.440 it's gonna be smaller if you're in that range, 00:14:38.539 --> 00:14:40.279 or you might be able to capture a little bit 00:14:40.279 --> 00:14:43.000 of the deduction if you're at least within $150 00:14:43.000 --> 00:14:48.100 ,000 of the 24 % tax bracket. Also, just an important 00:14:48.100 --> 00:14:51.120 note, that Cuba deduction was also stated to 00:14:51.120 --> 00:14:53.960 expire. So a lot of small businesses that were 00:14:53.960 --> 00:14:56.320 getting deductions, I have clients who, hey, 00:14:56.419 --> 00:14:58.759 their deductions are in the hundreds of thousands 00:14:58.759 --> 00:15:01.279 of dollars on this QBI. And they were going to 00:15:01.279 --> 00:15:03.299 lose that deduction if this didn't get extended 00:15:03.299 --> 00:15:06.559 past 2025. So that's another huge win for business 00:15:06.559 --> 00:15:09.080 owners who would have seen their taxes will go 00:15:09.080 --> 00:15:11.240 significantly upward without that extension. 00:15:11.740 --> 00:15:14.240 Yeah, that's great. Very good. How about business 00:15:14.240 --> 00:15:17.529 interest deduction? So this is a very less restrictive 00:15:17.529 --> 00:15:20.049 now, right? So this is a kind of a niche thing. 00:15:20.330 --> 00:15:21.970 This generally is going to impact a business, 00:15:22.190 --> 00:15:24.590 probably in the early stages of their company, 00:15:24.990 --> 00:15:27.230 where they may have a lot of debt financing that 00:15:27.230 --> 00:15:29.330 they do, but not a lot of income to show for 00:15:29.330 --> 00:15:32.309 it initially. And so this is a one sixty three 00:15:32.309 --> 00:15:34.669 J. Effectively, I know you were wondering what 00:15:34.669 --> 00:15:38.029 that code was stated. I know, you know, I know, 00:15:38.230 --> 00:15:41.190 you know, all by heart. So so essentially what 00:15:41.190 --> 00:15:44.120 that says is, hey, you are going to. basically 00:15:44.120 --> 00:15:46.100 the IRS, what they wanted to do is say, hey, 00:15:46.220 --> 00:15:48.320 if you're not making really any money, we're 00:15:48.320 --> 00:15:50.220 gonna limit the amount of interest you can deduct. 00:15:50.440 --> 00:15:53.379 So this is really just gonna change the calculation 00:15:53.379 --> 00:15:55.980 for how we define how much money you're making. 00:15:56.200 --> 00:15:58.460 So they're gonna add back things like depreciation 00:15:58.460 --> 00:16:01.279 or amortization. So instead of that reducing 00:16:01.279 --> 00:16:03.759 the amount of on paper money you're making, and 00:16:03.759 --> 00:16:05.980 then that also subsequently could reduce the 00:16:05.980 --> 00:16:08.580 amount of interest you're able to deduct, the 00:16:08.580 --> 00:16:10.860 IRS basically said, hey, we're gonna not have 00:16:10.860 --> 00:16:13.730 to calculate depreciation and amortization on 00:16:13.730 --> 00:16:15.750 how much money you're making. So that would potentially 00:16:15.750 --> 00:16:18.789 put you in a better position to deduct more interest 00:16:18.789 --> 00:16:20.730 for some of your debt financing. So like I said, 00:16:20.750 --> 00:16:23.470 this is a niche thing that might impact some 00:16:23.470 --> 00:16:25.509 businesses out there, but it's a win for them 00:16:25.509 --> 00:16:28.169 as it relates to being able to have more ability 00:16:28.169 --> 00:16:31.809 to deduct some of their interest expense. What 00:16:31.809 --> 00:16:33.990 is brand new that we didn't have before? Let's 00:16:33.990 --> 00:16:36.570 walk through the first one. I know the extra 00:16:36.570 --> 00:16:38.990 standard deduction for seniors. Very excited 00:16:38.990 --> 00:16:41.580 about that. You walk us through that one. For 00:16:41.580 --> 00:16:43.679 sure. So a lot of people who are getting Social 00:16:43.679 --> 00:16:46.940 Security, they're on pensions or they might be 00:16:46.940 --> 00:16:49.059 taking out distributions from the IRAs, this 00:16:49.059 --> 00:16:51.460 is going to be a big win for them. They actually 00:16:51.460 --> 00:16:54.679 have an additional $6 ,000 per person, so $12 00:16:54.679 --> 00:16:57.299 ,000 for a married couple that they get to exclude 00:16:57.299 --> 00:16:59.899 on their income. So we already talked about the 00:16:59.899 --> 00:17:03.320 $31 ,500, then they get an extra $1 ,650, so 00:17:03.320 --> 00:17:07.039 $3 ,300. So that's about $34 ,000 off the top. 00:17:07.160 --> 00:17:10.480 This is an additional $12 ,000 that senior team 00:17:10.480 --> 00:17:14.730 get. Correct. So roughly $45 ,000 that they make 00:17:14.730 --> 00:17:17.269 in taxable income, they won't pay taxes on. All 00:17:17.269 --> 00:17:19.490 right. So that's a big win for them. However, 00:17:19.750 --> 00:17:21.849 the government says, hey, if you make over 150 00:17:21.849 --> 00:17:25.049 ,000, you start getting phased out. Half that 00:17:25.049 --> 00:17:27.329 if you're single. All right. So don't get too 00:17:27.329 --> 00:17:29.630 excited if you're a big earner out there, but 00:17:29.630 --> 00:17:32.089 this is a big win for the middle class and below 00:17:32.089 --> 00:17:34.529 that won't have to pay as much taxes on their 00:17:34.529 --> 00:17:36.369 retirement earnings. No, that's great. And then 00:17:36.369 --> 00:17:39.049 of course we have dependent care credit, right? 00:17:39.089 --> 00:17:41.880 In FSA. Let's talk about that. Yeah. Yeah. So 00:17:41.880 --> 00:17:44.440 with the dependent care, I know obviously a lot 00:17:44.440 --> 00:17:46.779 of people are paying childcare to be able to 00:17:46.779 --> 00:17:51.079 go to work. And in the past, the max credit was 00:17:51.079 --> 00:17:54.299 just about $600 per kid of the two kids. They'd 00:17:54.299 --> 00:17:56.460 increased that with the calculation. It's going 00:17:56.460 --> 00:18:00.660 to work out to be about $1 ,380. So another $180 00:18:00.660 --> 00:18:03.539 basically that you're going to get as a tax credit, 00:18:03.539 --> 00:18:06.059 right? That's like a nice night out with your 00:18:06.059 --> 00:18:08.059 family. The government is going to chip in for 00:18:08.059 --> 00:18:10.559 you. You didn't find how many kids you have, 00:18:10.559 --> 00:18:13.720 right? Right, right, exactly. So that's going 00:18:13.720 --> 00:18:16.599 to be an addition. And then the FSA, oftentimes 00:18:16.599 --> 00:18:19.200 employers allow you to put money towards an FSA 00:18:19.200 --> 00:18:22.579 account. So that limit went from $5 ,000 to $7 00:18:22.579 --> 00:18:25.839 ,500. So you get an additional $1 ,200 you can 00:18:25.839 --> 00:18:27.880 essentially exclude from your income that can 00:18:27.880 --> 00:18:30.559 go into an FSA account that can be used towards 00:18:30.559 --> 00:18:32.339 paying some of those childcare expenses that 00:18:32.339 --> 00:18:34.559 you have. So that's a big win for both that have 00:18:34.559 --> 00:18:36.920 multiple kids that are under the age of 12 in 00:18:36.920 --> 00:18:38.779 this case. That's excellent. And this is really 00:18:38.779 --> 00:18:41.279 just a broad overview that we're covering today. 00:18:41.779 --> 00:18:43.480 What we're really excited about at Stevens Capital 00:18:43.480 --> 00:18:45.740 Partners is we are growing. We've been growing 00:18:45.740 --> 00:18:47.779 consistently. We're honored to be recognized 00:18:47.779 --> 00:18:50.680 in Inc 5000, not only regionals, but nationally. 00:18:50.839 --> 00:18:53.460 We just found out as well. But I say all that 00:18:53.460 --> 00:18:55.240 just to mention that if you're a business owner 00:18:55.240 --> 00:18:57.039 and you happen to see this video and you say, 00:18:57.099 --> 00:18:59.299 Hey, I really want to partner with someone who 00:18:59.299 --> 00:19:01.670 can be way more surgical than who I'm working 00:19:01.670 --> 00:19:04.170 with today, way more strategic, then please reach 00:19:04.170 --> 00:19:07.369 out to us, stevenscapitalpartners .com in a variety 00:19:07.369 --> 00:19:08.849 of ways you can reach us. You'll see that on 00:19:08.849 --> 00:19:11.250 our website. We'd love to have a conversation 00:19:11.250 --> 00:19:13.390 with you and see how we can impact your family 00:19:13.390 --> 00:19:15.150 and your business in a positive way. So thank 00:19:15.150 --> 00:19:15.710 you so much.