Carter Cofield Shares How To Turn Your Hobby Into A Successful Side Hustle, Holiday Tax Hack + More
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Speaker 1 (00:02):
Of course.
Speaker 2 (00:02):
My partner, Stacy Tisdale is here.
Speaker 1 (00:04):
Happy Wealth Wednesday, everybody.
Speaker 3 (00:06):
We have a really exciting show for you today because
we're going to show you how to like taxes.
Speaker 2 (00:11):
Oh that's to hate taxes. I hate taxes, but.
Speaker 4 (00:15):
Not like just how to avoid paying them. I don't
care if you like them or don't like them. If
you don't want to pay him.
Speaker 2 (00:19):
I want to.
Speaker 1 (00:23):
I talked to you about it and I was like, wow, ye,
just the stuff you learn and everything.
Speaker 2 (00:29):
My accountant called me and I almost passed out. I
was like, wow, how much? But yeah, So let's introduce
our guests.
Speaker 1 (00:36):
We have Carter Cofield and he is.
Speaker 3 (00:38):
The co host of melanin Money on YouTube, which is.
Speaker 4 (00:42):
A great great financial literacy show.
Speaker 3 (00:44):
Great financial literacy show, and UH learn a lot from that.
And it's really interesting. You are a tax expert, financial expert.
You've helped small businesses, celebrities, everybody get their money right.
But it's interesting how you came into this field in
the first place. So tell us audience, you know initially
how you got started as an accountant.
Speaker 4 (01:02):
Yeah. So most people don't know is my my parents
died when I was young, right, so my mom dad
when I was fourteen, and my dad did when I
was sixteen, so and I graduated in O nine, so
right around the recession. So I was the epiton me,
if I don't have there's no fallback plan, right, So
when my guidance counselor asked me, like, what do you
want to be when you like go to college, I
went to the computer and typed in what job has
(01:24):
the lowest unemployment rate? Because I literally could not afford
to be unemployed because I watched my family and my
friend suffered from poverty. So like, when I googled it,
CPA was a number one profession that had no unemployment
during the whole through the whole recession.
Speaker 2 (01:40):
So I want to look that up.
Speaker 4 (01:41):
I want to do that, Yeah, because no matter what's
happened with the economy, people need.
Speaker 5 (01:45):
To Yeah, they do, right, and you're less likely to
get audited, right if you use certified a CPA.
Speaker 4 (01:51):
Yeah, exactly. So I was like, I'm going to college
for that. Then I went to I went to the
University of Illinois, which was one of the top colleges, and
here we are.
Speaker 2 (01:59):
You did you always like numbers because some people I
love numbers.
Speaker 4 (02:02):
I love money because I was always had the question
why don't we have it? Right? Like, I see people
with the money, but we don't have it, So I
want to learn how I can help attract it. So
I was always good with numbers, and CPA was just
the field that I chose to put my expertise in.
Speaker 1 (02:17):
So you're passionate about this.
Speaker 4 (02:19):
I am, because like as a culture, making money for
us just became like natural and like something that we
can attain. And as soon as we figure out that
we can make money, then we figure out about the
thing called taxes. Right now, we make a million dollars,
the uncle Stam wants to take half of.
Speaker 5 (02:34):
It, right, But then we see people saving so much
on taxes that are making so much money.
Speaker 2 (02:38):
What am I paying more?
Speaker 1 (02:40):
Yeah?
Speaker 5 (02:40):
Exactly, Jeff Bezos, my taxes is a billionaire literally. All right, Well,
let's get into some of these questions, because you know,
I have a lot when it comes to taxes.
Speaker 2 (02:49):
Now, one thing I want to talk about is having
an LLC.
Speaker 5 (02:52):
I see people talking about that a lot more recently
and saying when you graduate from college, you should have
an LLC right away. So can you talk about why
that's important or.
Speaker 2 (03:02):
Is it important.
Speaker 4 (03:03):
Yeah, So I don't know if the necessarily having the
LLC in place is important. I mean, you want to
have it, But I think the bigger tale when it
comes to taxes is that if you want to win
the game of taxes, you need to need to have
a business or become an investor. The tax code is
made for entrepreneurs and investors. If you're not one of
the two, you are playing yourself when it comes to taxes.
(03:23):
So I love the narrative like when you graduate college,
like start an LLC, start some type of small businesses,
because that way you'll be able to turn a lot
of your personal expenses into tax deductible business expenses. So
I think that's why everybody says good Llcup.
Speaker 1 (03:38):
And you and I were talking just like overall.
Speaker 3 (03:40):
We were talking about how much we hate taxes every
but how the rich and the middle class think of
taxes so differently, like having a tax paying season versus
tax saving season.
Speaker 4 (03:51):
Yeah. Yeah, so our conversation before, I said that there
are actually two tax seasons. Most people think it's only one.
They think of tax season as January through April, right,
that is tax paying season. Most middle class people go
to their CPA in February and say how much am
I going to owe? That's what middle class do. The
wealthy do something different. The wealthy understand that tax saving
season is August through December, the last few months of
(04:13):
the year, and they go to their CPA and say,
what strategies can we implement so that I don't have
to pay taxes? And if you take care of business
during tax saving season, you don't have to worry about
nothing during tax paying season because you've done the work. Well,
let's talk about this, talk about it, let's get it, let's.
Speaker 2 (04:32):
Get it for tax saving season.
Speaker 1 (04:35):
Yes.
Speaker 4 (04:35):
So, one thing I always tell people is to turn
your hobby into a side hustle. Right. So, for example,
I had a friend. She was a lawyer. They get
one hundred and fifty thousand dollars a year getting killed
when it came to taxes. Her hobby was traveling. She
loved to travel the world and eat at five star
restaurants all across the right. I'm sure, I'm sure you
can attest. Right, So we sat down for lunch. She's like, Carter,
(04:58):
is there anyway I can write these trips off? I
was like, you have a business. She said, no, I said, okay, well,
let's turn this hobby into a side hustle. So she
started a vlog about the best restaurants to eat in
different countries. She started getting subscribers to her blog, she
started making money off her ebooks. She only made like
two or three thousand dollars in sales from that side business.
But what it did is it unlocked all those deductions.
(05:21):
So the IRS says, if you have a business, any
expense that is both ordinary or necessary to operate that
business is tax deductible.
Speaker 2 (05:29):
So you have to travel, you have to eat at these.
Speaker 4 (05:30):
You're to travel, and you have something hotel. It was
a loss exactly. So now she might have made two
thousand dollars in her business, but she might have lost
twenty five thousand dollars in her taxes. That loss from
her business to subtracted from her income at W two job, right,
so she didn't have get like a ten or fifteen
thousand dollars tax rEFInd.
Speaker 2 (05:48):
It's worth it, and she also.
Speaker 4 (05:49):
Has traveled the world.
Speaker 2 (05:51):
I'm standing like, you're already doing it doing it anyway.
Speaker 4 (05:53):
Why don't you, whatever your hobby is, find a way
to monetize it. Once you make that dollar in your hobby,
you unlock all those.
Speaker 5 (05:59):
Deductions, right, and then even certain things like say she
went out to eat with you, that's a business expense because.
Speaker 4 (06:05):
I pay for that meal, by the way, because she
didn't have a business yet, So I was like my
car because there's taxes deft to me. Exactly, I'm going
to take that dusk exactly.
Speaker 3 (06:14):
Any anything, I can just start a blog post about
anything and then it.
Speaker 4 (06:18):
Has Yeah, So like as long as you monetize that business.
So I think the other thing people can do is, like,
whatever your job is paying to do from nine to five, right,
somebody else would pay to do that same thing from
five to nine. Start to side business. If you're an
assistant at W at your W two job, you know
how men business owners need an assistant, right, just do
it after hours. Start making money in your side business.
(06:39):
You can start writing off things like your travel, your rents.
Would we'll talk about if I want to your automobiles.
All these things that were already paying for our business
can be paid for and we can start saving a
lot of money.
Speaker 5 (06:50):
Now, what if you drive to work, right, let's just
say you don't have this sad hustle, but you drive
to work, would your car be considered a business expense?
And let's say you also, at your job have to
work from home at times? Is that also potential to
write that off?
Speaker 4 (07:04):
None of this stuff is tax deductible if you only
have a W two job. That's what sucks because.
Speaker 1 (07:09):
Of virtual your computer.
Speaker 4 (07:11):
If you could literally be working from home using your
personal vehicle, all this, But if you have a W
two job, the IRS says no. The moment you start
the business, the IRS says yes. Okay, So why don't
we start businesses? You know what I'm saying. And I
think it's because the education system taught us to get
a job. If you think about it, who pays for
the education system?
Speaker 2 (07:31):
Right?
Speaker 4 (07:32):
The government pays with our tax dollars?
Speaker 5 (07:33):
And we don't think about taxes either when we're in school.
I don't feel like I've ever had taxes come up
in a conversation.
Speaker 2 (07:40):
Now.
Speaker 5 (07:41):
You know what else I want to ask you. A
lot of people moving to other states for tax purposes.
Can you talk about that? Because I always hear, Oh,
I'm moving into Texas, I'm moving to Florida, I'm moving
to Puerto Rico.
Speaker 4 (07:53):
Yeah, so if you move to a state that has
no state taxes, you avoid state taxing.
Speaker 2 (07:58):
How many states are there that nine?
Speaker 4 (08:00):
Okay, don't ask me name, I know, I know if
we have Florida, we got Texas, we got Wyoming, Okay,
we got Vegas, Nevada.
Speaker 5 (08:09):
So that could be worthwhile though, I mean if you
have the ability to be able to move, because especially
for I know somebody who got a huge chunk of money,
but they moved first before they ended up getting that
money from.
Speaker 4 (08:24):
That reason, probably say five to ten percent. So they
got a million dollars check they just say fifty two
one hundred thousand dollars by moving Somewhere.
Speaker 3 (08:31):
You were talking about cars, Yeah, so you would you
told me about a really interesting way to save a
lot of money on your car expenses by writing them off.
Speaker 4 (08:40):
Yeah. Yeah, So right now, vehicles are so last year
and this year. Vehicles are probably one of the easiest
and most advantaged tax deductions you can take. Right So,
let's say somebody has a W two job and I
want to start a business, but they have a vehicle.
If they rent that vehicle out while they're at work,
like put it on touro, put it on higher car,
(09:01):
they are vehicles now with business right, so they're making
money from their vehicle. So now they're able to write
off all expenses related to that vehicle, interest on your
car note, gas repairs, car washes, parking, insurance, and this
thing called depreciation. So what IRS says is that if
you hit a car and it weighs over six thousand pounds,
this is what I'll see all over social media. Right,
(09:23):
you get to write off this year eighty percent of
the value of the car. So if you went and
financed the Cadillac Escalate and it was one hundred thousand dollars,
you would get an eighty thousand dollars tax reduction. Today
that alone wipes out most people's tax bill completely. So
you put no money, you got the car using your business,
you wrote it off, and you save eighty tw one
(09:43):
hundred thousand dollars.
Speaker 1 (09:44):
Doesn't matter how I like, once a year.
Speaker 4 (09:47):
So the interesting thing about the play I did. That's
a good question. So the interesting thing about that play
is the IRS says your car has to be used
at least fifty percent for your business. Okay, now, when
you rent it out, not about how many times it's rented,
how many times it's available to rents. So if you
rent it out like two times and then you jack
(10:07):
the price up high, so nobody rents it out because
you really don't want people using your car. As long
as it's available for rent, that counts towards the fifty percent, okay.
Speaker 2 (10:16):
Or if somebody rented out, you just got a huge.
Speaker 4 (10:18):
Yeah yeah exactly, yeah, yeah exactly. So I think that
that's something that any W two person can do. You
go on to work, rent list your car, have your car,
make money while you're at work, and then you get
you know, it's ten twenty thirty, forty fifty thousand dollars
deduction depending on what type of vehicle you have.
Speaker 3 (10:35):
I'm hearing so much more about this renting your car,
putting your car to work. Isn't it just a tremendous liability?
Speaker 4 (10:41):
Well, it depends what company you use. So that's how
I first started, Like my first my first business, I
was working in Corporate America making a hundred thousand dollars
as a CPA. I learned about this tax stuff because
all CPA doesn't know about tax savings. I learned about this.
I said, okay, bet watch this. I rented my car
out while I was at work and I ended up
being like a twelve thousand dollars refund that next year
(11:02):
from all the deductions that my car had. And yeah,
people might get in an accident in your car, but
that's where the company comes in and pays you.
Speaker 1 (11:09):
So like, yeah.
Speaker 4 (11:11):
Yeah, so I can say this, so so no somebody
will get and I rent my car out on to
somebody got an accident, right, I went to the highest
bidder and they told me to be eight thousand dollars
for me to fix it. Toro cut me a check
for eight thousand dollars. Then I go to my friends
dealership who can do it for four thousand, right, And
(11:31):
that's part of the difference. Okay, So I don't think
it's that much liability if you because if you go
through the right means, Now Touro is the company, I
is anything other than that. I can't promise you that,
but they used to. They will cut check based off
whatever quote you get.
Speaker 2 (11:44):
To make sure whichever company, if you do this, you
check what they're Hey.
Speaker 4 (11:48):
Look, I would.
Speaker 5 (11:52):
Also I want to make sure that as we are
talking about texts, we're also talking about retiring in the future,
savings and investments, right, And so let's talk about the
benefit of you know, putting money into a retirement or
a savings plan, but the tax deductions that you get
from that.
Speaker 4 (12:10):
Yeah. So a key that I think the world needs
to understand is that the more you invest, the less
you pay the irs. Right, And that's what real estate
stocks whatever. So when you invest in these four one
K retirement plans, you get let's say you invest ten
thousand dollars here four one K. Yeah, you just invested
ten thousand dollars, but you also get a ten thousand
dollars tax deduction for doing so. So you're making money twice.
(12:32):
You're making money from the investment and you're making money
from the money that you save from the contribution.
Speaker 5 (12:37):
Hey, some people think that because I don't have any
savings or I don't have any money extra, I'm living
check to check, that I can't afford to put into
a retirement or a savings plan.
Speaker 2 (12:49):
But you can because this is actually going to come
back to.
Speaker 4 (12:52):
You saving you money in taxes. So the more you contribute,
the higher refund is likely going to be. And as
long as you're using your refund for you know, smart things,
you'll be putting yourself off in a better position.
Speaker 5 (13:02):
I learned that in my super broke day, you know,
when I started my roth ira and my four oh
one K to have the money go straight into that,
but then also knowing that it was deductible.
Speaker 3 (13:13):
So yeah, and I think that so you have to
be you have to be deducting.
Speaker 4 (13:17):
Well, I mean, whoever's doing your taxes, Yeah, you have to.
Don't do your own taxes because you're probably gonna you're
gonna cast yourself more mistakes. You will trying to you know,
out smarter.
Speaker 1 (13:28):
You know you have to, you have to be able.
Speaker 3 (13:29):
You're doing tax deductions instead of just the standard deduction.
Speaker 4 (13:33):
No, no, so you asked me about standard are itemizing? No,
the moment you contribute to a four one K, no
matter if you itemize or not, you get the deduction.
So so you want to make sure that you're contributing
to a four one K or ira. I think the
bigger thing that people don't contribute is because.
Speaker 1 (13:51):
They terrified that they don't have the day to day No.
Speaker 4 (13:54):
They're terrified they can't use the money to their sixty
But not true. But because right, well we'll talk about
the second not true.
Speaker 2 (14:04):
If you want to buy a home.
Speaker 4 (14:05):
Yeah, yeah, well actually so there's there's the way outside
of that that. There's that way, but there's a way
outside of that. So most people don't contribute to retirement
plans because they say, well, what happens if I have
an emergency? Now, if I'm not fifty nine and a half,
I'm gonna have to pay taxes and penalties if I
use the money early. Maybe seventy percent of four one
K providers have a loan provision in their full one K.
(14:29):
Most people don't know that. So if you look at
your full one K documents, seventy percent of employers will
allow you to take a loan against the money and
your full one K for up to fifty thousand dollars
or fifty percent whatever's left.
Speaker 2 (14:41):
You just have to pay it back in a certain
amount of time.
Speaker 4 (14:42):
You have to pay it back within five years. But
the interest rates are better than any other interest what
you'll get in today's environment. I think right now you're
paying eight to ten percent on interest. But when you
borrow from your own four to one K, you pay,
you may pay the loan back who you paying.
Speaker 2 (14:58):
Interests back to yourself exactly.
Speaker 4 (15:00):
I'd rather pay interest to myself then Chase for twenty
five percent or another credit card company for twenty five percent.
So most people can take a loan from their full
one k and use that money if they were to
have an emergency. And I think if they knew that
they could take a loan from it in case of
an emergency, more people will be prone to leverage you
in the first place.
Speaker 5 (15:19):
But the only problem is if you don't pay it
back also within the five years, and that can be
an issue.
Speaker 4 (15:23):
Yeah, if you don't pay it back within the five years,
that whatever you took out is just a distribution, So
pay it back. But I would rather somebody use that
as a loan than taking a loan back, taking a
loan from another company at twenty five thirty percent.
Speaker 1 (15:35):
Just takeout, don't take out more than you know your compare.
Speaker 4 (15:38):
It, and then what are you taking out for? Is
the better? Better question? We all get clear because what
we've had, what I've had some of my clients do
is they'll take a loan against they're fall one K
to buy a real estate property. Then they'll have the
cash for from the real estate pay off the loan.
So now they're using their asset to generate more assets.
Speaker 5 (15:59):
Now, what if say you had some really high interest
rate credit cards and you said, you know what, these
interest rates are so high?
Speaker 2 (16:06):
Would that be something that a person would consider doing.
Speaker 4 (16:09):
Yeah, I mean if you if you have high interest
credit card debt, that that's making the loan America. Now
you got to pay. Now you get two thousand dollars
a month in credit card bills, I would think it's
a good idea to take them to brawl gets your
full one k pay it off. Because now we pay
your full one K back, you only might be paying
six hundred dollars a month instead exactly, So only take
(16:30):
the loan, like if you know what you're going to
do with the money and if it's wise.
Speaker 2 (16:33):
Now, another hack you talk about is paying your children. Yeah,
do your business, so discuss that.
Speaker 4 (16:39):
Well, this is like when I was working with wealthy
clients in corporate America. This is what I saw each
and every one of them doing. And it's because it's
so many principles inside that we need to understand as
a culture. Right, So if you have a business, which
we all should have, we just talked about that, and
your kids working your business, this could be shredding paper,
doing your social media, answer phones, whatever. You can pay
(17:02):
your kids up to thirteen eight hundred and fifty dollars each.
You receive the tax deduction for paying your kids, and
your kids receive the money tax free as long as
they're below the age of seventeen. So instead of like
making money and then paying your kids with money that
you've already been taxed on, why don't you pay your
kids from your business so that you, as the owner,
(17:24):
can get a deduction and the kids can receive the
money tax free. And if you want to take it
a step further than that, don't let the kids spend
the whole thirteen eight hundred and fifty Take sixty five
hundred of that and put it into their wroth ira. Right, So,
now you've paid your kids from your business, you've got
a tax deduction, your kids receive the money tax free,
and angel as you know, wroth iras are never taxing
(17:46):
if you're paying, So now you're putting money into another
account that's never going to be taxed. And if you
do this when your kids are aged six, by the
time they're seventeen, they will have one hundred and fifty
thousand dollars of tax free money. If you want to
go to college, see here's that. If you don't want
to start a business, use that.
Speaker 2 (18:02):
Your son aged doubt.
Speaker 4 (18:05):
That was our first question, was age.
Speaker 1 (18:07):
I was like, yeah, it's like, well what happened to
But you can do stuff. If they're over each yeah,
you can still.
Speaker 4 (18:12):
Pay them, but all of the money won't be tax free.
Speaker 3 (18:16):
You know.
Speaker 4 (18:16):
You know what I'm saying. I would rather pay my
kids with after tax money, and then if you want
something use this money. Don't use us using my money
that have already pay taxes on. So I think that
if we all did that, we would set ourselves up,
but we'll also set up our future generation.
Speaker 5 (18:33):
Now, another thing that you can do that you talk
about is renting out your home to your business. That's crazy,
So how does that work?
Speaker 4 (18:42):
Okay, so you went crazy on the phone.
Speaker 2 (18:48):
This is what I'm actually about to do.
Speaker 5 (18:51):
You're doing it for Yes, I have a two family
house and so for the rent of that is actually
going to be my business.
Speaker 4 (18:59):
Perfect.
Speaker 5 (19:00):
I'll be paying myself my business rent to be able
to use that for everything I have to do for work,
for recording, podcasting, all of that.
Speaker 4 (19:06):
Well, I got a crazy play for you, and I
don't know if it's a good on camera, I'll give
to you after. Well, we could do it, or we
could do one is however you want to do it.
So the one of the strategies I love to teach
is a strategy is called the Augusta rule. So in Augusta, Georgia,
they have the golf master's tournaments. And what happened was
the people who lived in Augusta was like, okay, well,
I'm just gonna get a hotel and I'm gonna rent
(19:29):
out my primary residence. They were making ten twenty thousand
dollars a week from all these people going to the
golf tournament. And the IRS was like, okay, well we
want to tax that money because you all are making
money that's outside of our taxation. So but the people
of Augusta, Georgia, obviously it's a high network town. So
they end up winning the battle, of course, because his money.
Speaker 6 (19:51):
Talks, right, because lawyers, yeah, the finest lawyers, right, So
they won the fight and the IRS had, hey, okay,
if you rent your primary residence for fourteen days or less,
you don't have.
Speaker 4 (20:04):
To recognize the income on your tax retire cool. So
business owners got smart. I was like, wait, well, if
they can do it, can't we do it? So then
that then there became this play where if you have
a business, you can charge your business to use your
primary residence for whatever you want to do it. So,
(20:25):
let's say you want to shoo content in your home,
you can charge you can charge your business one thousand
dollars a day to use your home for content studio.
If you do have for fourteen days, that is fourteen
thousand dollars that you charge your business to use your home.
So your business gets a fourteen thousand dollars right off
for rent, just like if you was to use a
(20:45):
space right but you get to if you're the person
a pan of money too. So now you receive the
money tax free. So you can get a fourteen thousand
dollars tax reduction and you can receive fourteen thousand dollars
tax free. Now let's take it a step further. Yes,
let's say, so you get to choose what days you
want to rent out your primary residence. So what if
(21:06):
you happened to do it when a Beyonce concert was
in town? The rent that you can charge your business
is based off rent comps at that moment. So if
Beyonce comes into town, it might you might be able
to rent out your house for two thousand dollars a
day because your city is jumping. So now we just
got a twenty eight thousand dollars ride off of our
(21:26):
business and we just received twenty eight thousand dollars tax free.
Speaker 2 (21:30):
Okay, So the thousand dollars a day would be based
on comps comps at that period, Okay.
Speaker 4 (21:35):
So I had one of our clients do it. He
had a mansion in and in Arizona. Last year. The
super Bowl was the Arizona last year.
Speaker 2 (21:45):
That was a wild yeah.
Speaker 4 (21:46):
So he went from being able to do fifteen hundred
dollars comps for his area to four thousand dollar comps
that week. So he was able to get like fifty
somethings fifty thousand dollars in tax money from his business
by taking advantage of that Augusta ru or doing the
super Bowl at the time.
Speaker 1 (22:06):
So you have to cut yourself a check. Yeah, yeah,
it's going.
Speaker 4 (22:10):
To be yeah, and it has to be off rent comps.
So like I would just say, get a get a
calendar of your city's biggest events, and those are the
days that you want to rent out your primary residence
to your business.
Speaker 5 (22:21):
Although New York is very expensive every day, holidays, let's
talk about it.
Speaker 3 (22:26):
Wasn't but it's trying to do rentals during the US
Open oh yeah, yeah, yeah, and holidays. You see a
year in video shoot coming, which I had to do anyway.
Speaker 4 (22:35):
Anyway, anyway, And my thing is just like, guys, we're
already spending the money.
Speaker 2 (22:40):
Anyway, why not get it to ex forward.
Speaker 4 (22:43):
Because that's what the wealthy people are doing. They turned
their biggest expenses into legitimate taxid Like.
Speaker 5 (22:49):
The fact that they could be making one hundred thousand
times more than me but paying way less than me
is insane.
Speaker 4 (22:55):
And I tell people, you can hate the player, or
you can hate the game, or you can learn the game.
Speaker 5 (23:01):
So because the thing is, there's legal ways that you're
able to do these things. So it's not like you're
just not paying your taxes, that you're doing something you're
not supposed to. You're just understanding how the system works
and working within that. Now you also, speaking of holidays,
there's a way that you can save money on your
taxes as far as holidays with your friends.
Speaker 3 (23:19):
Yes, So this is a good, good type of the
good type of the.
Speaker 4 (23:24):
Good type of holidays. Right, So as of this recording,
we have you know, Thanksgiving and Christmas, and most people
are going to get together with their family anyway, probably
rent out a nice Airbnb, cook the food.
Speaker 2 (23:34):
I have a great air and b if anybody's interested.
Speaker 4 (23:36):
But okay, go ahead, shameless plot. I love I love it.
I love it, I love it. I love it. So,
if you have an LLC or S corporation, whatever your
business is, structure and we can talk about the difference
if y'all want to. You're allowed to have what's called
a board of advisors. Just like fourtune five hundred companies
have board of directors. You can have board of advisors.
(23:57):
So this can be your family, your friends, your cousin,
your mom, dad, little sister, daughter, son. You can pick
up to five people, five to six. Don't pick more
than that, it's being greedy. So I say about five
or six people on your board of advisors. Now that
you have a board of advisors, you are able to
have quarterly board of advisor meetings whenever, wherever in the
world you want to have them at. So my thing
(24:19):
is Since you're paying for the airbnb anyway, and getting
your family to come to one place anyway, why don't
you have Thanksgiving become one of your Board of Advisor meetings.
All you have to do is meet with them for
an hour to take notes, take photos, talk about business.
You're able to write off whatever the airbnb cost. You're
able to write off whatever flights you pay for for
(24:39):
your family to get there, and the meals that you
get catered to the Airbnb are still fifty percent tax deductible.
Speaker 1 (24:46):
How do you set that up?
Speaker 4 (24:48):
So all you need to have is a contract in
your or in your operating agreement of your business. So
you have your LLC, you have your operating agreement. You
just put the Board of Advisor the number of people
and then first one last names, have them sign it.
Keep that in your operating operating agreement, and then when
it comes to writing it off, just use your business
card for their expenses and document like take photos of
(25:10):
y'all meeting, take meeting minutes, and like you can use
an app like otter dot ai. It just literally transcribes
the whole meeting for you and it goes into a folder,
so you have photo documentation. You have meeting documentation, and
then you know you can write off the holidays. You
do this for Christmas. I do it for my birthday
every year. Everything.
Speaker 2 (25:27):
It's like a nice Wealth Wednesday trip.
Speaker 3 (25:30):
We have a lot to talk about travel. Yeah, we
have to see different perspectives around the world.
Speaker 4 (25:35):
Yeah, some people think better than other countries. So if
I want to have my birthday and Brazil and I
invite my friends who are all my.
Speaker 5 (25:41):
Business, already sounds dangerous right now, you're making us dangerous.
Speaker 4 (25:48):
Yeah, yeah, right right. But again, as long as you
document things correctly, you'll be fine. I ought it is
not something to be scared about if you're if it's
just a pain though, yeah, I mean like, but but if.
Speaker 2 (26:00):
Everything's documented properly, it's pretty.
Speaker 4 (26:02):
So what's more painful one hundred thousand dollars tax bill?
Speaker 1 (26:06):
Nope?
Speaker 4 (26:07):
Okay, okay, nope.
Speaker 2 (26:09):
I don't want that. No, I don't want that.
Speaker 1 (26:11):
I just hearded this scenario.
Speaker 3 (26:12):
A lot of entrepreneurs end up bootstrapping their businesses, paying
for it themselves versus getting loans and that type of thing.
So a friend of mine was telling me she didn't
realize that she owed herself money and she's talking to
a financial advisor about needing to get money because she
wanted to do debt reduction and everything, and they were
(26:33):
trip figuring out the best thing, and he pointed out
to her, He's like, well, if you look at your taxes,
you actually owe yourself about forty thousand dollars and you
can take a loan against that.
Speaker 4 (26:43):
Yeah. So when most people bootstrap their business, they just say,
all right, I'm gonna take money on my personal account
put in my business account because my business can't afford
to pay the business bills. Instead of doing that, I
would create a loan agreement from from you to the
business saying that I'm going to eye Carter Kolefield loan
this business twenty thousand dollars at a ten percent interest
(27:04):
rate or whatever. Right, so that you have that document
in place. Because when your business pays you back, and
it pays you back interest, business interest on business loans
is also tax deductible, So now I'm able to write
off the interest that I pay myself back.
Speaker 3 (27:20):
Right.
Speaker 4 (27:22):
So, like, it's so many strategies I feel like we
need to learn. This is why I was so passionate
about taxes, and I went out to be that because
like I consider myself to be at the tax advisor
for the culture because I took what I was learning
in Corporate America and I quit started my own business
to help small business owners and that's why we created
mailon and Money to help people make more money also
(27:43):
pay less taxes.
Speaker 2 (27:44):
Because you're very scared, stared of the irs. Yeah, never
want to get those letters in the mail.
Speaker 5 (27:50):
And sometimes you're like, don't be too aggressive because I
want to make sure that I'm not flagged, I'm not audited.
But as long as everything is through this system and documented,
then you should take advantage.
Speaker 4 (28:04):
Should take advantage of it because like if you get
let's say you say you take advantage of all the
deductions and it saves you two hundred thousand dollarsand taxes.
If you get audited it and you pass, it's worth
the two hundred thousand dollars, right, definitely, because like our
artists like going to the dinnist, if you haven't been
brushing your teeth, you aren't nervous. If you've been brushing
(28:25):
your teeth for lossing you you roll up to Dennis
smile like, what's up, doc? What you got for me?
Because you knew you were doing what you were supposed
to do the whole time. So I don't think it's
nothing to be scared about. I think the easiest way
to make more money is to pay less taxes right period.
Speaker 3 (28:39):
Okay, what do you say that all the people listening
out here who are saying, how come my accounts not
telling me this?
Speaker 2 (28:43):
Because your account's a lazy That is very true.
Speaker 5 (28:46):
Accountants will just do the fill it out the way
and not even ask you.
Speaker 2 (28:50):
If they're not asking you, I'd like to sit.
Speaker 5 (28:52):
Down in person with my accountant at all times and
we like check in. And the way I have my
business set up is they can see my accounts, but
they can't like pay anything from it. Yeah, So that
way they're able to see, like what's happening was so
throughout the year. They're also documenting everything that's happening so
that it's easier when it's time to do the taxes.
Speaker 2 (29:13):
To know it's there.
Speaker 5 (29:13):
But you know, I've heard horror stories of people having
money deducted from their account.
Speaker 4 (29:18):
Yeah, you don't want to give them like access to
pay bills necessarily, because then they can they can get
crazy with them. But you do want them seeing your
accounts because like right now I've I've booked the clients
taxes in November and be like, all right, do that,
do that implement this one hundred thousand dollars saved.
Speaker 5 (29:34):
Right even depreciation on your home. I know you touched
about it on your car, but on your home too.
Speaker 4 (29:39):
On your home. So so the play that I want
to give you, and I'll give it to you on camera.
So you have us, you say you bought us space
right that you're going to rent to yourself and use
it for work. Okay, that's the only use of it.
Are you letting somebody else? Are you? Like?
Speaker 5 (29:52):
That is really the only use of it. It is
a space that like I have a two family house.
I've had some horror it's my home, and so I've
had some horrible stories of like tenants not moving out, squatting,
you know, not paying rents in New York too.
Speaker 2 (30:04):
That I have to deal with.
Speaker 5 (30:05):
It's really tied them out, right, So I don't want
to go through that again. And so what I'm doing
is a lot of times like if people come into town,
now I have a place to stay, but I also
can work from there. And so you know, me having
my real estate license. If there's things that I want
to do our meetings, at least, now I have this
space that I can do it in.
Speaker 4 (30:21):
Absolutely so on top of that, so obviously you can
work there and then what you what you can do
is you can charge your your business can pay you
for the use of that facility. What you also can
do is run a cost segregation study on your property
to accelerate the depreciation. Because most properties will appreciate over
(30:43):
twenty seven and a half years. So if you get
a half a million dollar property, divide about twenty seven
and a half, it's gonna be about you'll get about
eighteen thousand dollars deduction per year for having the property.
Eighteen k is good. But or you can do a
cost sex study, which would allow you to accelerate the depreciation.
You can write off about thirty percent in the first year,
so thirty percent of five hundred thousand, it's like one.
Speaker 2 (31:05):
Hundred and something one hundred and fifty.
Speaker 4 (31:07):
Yeah, one hundred yeah, about hundred and fiftybo one hundred fifty,
So it seat of get eighteen thousand dollars deduction, you
would get one hundred and fifty thousand dollars deduction what
you think can write off against other income.
Speaker 1 (31:21):
I'm having a talk with my account or getting a
new one.
Speaker 4 (31:24):
Yeah, no, I mean, but yeah, I just have these
comment And that's why I say, you don't have to
know as much as I know.
Speaker 2 (31:29):
You should know enough, but your account should know, your
accountant should yeah, yes, should know.
Speaker 4 (31:33):
You should be like, what can I do before the
end of the year, and then.
Speaker 2 (31:35):
You got to do your reachss to be like this.
Speaker 5 (31:37):
And sometimes I think it's certain areas there are specific
you know, like landmarks. Sometimes there are special tax breaks
that we should always be looking into as well in
certain neighborhoods and things too.
Speaker 4 (31:49):
Yeah, on the state level, on the city level. But
I think if you focus on the federal level, meaning
that wherever you go, you get the everything that we
talked about was on the federal level. If you focus
on these things, you'll be able to save a lot
of money. Here's the crazy part, at least for me.
Education as a business owner is also tax deductible. But
(32:11):
when you go to college and pay one hundred thousand,
and I have more degrees than the than the thermometer,
So I get college is necessary. I get it. But
most people stop educating themselves after college. When if you're
a business owner and so and you pay ten thousand
dollars for a coaching program about business that is one
hundred percent deductible. So why wouldn't you pay in investing
(32:33):
yourself to learn more.
Speaker 2 (32:34):
I love taking class.
Speaker 3 (32:35):
A lot of people get stuck on that. Well, I
don't want to pay the fee, I don't want to
pay whatever.
Speaker 4 (32:39):
Well, like you said, you pay the better yourself. Will
you pay the irs best in yourself?
Speaker 5 (32:44):
You know, when you're selling at home watching TV and
bige watching TV shows, you could be learning more to
help bring your business to the next level.
Speaker 1 (32:50):
One excellent?
Speaker 2 (32:53):
You are one?
Speaker 1 (32:53):
You want to share all this knowledge for free?
Speaker 4 (32:56):
Oh yeah.
Speaker 1 (32:59):
Free?
Speaker 4 (33:00):
Yes? So I have a free e book with over
one hundred different tax deductions that was not free. I'm
giving to you all people for free. People normally pay
for it. Yeah yeah, yeah, people normally pay for it.
But it's one hundred different tax reductions that people can
implement today. So like, if you get the book today,
it can save you tens of thousand dollars before the
years out if you read it and implement the strategy.
(33:20):
So if they text the word book to three one
two eight four seven twenty three oh nine. They will
be able to get that book for free.
Speaker 5 (33:30):
All right, text book to three one two eight four
seven twenty three oh nine.
Speaker 2 (33:34):
Is this tax deductible for you?
Speaker 4 (33:37):
Yes? Okay, depend on how many people? Yeah, right right right.
Speaker 1 (33:42):
For sure, Thank you so much.
Speaker 4 (33:45):
No, this was fun. People find you also, yeah okay, yeah,
so on all social media platforms Cofield Underscore Advisor, we
also can follow our companies.
Speaker 1 (33:53):
It's co Field one F that screwed me up.
Speaker 4 (33:55):
Oh yeah, yeah, yess Cofield one F Underscore Advisor. Or
check out our our financial education company, Mellon in Money,
which we're teaching investing, taxes and all types of business strategyes.
Speaker 1 (34:07):
Melon and Money has a great YouTube channel.
Speaker 4 (34:08):
Oh yeah, yeah, really really great angel. Yeah, we'll get
We're gonna.
Speaker 2 (34:13):
Get to get on your level.
Speaker 1 (34:15):
Save some money on my.
Speaker 3 (34:16):
Taxi now, thank you all for tuning in to Wealth
Wednesdays and tonight. On Wealth Wednesdays, after party, Jason White
talks to Gigi jj McGuire service. They talk about she's
planning to open a new restaurants.
Speaker 1 (34:30):
They talk about.
Speaker 3 (34:31):
All sorts of great things. I'll be sure to Tune
in at the Federal Code on YouTube.
Speaker 2 (34:36):
Yep Gji has been trending, y'all.
Of course.
Speaker 2 (00:02):
My partner, Stacy Tisdale is here.
Speaker 1 (00:04):
Happy Wealth Wednesday, everybody.
Speaker 3 (00:06):
We have a really exciting show for you today because
we're going to show you how to like taxes.
Speaker 2 (00:11):
Oh that's to hate taxes. I hate taxes, but.
Speaker 4 (00:15):
Not like just how to avoid paying them. I don't
care if you like them or don't like them. If
you don't want to pay him.
Speaker 2 (00:19):
I want to.
Speaker 1 (00:23):
I talked to you about it and I was like, wow, ye,
just the stuff you learn and everything.
Speaker 2 (00:29):
My accountant called me and I almost passed out. I
was like, wow, how much? But yeah, So let's introduce
our guests.
Speaker 1 (00:36):
We have Carter Cofield and he is.
Speaker 3 (00:38):
The co host of melanin Money on YouTube, which is.
Speaker 4 (00:42):
A great great financial literacy show.
Speaker 3 (00:44):
Great financial literacy show, and UH learn a lot from that.
And it's really interesting. You are a tax expert, financial expert.
You've helped small businesses, celebrities, everybody get their money right.
But it's interesting how you came into this field in
the first place. So tell us audience, you know initially
how you got started as an accountant.
Speaker 4 (01:02):
Yeah. So most people don't know is my my parents
died when I was young, right, so my mom dad
when I was fourteen, and my dad did when I
was sixteen, so and I graduated in O nine, so
right around the recession. So I was the epiton me,
if I don't have there's no fallback plan, right, So
when my guidance counselor asked me, like, what do you
want to be when you like go to college, I
went to the computer and typed in what job has
(01:24):
the lowest unemployment rate? Because I literally could not afford
to be unemployed because I watched my family and my
friend suffered from poverty. So like, when I googled it,
CPA was a number one profession that had no unemployment
during the whole through the whole recession.
Speaker 2 (01:40):
So I want to look that up.
Speaker 4 (01:41):
I want to do that, Yeah, because no matter what's
happened with the economy, people need.
Speaker 5 (01:45):
To Yeah, they do, right, and you're less likely to
get audited, right if you use certified a CPA.
Speaker 4 (01:51):
Yeah, exactly. So I was like, I'm going to college
for that. Then I went to I went to the
University of Illinois, which was one of the top colleges, and
here we are.
Speaker 2 (01:59):
You did you always like numbers because some people I
love numbers.
Speaker 4 (02:02):
I love money because I was always had the question
why don't we have it? Right? Like, I see people
with the money, but we don't have it, So I
want to learn how I can help attract it. So
I was always good with numbers, and CPA was just
the field that I chose to put my expertise in.
Speaker 1 (02:17):
So you're passionate about this.
Speaker 4 (02:19):
I am, because like as a culture, making money for
us just became like natural and like something that we
can attain. And as soon as we figure out that
we can make money, then we figure out about the
thing called taxes. Right now, we make a million dollars,
the uncle Stam wants to take half of.
Speaker 5 (02:34):
It, right, But then we see people saving so much
on taxes that are making so much money.
Speaker 2 (02:38):
What am I paying more?
Speaker 1 (02:40):
Yeah?
Speaker 5 (02:40):
Exactly, Jeff Bezos, my taxes is a billionaire literally. All right, Well,
let's get into some of these questions, because you know,
I have a lot when it comes to taxes.
Speaker 2 (02:49):
Now, one thing I want to talk about is having
an LLC.
Speaker 5 (02:52):
I see people talking about that a lot more recently
and saying when you graduate from college, you should have
an LLC right away. So can you talk about why
that's important or.
Speaker 2 (03:02):
Is it important.
Speaker 4 (03:03):
Yeah, So I don't know if the necessarily having the
LLC in place is important. I mean, you want to
have it, But I think the bigger tale when it
comes to taxes is that if you want to win
the game of taxes, you need to need to have
a business or become an investor. The tax code is
made for entrepreneurs and investors. If you're not one of
the two, you are playing yourself when it comes to taxes.
(03:23):
So I love the narrative like when you graduate college,
like start an LLC, start some type of small businesses,
because that way you'll be able to turn a lot
of your personal expenses into tax deductible business expenses. So
I think that's why everybody says good Llcup.
Speaker 1 (03:38):
And you and I were talking just like overall.
Speaker 3 (03:40):
We were talking about how much we hate taxes every
but how the rich and the middle class think of
taxes so differently, like having a tax paying season versus
tax saving season.
Speaker 4 (03:51):
Yeah. Yeah, so our conversation before, I said that there
are actually two tax seasons. Most people think it's only one.
They think of tax season as January through April, right,
that is tax paying season. Most middle class people go
to their CPA in February and say how much am
I going to owe? That's what middle class do. The
wealthy do something different. The wealthy understand that tax saving
season is August through December, the last few months of
(04:13):
the year, and they go to their CPA and say,
what strategies can we implement so that I don't have
to pay taxes? And if you take care of business
during tax saving season, you don't have to worry about
nothing during tax paying season because you've done the work. Well,
let's talk about this, talk about it, let's get it, let's.
Speaker 2 (04:32):
Get it for tax saving season.
Speaker 1 (04:35):
Yes.
Speaker 4 (04:35):
So, one thing I always tell people is to turn
your hobby into a side hustle. Right. So, for example,
I had a friend. She was a lawyer. They get
one hundred and fifty thousand dollars a year getting killed
when it came to taxes. Her hobby was traveling. She
loved to travel the world and eat at five star
restaurants all across the right. I'm sure, I'm sure you
can attest. Right, So we sat down for lunch. She's like, Carter,
(04:58):
is there anyway I can write these trips off? I
was like, you have a business. She said, no, I said, okay, well,
let's turn this hobby into a side hustle. So she
started a vlog about the best restaurants to eat in
different countries. She started getting subscribers to her blog, she
started making money off her ebooks. She only made like
two or three thousand dollars in sales from that side business.
But what it did is it unlocked all those deductions.
(05:21):
So the IRS says, if you have a business, any
expense that is both ordinary or necessary to operate that
business is tax deductible.
Speaker 2 (05:29):
So you have to travel, you have to eat at these.
Speaker 4 (05:30):
You're to travel, and you have something hotel. It was
a loss exactly. So now she might have made two
thousand dollars in her business, but she might have lost
twenty five thousand dollars in her taxes. That loss from
her business to subtracted from her income at W two job, right,
so she didn't have get like a ten or fifteen
thousand dollars tax rEFInd.
Speaker 2 (05:48):
It's worth it, and she also.
Speaker 4 (05:49):
Has traveled the world.
Speaker 2 (05:51):
I'm standing like, you're already doing it doing it anyway.
Speaker 4 (05:53):
Why don't you, whatever your hobby is, find a way
to monetize it. Once you make that dollar in your hobby,
you unlock all those.
Speaker 5 (05:59):
Deductions, right, and then even certain things like say she
went out to eat with you, that's a business expense because.
Speaker 4 (06:05):
I pay for that meal, by the way, because she
didn't have a business yet, So I was like my
car because there's taxes deft to me. Exactly, I'm going
to take that dusk exactly.
Speaker 3 (06:14):
Any anything, I can just start a blog post about
anything and then it.
Speaker 4 (06:18):
Has Yeah, So like as long as you monetize that business.
So I think the other thing people can do is, like,
whatever your job is paying to do from nine to five, right,
somebody else would pay to do that same thing from
five to nine. Start to side business. If you're an
assistant at W at your W two job, you know
how men business owners need an assistant, right, just do
it after hours. Start making money in your side business.
(06:39):
You can start writing off things like your travel, your rents.
Would we'll talk about if I want to your automobiles.
All these things that were already paying for our business
can be paid for and we can start saving a
lot of money.
Speaker 5 (06:50):
Now, what if you drive to work, right, let's just
say you don't have this sad hustle, but you drive
to work, would your car be considered a business expense?
And let's say you also, at your job have to
work from home at times? Is that also potential to
write that off?
Speaker 4 (07:04):
None of this stuff is tax deductible if you only
have a W two job. That's what sucks because.
Speaker 1 (07:09):
Of virtual your computer.
Speaker 4 (07:11):
If you could literally be working from home using your
personal vehicle, all this, But if you have a W
two job, the IRS says no. The moment you start
the business, the IRS says yes. Okay, So why don't
we start businesses? You know what I'm saying. And I
think it's because the education system taught us to get
a job. If you think about it, who pays for
the education system?
Speaker 2 (07:31):
Right?
Speaker 4 (07:32):
The government pays with our tax dollars?
Speaker 5 (07:33):
And we don't think about taxes either when we're in school.
I don't feel like I've ever had taxes come up
in a conversation.
Speaker 2 (07:40):
Now.
Speaker 5 (07:41):
You know what else I want to ask you. A
lot of people moving to other states for tax purposes.
Can you talk about that? Because I always hear, Oh,
I'm moving into Texas, I'm moving to Florida, I'm moving
to Puerto Rico.
Speaker 4 (07:53):
Yeah, so if you move to a state that has
no state taxes, you avoid state taxing.
Speaker 2 (07:58):
How many states are there that nine?
Speaker 4 (08:00):
Okay, don't ask me name, I know, I know if
we have Florida, we got Texas, we got Wyoming, Okay,
we got Vegas, Nevada.
Speaker 5 (08:09):
So that could be worthwhile though, I mean if you
have the ability to be able to move, because especially
for I know somebody who got a huge chunk of money,
but they moved first before they ended up getting that
money from.
Speaker 4 (08:24):
That reason, probably say five to ten percent. So they
got a million dollars check they just say fifty two
one hundred thousand dollars by moving Somewhere.
Speaker 3 (08:31):
You were talking about cars, Yeah, so you would you
told me about a really interesting way to save a
lot of money on your car expenses by writing them off.
Speaker 4 (08:40):
Yeah. Yeah, So right now, vehicles are so last year
and this year. Vehicles are probably one of the easiest
and most advantaged tax deductions you can take. Right So,
let's say somebody has a W two job and I
want to start a business, but they have a vehicle.
If they rent that vehicle out while they're at work,
like put it on touro, put it on higher car,
(09:01):
they are vehicles now with business right, so they're making
money from their vehicle. So now they're able to write
off all expenses related to that vehicle, interest on your
car note, gas repairs, car washes, parking, insurance, and this
thing called depreciation. So what IRS says is that if
you hit a car and it weighs over six thousand pounds,
this is what I'll see all over social media. Right,
(09:23):
you get to write off this year eighty percent of
the value of the car. So if you went and
financed the Cadillac Escalate and it was one hundred thousand dollars,
you would get an eighty thousand dollars tax reduction. Today
that alone wipes out most people's tax bill completely. So
you put no money, you got the car using your business,
you wrote it off, and you save eighty tw one
(09:43):
hundred thousand dollars.
Speaker 1 (09:44):
Doesn't matter how I like, once a year.
Speaker 4 (09:47):
So the interesting thing about the play I did. That's
a good question. So the interesting thing about that play
is the IRS says your car has to be used
at least fifty percent for your business. Okay, now, when
you rent it out, not about how many times it's rented,
how many times it's available to rents. So if you
rent it out like two times and then you jack
(10:07):
the price up high, so nobody rents it out because
you really don't want people using your car. As long
as it's available for rent, that counts towards the fifty percent, okay.
Speaker 2 (10:16):
Or if somebody rented out, you just got a huge.
Speaker 4 (10:18):
Yeah yeah exactly, yeah, yeah exactly. So I think that
that's something that any W two person can do. You
go on to work, rent list your car, have your car,
make money while you're at work, and then you get
you know, it's ten twenty thirty, forty fifty thousand dollars
deduction depending on what type of vehicle you have.
Speaker 3 (10:35):
I'm hearing so much more about this renting your car,
putting your car to work. Isn't it just a tremendous liability?
Speaker 4 (10:41):
Well, it depends what company you use. So that's how
I first started, Like my first my first business, I
was working in Corporate America making a hundred thousand dollars
as a CPA. I learned about this tax stuff because
all CPA doesn't know about tax savings. I learned about this.
I said, okay, bet watch this. I rented my car
out while I was at work and I ended up
being like a twelve thousand dollars refund that next year
(11:02):
from all the deductions that my car had. And yeah,
people might get in an accident in your car, but
that's where the company comes in and pays you.
Speaker 1 (11:09):
So like, yeah.
Speaker 4 (11:11):
Yeah, so I can say this, so so no somebody
will get and I rent my car out on to
somebody got an accident, right, I went to the highest
bidder and they told me to be eight thousand dollars
for me to fix it. Toro cut me a check
for eight thousand dollars. Then I go to my friends
dealership who can do it for four thousand, right, And
(11:31):
that's part of the difference. Okay, So I don't think
it's that much liability if you because if you go
through the right means, Now Touro is the company, I
is anything other than that. I can't promise you that,
but they used to. They will cut check based off
whatever quote you get.
Speaker 2 (11:44):
To make sure whichever company, if you do this, you
check what they're Hey.
Speaker 4 (11:48):
Look, I would.
Speaker 5 (11:52):
Also I want to make sure that as we are
talking about texts, we're also talking about retiring in the future,
savings and investments, right, And so let's talk about the
benefit of you know, putting money into a retirement or
a savings plan, but the tax deductions that you get
from that.
Speaker 4 (12:10):
Yeah. So a key that I think the world needs
to understand is that the more you invest, the less
you pay the irs. Right, And that's what real estate
stocks whatever. So when you invest in these four one
K retirement plans, you get let's say you invest ten
thousand dollars here four one K. Yeah, you just invested
ten thousand dollars, but you also get a ten thousand
dollars tax deduction for doing so. So you're making money twice.
(12:32):
You're making money from the investment and you're making money
from the money that you save from the contribution.
Speaker 5 (12:37):
Hey, some people think that because I don't have any
savings or I don't have any money extra, I'm living
check to check, that I can't afford to put into
a retirement or a savings plan.
Speaker 2 (12:49):
But you can because this is actually going to come
back to.
Speaker 4 (12:52):
You saving you money in taxes. So the more you contribute,
the higher refund is likely going to be. And as
long as you're using your refund for you know, smart things,
you'll be putting yourself off in a better position.
Speaker 5 (13:02):
I learned that in my super broke day, you know,
when I started my roth ira and my four oh
one K to have the money go straight into that,
but then also knowing that it was deductible.
Speaker 3 (13:13):
So yeah, and I think that so you have to
be you have to be deducting.
Speaker 4 (13:17):
Well, I mean, whoever's doing your taxes, Yeah, you have to.
Don't do your own taxes because you're probably gonna you're
gonna cast yourself more mistakes. You will trying to you know,
out smarter.
Speaker 1 (13:28):
You know you have to, you have to be able.
Speaker 3 (13:29):
You're doing tax deductions instead of just the standard deduction.
Speaker 4 (13:33):
No, no, so you asked me about standard are itemizing? No,
the moment you contribute to a four one K, no
matter if you itemize or not, you get the deduction.
So so you want to make sure that you're contributing
to a four one K or ira. I think the
bigger thing that people don't contribute is because.
Speaker 1 (13:51):
They terrified that they don't have the day to day No.
Speaker 4 (13:54):
They're terrified they can't use the money to their sixty
But not true. But because right, well we'll talk about
the second not true.
Speaker 2 (14:04):
If you want to buy a home.
Speaker 4 (14:05):
Yeah, yeah, well actually so there's there's the way outside
of that that. There's that way, but there's a way
outside of that. So most people don't contribute to retirement
plans because they say, well, what happens if I have
an emergency? Now, if I'm not fifty nine and a half,
I'm gonna have to pay taxes and penalties if I
use the money early. Maybe seventy percent of four one
K providers have a loan provision in their full one K.
(14:29):
Most people don't know that. So if you look at
your full one K documents, seventy percent of employers will
allow you to take a loan against the money and
your full one K for up to fifty thousand dollars
or fifty percent whatever's left.
Speaker 2 (14:41):
You just have to pay it back in a certain
amount of time.
Speaker 4 (14:42):
You have to pay it back within five years. But
the interest rates are better than any other interest what
you'll get in today's environment. I think right now you're
paying eight to ten percent on interest. But when you
borrow from your own four to one K, you pay,
you may pay the loan back who you paying.
Speaker 2 (14:58):
Interests back to yourself exactly.
Speaker 4 (15:00):
I'd rather pay interest to myself then Chase for twenty
five percent or another credit card company for twenty five percent.
So most people can take a loan from their full
one k and use that money if they were to
have an emergency. And I think if they knew that
they could take a loan from it in case of
an emergency, more people will be prone to leverage you
in the first place.
Speaker 5 (15:19):
But the only problem is if you don't pay it
back also within the five years, and that can be
an issue.
Speaker 4 (15:23):
Yeah, if you don't pay it back within the five years,
that whatever you took out is just a distribution, So
pay it back. But I would rather somebody use that
as a loan than taking a loan back, taking a
loan from another company at twenty five thirty percent.
Speaker 1 (15:35):
Just takeout, don't take out more than you know your compare.
Speaker 4 (15:38):
It, and then what are you taking out for? Is
the better? Better question? We all get clear because what
we've had, what I've had some of my clients do
is they'll take a loan against they're fall one K
to buy a real estate property. Then they'll have the
cash for from the real estate pay off the loan.
So now they're using their asset to generate more assets.
Speaker 5 (15:59):
Now, what if say you had some really high interest
rate credit cards and you said, you know what, these
interest rates are so high?
Speaker 2 (16:06):
Would that be something that a person would consider doing.
Speaker 4 (16:09):
Yeah, I mean if you if you have high interest
credit card debt, that that's making the loan America. Now
you got to pay. Now you get two thousand dollars
a month in credit card bills, I would think it's
a good idea to take them to brawl gets your
full one k pay it off. Because now we pay
your full one K back, you only might be paying
six hundred dollars a month instead exactly, So only take
(16:30):
the loan, like if you know what you're going to
do with the money and if it's wise.
Speaker 2 (16:33):
Now, another hack you talk about is paying your children. Yeah,
do your business, so discuss that.
Speaker 4 (16:39):
Well, this is like when I was working with wealthy
clients in corporate America. This is what I saw each
and every one of them doing. And it's because it's
so many principles inside that we need to understand as
a culture. Right, So if you have a business, which
we all should have, we just talked about that, and
your kids working your business, this could be shredding paper,
doing your social media, answer phones, whatever. You can pay
(17:02):
your kids up to thirteen eight hundred and fifty dollars each.
You receive the tax deduction for paying your kids, and
your kids receive the money tax free as long as
they're below the age of seventeen. So instead of like
making money and then paying your kids with money that
you've already been taxed on, why don't you pay your
kids from your business so that you, as the owner,
(17:24):
can get a deduction and the kids can receive the
money tax free. And if you want to take it
a step further than that, don't let the kids spend
the whole thirteen eight hundred and fifty Take sixty five
hundred of that and put it into their wroth ira. Right, So,
now you've paid your kids from your business, you've got
a tax deduction, your kids receive the money tax free,
and angel as you know, wroth iras are never taxing
(17:46):
if you're paying, So now you're putting money into another
account that's never going to be taxed. And if you
do this when your kids are aged six, by the
time they're seventeen, they will have one hundred and fifty
thousand dollars of tax free money. If you want to
go to college, see here's that. If you don't want
to start a business, use that.
Speaker 2 (18:02):
Your son aged doubt.
Speaker 4 (18:05):
That was our first question, was age.
Speaker 1 (18:07):
I was like, yeah, it's like, well what happened to
But you can do stuff. If they're over each yeah,
you can still.
Speaker 4 (18:12):
Pay them, but all of the money won't be tax free.
Speaker 3 (18:16):
You know.
Speaker 4 (18:16):
You know what I'm saying. I would rather pay my
kids with after tax money, and then if you want
something use this money. Don't use us using my money
that have already pay taxes on. So I think that
if we all did that, we would set ourselves up,
but we'll also set up our future generation.
Speaker 5 (18:33):
Now, another thing that you can do that you talk
about is renting out your home to your business. That's crazy,
So how does that work?
Speaker 4 (18:42):
Okay, so you went crazy on the phone.
Speaker 2 (18:48):
This is what I'm actually about to do.
Speaker 5 (18:51):
You're doing it for Yes, I have a two family
house and so for the rent of that is actually
going to be my business.
Speaker 4 (18:59):
Perfect.
Speaker 5 (19:00):
I'll be paying myself my business rent to be able
to use that for everything I have to do for work,
for recording, podcasting, all of that.
Speaker 4 (19:06):
Well, I got a crazy play for you, and I
don't know if it's a good on camera, I'll give
to you after. Well, we could do it, or we
could do one is however you want to do it.
So the one of the strategies I love to teach
is a strategy is called the Augusta rule. So in Augusta, Georgia,
they have the golf master's tournaments. And what happened was
the people who lived in Augusta was like, okay, well,
I'm just gonna get a hotel and I'm gonna rent
(19:29):
out my primary residence. They were making ten twenty thousand
dollars a week from all these people going to the
golf tournament. And the IRS was like, okay, well we
want to tax that money because you all are making
money that's outside of our taxation. So but the people
of Augusta, Georgia, obviously it's a high network town. So
they end up winning the battle, of course, because his money.
Speaker 6 (19:51):
Talks, right, because lawyers, yeah, the finest lawyers, right, So
they won the fight and the IRS had, hey, okay,
if you rent your primary residence for fourteen days or less,
you don't have.
Speaker 4 (20:04):
To recognize the income on your tax retire cool. So
business owners got smart. I was like, wait, well, if
they can do it, can't we do it? So then
that then there became this play where if you have
a business, you can charge your business to use your
primary residence for whatever you want to do it. So,
(20:25):
let's say you want to shoo content in your home,
you can charge you can charge your business one thousand
dollars a day to use your home for content studio.
If you do have for fourteen days, that is fourteen
thousand dollars that you charge your business to use your home.
So your business gets a fourteen thousand dollars right off
for rent, just like if you was to use a
(20:45):
space right but you get to if you're the person
a pan of money too. So now you receive the
money tax free. So you can get a fourteen thousand
dollars tax reduction and you can receive fourteen thousand dollars
tax free. Now let's take it a step further. Yes,
let's say, so you get to choose what days you
want to rent out your primary residence. So what if
(21:06):
you happened to do it when a Beyonce concert was
in town? The rent that you can charge your business
is based off rent comps at that moment. So if
Beyonce comes into town, it might you might be able
to rent out your house for two thousand dollars a
day because your city is jumping. So now we just
got a twenty eight thousand dollars ride off of our
(21:26):
business and we just received twenty eight thousand dollars tax free.
Speaker 2 (21:30):
Okay, So the thousand dollars a day would be based
on comps comps at that period, Okay.
Speaker 4 (21:35):
So I had one of our clients do it. He
had a mansion in and in Arizona. Last year. The
super Bowl was the Arizona last year.
Speaker 2 (21:45):
That was a wild yeah.
Speaker 4 (21:46):
So he went from being able to do fifteen hundred
dollars comps for his area to four thousand dollar comps
that week. So he was able to get like fifty
somethings fifty thousand dollars in tax money from his business
by taking advantage of that Augusta ru or doing the
super Bowl at the time.
Speaker 1 (22:06):
So you have to cut yourself a check. Yeah, yeah,
it's going.
Speaker 4 (22:10):
To be yeah, and it has to be off rent comps.
So like I would just say, get a get a
calendar of your city's biggest events, and those are the
days that you want to rent out your primary residence
to your business.
Speaker 5 (22:21):
Although New York is very expensive every day, holidays, let's
talk about it.
Speaker 3 (22:26):
Wasn't but it's trying to do rentals during the US
Open oh yeah, yeah, yeah, and holidays. You see a
year in video shoot coming, which I had to do anyway.
Speaker 4 (22:35):
Anyway, anyway, And my thing is just like, guys, we're
already spending the money.
Speaker 2 (22:40):
Anyway, why not get it to ex forward.
Speaker 4 (22:43):
Because that's what the wealthy people are doing. They turned
their biggest expenses into legitimate taxid Like.
Speaker 5 (22:49):
The fact that they could be making one hundred thousand
times more than me but paying way less than me
is insane.
Speaker 4 (22:55):
And I tell people, you can hate the player, or
you can hate the game, or you can learn the game.
Speaker 5 (23:01):
So because the thing is, there's legal ways that you're
able to do these things. So it's not like you're
just not paying your taxes, that you're doing something you're
not supposed to. You're just understanding how the system works
and working within that. Now you also, speaking of holidays,
there's a way that you can save money on your
taxes as far as holidays with your friends.
Speaker 3 (23:19):
Yes, So this is a good, good type of the
good type of the.
Speaker 4 (23:24):
Good type of holidays. Right, So as of this recording,
we have you know, Thanksgiving and Christmas, and most people
are going to get together with their family anyway, probably
rent out a nice Airbnb, cook the food.
Speaker 2 (23:34):
I have a great air and b if anybody's interested.
Speaker 4 (23:36):
But okay, go ahead, shameless plot. I love I love it.
I love it, I love it. I love it. So,
if you have an LLC or S corporation, whatever your
business is, structure and we can talk about the difference
if y'all want to. You're allowed to have what's called
a board of advisors. Just like fourtune five hundred companies
have board of directors. You can have board of advisors.
(23:57):
So this can be your family, your friends, your cousin,
your mom, dad, little sister, daughter, son. You can pick
up to five people, five to six. Don't pick more
than that, it's being greedy. So I say about five
or six people on your board of advisors. Now that
you have a board of advisors, you are able to
have quarterly board of advisor meetings whenever, wherever in the
world you want to have them at. So my thing
(24:19):
is Since you're paying for the airbnb anyway, and getting
your family to come to one place anyway, why don't
you have Thanksgiving become one of your Board of Advisor meetings.
All you have to do is meet with them for
an hour to take notes, take photos, talk about business.
You're able to write off whatever the airbnb cost. You're
able to write off whatever flights you pay for for
(24:39):
your family to get there, and the meals that you
get catered to the Airbnb are still fifty percent tax deductible.
Speaker 1 (24:46):
How do you set that up?
Speaker 4 (24:48):
So all you need to have is a contract in
your or in your operating agreement of your business. So
you have your LLC, you have your operating agreement. You
just put the Board of Advisor the number of people
and then first one last names, have them sign it.
Keep that in your operating operating agreement, and then when
it comes to writing it off, just use your business
card for their expenses and document like take photos of
(25:10):
y'all meeting, take meeting minutes, and like you can use
an app like otter dot ai. It just literally transcribes
the whole meeting for you and it goes into a folder,
so you have photo documentation. You have meeting documentation, and
then you know you can write off the holidays. You
do this for Christmas. I do it for my birthday
every year. Everything.
Speaker 2 (25:27):
It's like a nice Wealth Wednesday trip.
Speaker 3 (25:30):
We have a lot to talk about travel. Yeah, we
have to see different perspectives around the world.
Speaker 4 (25:35):
Yeah, some people think better than other countries. So if
I want to have my birthday and Brazil and I
invite my friends who are all my.
Speaker 5 (25:41):
Business, already sounds dangerous right now, you're making us dangerous.
Speaker 4 (25:48):
Yeah, yeah, right right. But again, as long as you
document things correctly, you'll be fine. I ought it is
not something to be scared about if you're if it's
just a pain though, yeah, I mean like, but but if.
Speaker 2 (26:00):
Everything's documented properly, it's pretty.
Speaker 4 (26:02):
So what's more painful one hundred thousand dollars tax bill?
Speaker 1 (26:06):
Nope?
Speaker 4 (26:07):
Okay, okay, nope.
Speaker 2 (26:09):
I don't want that. No, I don't want that.
Speaker 1 (26:11):
I just hearded this scenario.
Speaker 3 (26:12):
A lot of entrepreneurs end up bootstrapping their businesses, paying
for it themselves versus getting loans and that type of thing.
So a friend of mine was telling me she didn't
realize that she owed herself money and she's talking to
a financial advisor about needing to get money because she
wanted to do debt reduction and everything, and they were
(26:33):
trip figuring out the best thing, and he pointed out
to her, He's like, well, if you look at your taxes,
you actually owe yourself about forty thousand dollars and you
can take a loan against that.
Speaker 4 (26:43):
Yeah. So when most people bootstrap their business, they just say,
all right, I'm gonna take money on my personal account
put in my business account because my business can't afford
to pay the business bills. Instead of doing that, I
would create a loan agreement from from you to the
business saying that I'm going to eye Carter Kolefield loan
this business twenty thousand dollars at a ten percent interest
(27:04):
rate or whatever. Right, so that you have that document
in place. Because when your business pays you back, and
it pays you back interest, business interest on business loans
is also tax deductible, So now I'm able to write
off the interest that I pay myself back.
Speaker 3 (27:20):
Right.
Speaker 4 (27:22):
So, like, it's so many strategies I feel like we
need to learn. This is why I was so passionate
about taxes, and I went out to be that because
like I consider myself to be at the tax advisor
for the culture because I took what I was learning
in Corporate America and I quit started my own business
to help small business owners and that's why we created
mailon and Money to help people make more money also
(27:43):
pay less taxes.
Speaker 2 (27:44):
Because you're very scared, stared of the irs. Yeah, never
want to get those letters in the mail.
Speaker 5 (27:50):
And sometimes you're like, don't be too aggressive because I
want to make sure that I'm not flagged, I'm not audited.
But as long as everything is through this system and documented,
then you should take advantage.
Speaker 4 (28:04):
Should take advantage of it because like if you get
let's say you say you take advantage of all the
deductions and it saves you two hundred thousand dollarsand taxes.
If you get audited it and you pass, it's worth
the two hundred thousand dollars, right, definitely, because like our
artists like going to the dinnist, if you haven't been
brushing your teeth, you aren't nervous. If you've been brushing
(28:25):
your teeth for lossing you you roll up to Dennis
smile like, what's up, doc? What you got for me?
Because you knew you were doing what you were supposed
to do the whole time. So I don't think it's
nothing to be scared about. I think the easiest way
to make more money is to pay less taxes right period.
Speaker 3 (28:39):
Okay, what do you say that all the people listening
out here who are saying, how come my accounts not
telling me this?
Speaker 2 (28:43):
Because your account's a lazy That is very true.
Speaker 5 (28:46):
Accountants will just do the fill it out the way
and not even ask you.
Speaker 2 (28:50):
If they're not asking you, I'd like to sit.
Speaker 5 (28:52):
Down in person with my accountant at all times and
we like check in. And the way I have my
business set up is they can see my accounts, but
they can't like pay anything from it. Yeah, So that
way they're able to see, like what's happening was so
throughout the year. They're also documenting everything that's happening so
that it's easier when it's time to do the taxes.
Speaker 2 (29:13):
To know it's there.
Speaker 5 (29:13):
But you know, I've heard horror stories of people having
money deducted from their account.
Speaker 4 (29:18):
Yeah, you don't want to give them like access to
pay bills necessarily, because then they can they can get
crazy with them. But you do want them seeing your
accounts because like right now I've I've booked the clients
taxes in November and be like, all right, do that,
do that implement this one hundred thousand dollars saved.
Speaker 5 (29:34):
Right even depreciation on your home. I know you touched
about it on your car, but on your home too.
Speaker 4 (29:39):
On your home. So so the play that I want
to give you, and I'll give it to you on camera.
So you have us, you say you bought us space
right that you're going to rent to yourself and use
it for work. Okay, that's the only use of it.
Are you letting somebody else? Are you? Like?
Speaker 5 (29:52):
That is really the only use of it. It is
a space that like I have a two family house.
I've had some horror it's my home, and so I've
had some horrible stories of like tenants not moving out, squatting,
you know, not paying rents in New York too.
Speaker 2 (30:04):
That I have to deal with.
Speaker 5 (30:05):
It's really tied them out, right, So I don't want
to go through that again. And so what I'm doing
is a lot of times like if people come into town,
now I have a place to stay, but I also
can work from there. And so you know, me having
my real estate license. If there's things that I want
to do our meetings, at least, now I have this
space that I can do it in.
Speaker 4 (30:21):
Absolutely so on top of that, so obviously you can
work there and then what you what you can do
is you can charge your your business can pay you
for the use of that facility. What you also can
do is run a cost segregation study on your property
to accelerate the depreciation. Because most properties will appreciate over
(30:43):
twenty seven and a half years. So if you get
a half a million dollar property, divide about twenty seven
and a half, it's gonna be about you'll get about
eighteen thousand dollars deduction per year for having the property.
Eighteen k is good. But or you can do a
cost sex study, which would allow you to accelerate the depreciation.
You can write off about thirty percent in the first year,
so thirty percent of five hundred thousand, it's like one.
Speaker 2 (31:05):
Hundred and something one hundred and fifty.
Speaker 4 (31:07):
Yeah, one hundred yeah, about hundred and fiftybo one hundred fifty,
So it seat of get eighteen thousand dollars deduction, you
would get one hundred and fifty thousand dollars deduction what
you think can write off against other income.
Speaker 1 (31:21):
I'm having a talk with my account or getting a
new one.
Speaker 4 (31:24):
Yeah, no, I mean, but yeah, I just have these
comment And that's why I say, you don't have to
know as much as I know.
Speaker 2 (31:29):
You should know enough, but your account should know, your
accountant should yeah, yes, should know.
Speaker 4 (31:33):
You should be like, what can I do before the
end of the year, and then.
Speaker 2 (31:35):
You got to do your reachss to be like this.
Speaker 5 (31:37):
And sometimes I think it's certain areas there are specific
you know, like landmarks. Sometimes there are special tax breaks
that we should always be looking into as well in
certain neighborhoods and things too.
Speaker 4 (31:49):
Yeah, on the state level, on the city level. But
I think if you focus on the federal level, meaning
that wherever you go, you get the everything that we
talked about was on the federal level. If you focus
on these things, you'll be able to save a lot
of money. Here's the crazy part, at least for me.
Education as a business owner is also tax deductible. But
(32:11):
when you go to college and pay one hundred thousand,
and I have more degrees than the than the thermometer,
So I get college is necessary. I get it. But
most people stop educating themselves after college. When if you're
a business owner and so and you pay ten thousand
dollars for a coaching program about business that is one
hundred percent deductible. So why wouldn't you pay in investing
(32:33):
yourself to learn more.
Speaker 2 (32:34):
I love taking class.
Speaker 3 (32:35):
A lot of people get stuck on that. Well, I
don't want to pay the fee, I don't want to
pay whatever.
Speaker 4 (32:39):
Well, like you said, you pay the better yourself. Will
you pay the irs best in yourself?
Speaker 5 (32:44):
You know, when you're selling at home watching TV and
bige watching TV shows, you could be learning more to
help bring your business to the next level.
Speaker 1 (32:50):
One excellent?
Speaker 2 (32:53):
You are one?
Speaker 1 (32:53):
You want to share all this knowledge for free?
Speaker 4 (32:56):
Oh yeah.
Speaker 1 (32:59):
Free?
Speaker 4 (33:00):
Yes? So I have a free e book with over
one hundred different tax deductions that was not free. I'm
giving to you all people for free. People normally pay
for it. Yeah yeah, yeah, people normally pay for it.
But it's one hundred different tax reductions that people can
implement today. So like, if you get the book today,
it can save you tens of thousand dollars before the
years out if you read it and implement the strategy.
(33:20):
So if they text the word book to three one
two eight four seven twenty three oh nine. They will
be able to get that book for free.
Speaker 5 (33:30):
All right, text book to three one two eight four
seven twenty three oh nine.
Speaker 2 (33:34):
Is this tax deductible for you?
Speaker 4 (33:37):
Yes? Okay, depend on how many people? Yeah, right right right.
Speaker 1 (33:42):
For sure, Thank you so much.
Speaker 4 (33:45):
No, this was fun. People find you also, yeah okay, yeah,
so on all social media platforms Cofield Underscore Advisor, we
also can follow our companies.
Speaker 1 (33:53):
It's co Field one F that screwed me up.
Speaker 4 (33:55):
Oh yeah, yeah, yess Cofield one F Underscore Advisor. Or
check out our our financial education company, Mellon in Money,
which we're teaching investing, taxes and all types of business strategyes.
Speaker 1 (34:07):
Melon and Money has a great YouTube channel.
Speaker 4 (34:08):
Oh yeah, yeah, really really great angel. Yeah, we'll get
We're gonna.
Speaker 2 (34:13):
Get to get on your level.
Speaker 1 (34:15):
Save some money on my.
Speaker 3 (34:16):
Taxi now, thank you all for tuning in to Wealth
Wednesdays and tonight. On Wealth Wednesdays, after party, Jason White
talks to Gigi jj McGuire service. They talk about she's
planning to open a new restaurants.
Speaker 1 (34:30):
They talk about.
Speaker 3 (34:31):
All sorts of great things. I'll be sure to Tune
in at the Federal Code on YouTube.
Speaker 2 (34:36):
Yep Gji has been trending, y'all.
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