Tax Savings

Episode Transcript

Speaker 1 (00:00):
Hello, everyone, Welcome to the Greg Hicks Show. I'm Greg Kicks,
certified Financial Planner along with Wanda Cooper Financial Advisor and
Bo Nicholson's certified Financial.

Speaker 2 (00:09):
Planner, and I'm glad to be back.

Speaker 1 (00:11):
I was out of town the last two weeks and
I heard I heard rumors that wanted Wanda bou show
went well, and that's good and we appreciate y'all subbing
and helping me out. And I had a by the way,
I can't ignore the trip this week and I went
to the National Wrestling College Championship.

Speaker 3 (00:31):
Look that up that video.

Speaker 1 (00:32):
In Philadelphia, and kudos to n C State. They had
an All American national champion, a little one hundred and
twenty five pounder lightweight, and we had three All Americans.
But the Coup day Thaie event was like a movie
script when the heavyweights wrestled. A kid from Minnesota is
a prodigy, two.

Speaker 2 (00:51):
Time national champ.

Speaker 1 (00:52):
He won the Olympic gold medal last time as a
college kid, and he came back for his final year
and his opponent that night was a guy named Hendrickson
that had graduated from the Air Force Academy last year.
So he's officially a second lieutenant, but he got an
extra year to compete like all athletes in the COVID year,

(01:14):
so he went to Oklahoma State. So the two heavyweights
went at it to finish the tournament, and just coincidentally,
President Trump and some of his buddies were there for
the whole tournament. Anyway, long story short, the kid you
always introduced the opponents and they come out in the
uniform and the crowd goes, yeah yah. There was eighteen
and a half thousand people there, but the kid from

(01:37):
Air Force came out, didn't wear his Oklahoma state thing.
He came out with a flag draped over him, a
United States flag and a T shirt that said Jesus
on it. And he came out and he beat the
Olympic champion, and the crowd went batylistic, And then I
thought it was unbelievable. He went and hugged his girlfriend,

(01:59):
his mom, dad as coach, came back and shook hands
with the Olympic gold medalist, Gable Steveson, and then he
turned to President Trump and saluted him as a second lieutenant.
It was like a movie script, it was like and
the people just of course, the crowd went by listing
And here's the irony of ironies. The kid he beat

(02:20):
the gold medals from the Olympic Games is named Gable Steveson.
He's named after the most famous wrestler ever, Dan Gable.
When he was born, his parents were wrestling fans, and
they said, let's call him Gable for Dendable choice.

Speaker 2 (02:37):
Look what he grew up to be.

Speaker 1 (02:40):
But the biggest upset in the history of college wrestling
was Dan Gable. Undefeated in high school. In college, he
lost his final match, and his protege, Gable Steveson lost
his final.

Speaker 2 (02:54):
Match fifty years later.

Speaker 1 (02:55):
Wow, I'm telling it, it's a movie script to some
writer and producer.

Speaker 2 (02:59):
You can't make up what happened.

Speaker 4 (03:01):
It was like, it's hard to finish a season like that.

Speaker 2 (03:03):
You can't. You can't even believe what I'd.

Speaker 3 (03:05):
Love to see. I'm gonna go back and look up.

Speaker 1 (03:07):
The It's all over social media. It's it's worth it.
It's anyway. I hated to digress, but but wrestling has
been a big part of my life over my lifetime,
and I but just being there, and I joked with
some of my friends said what do you do this weekend?
I said, well, I hung out with President Trump and
Elon and some of the guys.

Speaker 3 (03:27):
You better not ever do that that. You don't call me.

Speaker 1 (03:29):
Hey, I didn't invite them. They were just show they
showed up, going to be there.

Speaker 2 (03:35):
Yeah, right.

Speaker 1 (03:37):
Anyway, so the market continued to go up and down,
up and down and and and speaking of musk, poor
Tesla is now a political football. Yeah, and that's not fair.
The stock has been real volatile. We bought it off
and on for clients, and most of our clients are
still way up. But anyway, it's kind of sad when

(03:57):
politics falls over into the market.

Speaker 2 (04:00):
But how do you avoid it?

Speaker 3 (04:02):
You know, I don't think you can. We had a
whole radio show on that. Yeah, you know, you can't.
They kind of go in tandem. People read news, they react,
They read news, they react instead of researching.

Speaker 2 (04:12):
Yeah.

Speaker 1 (04:13):
Yeah, yeah, it's an emotional roller coaster already, and then
throw in politics and it really gets emotional.

Speaker 4 (04:18):
Unfortunately, I'll tell you what, a lot of these tariffs
seem to be having the uh, the impact that Trump
hoped that they would have. I just saws it has
and I've got some crazy figures here. Actually, the Indian
government actually this week said they were willing to reduce
tariffs on fifty five percent of US imports down to

(04:41):
as little as zero from the current range of around
thirty percent. And listen to these numbers. This is this
is outrageous. Since Trump took office, a staggering three trillion
dollars of investment has flowed back into the United States.

Speaker 3 (04:56):
But that's not making big news.

Speaker 4 (04:57):
No from Saudi Arabia, Apple five hundred billion, United Arab
Emirates one point four trillion, Johnson and Johnson fifty five billion,
Soft Bank one hundred billion. I mean, companies understand what's
going on and who's in charge here. And I know
Honda built a plant after the tariffs were announce They

(05:17):
were like, you know what, We're not going to deal
with that. We're just going to build a plant start
building our dang cars in the US.

Speaker 3 (05:22):
But I'd rather focus on the rallies that Bernie Sanders
is having instead of reporting those number.

Speaker 4 (05:30):
We all know who runs the media, I know. I mean,
I think a lot of our listeners are smart enough
to cut through the noise and listen.

Speaker 3 (05:36):
They've voted that way too. They're they're cutting through all
that stuff and doing the right thing.

Speaker 1 (05:41):
Yeah, yeah, and that's the bottom line, and you can't
see instant results. So billions of dollars is amazing, but
it's going to take a couple of years before that,
really yeah.

Speaker 4 (05:52):
And there'll be a season of pain before we kind
of get back to where he wants to go. You
look at I've mentioned this before on the show, but
I wasn't around eighty to eighty one when Reagan came
in and Volker always share, and you look at what
happened to the market, the great reset after Jimmy Carter
and the policies he put in place, and then the
market from nineteen eighty one basically to nineteen ninety nine

(06:15):
with a blip, little Black Monday blip in eighty seven,
market went way up yep for years, for years and
years and years. And who knows. I mean, maybe we
could be in a time right now where we're pulling
back the slingshot and springboard and forward. But the important
thing is that you are working with a professional who
can help you out with a good asset allocation plan,
manage your taxes like we're talking about today in a

(06:36):
smart way so that you're not paying too much to
Uncle Sam, and just give you a sense of confidence
as you work towards your financial goals. And a number
of that you can call if you haven't yet done
this is nine one nine eight five six one nine
six eight to meet Greg wander myself and sit down
with us and talk about how we can maybe help
you navigate all these complexities and challenges that are in

(06:56):
the financial world.

Speaker 3 (06:57):
And if you don't want to come by yourself, grab
you friends. We do group meetings all the time. We
would love to do a group meeting. So if you're
not one on one person, you're like, I want to
meet with him, but I want to go by myself
because I might have to sign something. Well, first of all,
you're not gonna sign anything, but bring your friends, bring
your mom and dad, bring whoever.

Speaker 4 (07:17):
I've people, bring their pets.

Speaker 3 (07:19):
There, you go, bring them. We're not afraid. We'll meet
with you.

Speaker 1 (07:23):
That brings up a memory. A few years ago a
lady who's still my client, really neat lady. The radio
listener was her nephew, I think it was, but he
was a shelf He did his own investing, which is cool,
but he loved the radio shows. So he brought her
to me and she's been a client there for like

(07:43):
seven or eight years, so she wasn't even a radio
listener and became a client, but her nephew was so
But anyway, I'll tell you a funny story about the
emotional reaction.

Speaker 2 (07:54):
I'm gonna talk about my daughter, Carrie.

Speaker 1 (07:56):
So I've done a five twenty nine plan for my
granddaughters since they were little bitty kids, like before they
were four months old, and I've been funding it for
the years. And the oldest one, Finley, is junior. She's
probably going to come to NC State because all of
her grandparents did. Her parents just like you, pretty much
got to go then. So any long story short, I

(08:18):
said something to Carrie the other night about, hey, Carrie,
you saw how her stuff's grown. Now she's got the
first year totally paid for and maybe the second year
or part of it. And this is cute but typical.
Carrie says, Dad, what is it? Then the market's really
bouncing and it's going down a little bit. You might

(08:39):
want to maybe move it in. Her husband, my son
in law, Eric, said, Carrie, your dad's a financial advisor.
I think he might know what to do with that.

Speaker 2 (08:50):
But it was cute that.

Speaker 1 (08:52):
My daughter, you know, she hears the news. She doesn't
look at my daughter's granddaughter's five to nine, but she
felt the emotional part. And that's like you said, an
advisor is already on that. Yeah, I mean advisors are
way ahead of the curve.

Speaker 4 (09:08):
There's a portfolio on that note CREG that tracks Jim
Kramer's stock picks. And you know you talk about reactionary.
That guy as soon as something starts going up and
it's he's like bye bye, bye bye bye at the top.
And then as soon as something is falling apart, we
gotta sell, we gotta get out. And uh, there's two
statistics that have been put together on over the past year,
three years, five years. What if you listen to Jim

(09:30):
Kramer's advice and every single one of these stocks that
he's picked or told you to dump, and it is
I mean the S and P five hundred is destroying it.
It is down. It's negative over the past two years
when the market's rallied pretty big.

Speaker 3 (09:43):
Well, I listened to him because I know my clients are,
but I particularly listen when he has a CEO on
because he had this. Yeah, so I do listen to that.

Speaker 4 (09:53):
I don't buy what he's the stephen A. Smith of CNBC.

Speaker 3 (09:56):
Because by that there's no way I just took profit
all for that.

Speaker 1 (10:01):
A few years ago, I remember Wyda would get two
or three calls in one week about the same stock,
and then she started asking people, do you watch Kramer
because of that emotional reactor?

Speaker 3 (10:13):
Sir?

Speaker 1 (10:14):
But anyway, the bottom line is ring emotions out of it,
you'll make a lot more money over time, and that's
where the advisor comes into play. We try to be logical,
and by the way, I always remind my clients we
have emotions too.

Speaker 2 (10:26):
I feel really really bad.

Speaker 1 (10:28):
The market's going down, down, down, and I'm watching every
morning pull up my client accounts and they're getting affected.
But the one thing I will say that I think
all of us here would agree. We're not all in
the market. So we're not up twenty percent two years ago,
but we didn't go down twenty percent three years ago either,
And that's the big thing. A lot of my clients
are calling how am I doing, And I'll pull it

(10:49):
up and I'll say, well, you're down one point three
percent in the last two.

Speaker 2 (10:52):
Months, and they go, what yeh.

Speaker 1 (10:55):
That's because we diversify and monitor all right, we're going
to take our first break coming up here, and today's
show is something y'all aren't interested in, tax savings, anybody interested?

Speaker 2 (11:05):
Stay tuned.

Speaker 1 (11:07):
Hello, everyone, Welcome to the Greg Kicks Show. I'm here
with Bo and Wanda Greg Hicks. We're always here on
the weekends. So what are you listening at the beach
on Saturday and Sunday or in the Raleigh area metro area.
We're such a big city now, we're in the top
twenty five in Raleigh. Not big enough for our producer though,
that's right, Yeah, that's right, she's moving away.

Speaker 2 (11:26):
But anyway, welcome to the show.

Speaker 1 (11:28):
We're all about money, financial planning, organizing your life.

Speaker 2 (11:33):
To meet your goals, your risk.

Speaker 1 (11:35):
Level, eliminating debt. And one of those bullet points today
is tax planning. And we're not CPAs, nor do we
do tax returns, but we know a lot about planning.
And when I say planning, planning to save taxes is
our mantra. We talk about taxes, probably more than most

(11:59):
advisors do because we're so conscious of it. So today
we're going to talk about ways to save taxes, avoid taxes,
counter taxes with write offs and so forth. So we'll
talk about a lot of different areas. But the reason
we do this show at this time, excuse me, at

(12:21):
this time of the year, this April fifteenth is coming.
Heads up, the federal government because of the North Carolina
mountain floods and hurricane has extended tax returns to May first.
For North Carolinians. Heads up, you've actually got a month
to go. Yay for all you procrastinators. A good job,

(12:42):
federald I know me too. So let's talk about just
some immediate things we got about a month ago. Mediate
things we might do to save taxes.

Speaker 3 (12:53):
Yeah, I mean, if you're start a business of your
own or something like that. Like sometimes people retire and
they go to a second career part time, and and
I've met with several that didn't know they could do
a little small plan for themselves if they're going to
work a few more years. Sometimes that can make sense
to do that. But also Greg, this the twenty twenty

(13:17):
five I think this year is when the four to
one K plans they automatically enroll you if you're a
young worker and you start working. According to what I read,
this is going to be something they're going to put
in place. This year. But I think what's on everybody's
mind is that the uh, the tax cut and jobs ACKed.

(13:39):
You know that was originally you know, something started way back,
but it's due to sunset this year. I mean twenty
twenty five, isn't it.

Speaker 2 (13:47):
It was.

Speaker 1 (13:48):
It's not going to sound sure because passed the House.

Speaker 2 (13:52):
Oh good, Oh yeah.

Speaker 3 (13:53):
And I think that's something.

Speaker 1 (13:54):
That you know, the Trump reform is going to stay.

Speaker 3 (13:57):
Yeah, that we needed to visit because that's that's probably
on everybody's mind too. But now a lot of things
that you could do, you want to do, you would
do year in. You know, funding your an IRA, maybe
you don't, you never participated in a plan. Maybe you
just did an IRA every year. You've got to update
for fifty well you've got one now, so but most

(14:20):
of these things that can impact you have to be
done year in. So my advice to you is, once
you do your taxes this year, don't wait till the
end of this year to implement what can help you
for next year, because I you know, they they've you know,
increased all these withholdings and exemptions. They help you. But
still you can help yourself. And there's a lot of

(14:42):
things that you can do before year, and so don't
wait on this because I don't know what the future
is going to hold for you know, taxes being under
the Tax Cuts and Jobs Act, we don't know. So
we don't want people to just wait and assume that's
going to keep going, because I may not.

Speaker 4 (14:58):
We know the other side of the eye wants to
push taxes in the other direction and deal with our
national debt differently than we're currently dealing with it. In
the Department of Government Efficiency has been dealing with it
and cutting spending and you know, doing that kind of reform.
The easy way for the other side of the aisle
to do it is through tax increases, and we're fortunate

(15:19):
to have the extension on the tax cuts this year. However,
one is right, I mean flashing forward five ten years
down the road. I'm in the camp who thinks taxes
will probably be higher, and so I oftentimes will make
the argument, but it makes more sense to make wroth
contributions now into a rath ira, which means Uncle Sam's
at the front door of that party. You go ahead

(15:41):
and you pay him the entrance fee, You pay the
taxes on the money you put into the raw ira.
Now and then that money grows tax free. You get
the growth after tax. Another way to think about it,
and there's nobody at the back door. You can walk
out of that party without seeing anybody. You can take
all the money out of that account without paying any
taxes on it. And so but back to tax saving strategies.

(16:04):
Now one is right about retirement accounts and sep iras
is something that a lot of my business owner clients do,
especially if they are like real estate agents or they
have a single person business. You can put seventy thousand
dollars a year into a set IRA. Now there's other
restrictions on that, but seventy thousand dollars is the max

(16:24):
you can put in there. That's a that's a heck
of a lot of tax savings. If you have a
tax issue and you're looking for cuts as a business owner,
oftentimes my business owner will de business owner clients will
defer their taxes until October and so just understand when
your last day is. It's either May first or October fifteenth.
And then hsas, I think are commonly overlooked. Health savings

(16:46):
accounts absolutely when clients have hsas, this is an interesting strategy.
But I'll tell them, do not spend that HSA account
on qualified expenses, but instead open up Excel and open
up Microsoft Word and save all of your receipts and

(17:08):
make a spreadsheet of every single dollar that you've spent
on HSA eligible purchases. Why do we do this because
it preserves what's in the HSA. You can invest the
money in your health savings account. You keep put money
in there, you grow it, grow it, grow it, grow it,
grow it. And then you've got this SUCCEL sheet that shows,
over the course of fifteen twenty years, all right, you've

(17:29):
put thirty thousand dollars. You spent thirty thousand dollars on
medical related expenses. You can pay yourself back from the
HSA at any point down the road. And so what
happens is you allow that money to grow tax free,
you take it out tax free the HSA while you're
spending money on healthcare expenses and through time value money.
That works out very well in your favor. And our

(17:53):
number nine one nine eight five six one nine sixty
eight is a good place to call if you want
some last minute strategies on this or just some of
these high level strategies that maybe your advisor is not
telling you nine one nine eight five six one nine
six eight.

Speaker 1 (18:08):
One thing I'll follow up on when Bo mentioned the
max is seventy thousand into a SEP. That's assuming you
make money. It's twenty five percent of your earned money.
So if you make two hundred thousand and a great
self employed job or business, you could put approximately fifty
thousand before you file taxes. And this is for a

(18:31):
last year's taxes. It's the only retirement plan other than
an IRA or ROTH that you can go backwards to
the year before. So if you're in that predicament going
oh my gosh, I got all these taxes and you're
self employed, or maybe you have one employee, call us
and just say tell me about the set SCP. It
stands for Simplified Employee pension. You can do twenty five

(18:54):
percenter in that income, whether you're incorporated or sole proprietor
so give us a call at nine nine eight five
six nineteen sixty eight. And wouldn't that be a fun
thing to do in the last month before tax Well.

Speaker 3 (19:05):
One of the things I like to do, and Boat
touched on this is I've met with folks that are
within five years of retirement, and they were never able
to due a wroth because they have these what I
consider stupid income.

Speaker 2 (19:18):
Levels, stupid good ones.

Speaker 3 (19:20):
Yeah, yeah, but so they could never du a wroth. Yeah,
and so I'll mention to them, you work in five
more years, does your company offer a four to one
k roth or four or three b wroth whatever applies?
And they're like, yeah, they do. I said, well, think
about socking money away in that. Talk to your tax
person first though, to see how that might impact you.

(19:42):
But when you've got somebody putting in up to the
max of thirty thousand or whatever, that's one hundred and
fifty thousand and dollars in tax free.

Speaker 4 (19:52):
Now what if you contributions?

Speaker 3 (19:54):
Right? So, what is it that the person might need
in five years, six years, seven, in the years every
time by then they need a car, you.

Speaker 1 (20:03):
Know, or pay their mortgage, pay their mortgage on that.

Speaker 3 (20:06):
So, I mean it's to me it makes sense, but
I always refer them back to their accountant to discuss
it thoroughly. But I just think, if you're out there
and you within five years of retirement, come see US
nine one nine A five six nineteen sixty eight. We
do this all day every day. We can help you too.

Speaker 4 (20:23):
And to expand on that and keep the rough love
story going a little bit. Everybody talks about diversification and
our profession and how important diversification is, but you have
to apply that past just the diversification of your assets.
What about diversification of account types? And Wine is talking
about roths and pre tax accounts like your four oh
one K and your IRA and then brokerage accounts. It's

(20:45):
nice to be in retirement and have some tax flexibility,
different access points that have different kinds of tax treatment,
and so again our number one more time before the
break nine one nine eight five six one nine six eight.
We'd love to hear from you and learn your story
and see how we can help. You'll stick with us.
We got so much more to talk about with taxes.
We'll be right back.

Speaker 1 (21:03):
Welcome back to the second half of the Greg Hicks Show.
We're so glad you tuned in our number to call
if you want to ask a question about your financial
life and where you're heading and your goals and taxes
and so forth. Since our tax our show today is
on tax savings. Call us at nine one nine eight
five six nineteen sixty eight. Want to also mention our website.

(21:25):
It's the initials of our business, Financial Resource Management, North Carolina.
We have offices in Raleigh and Moorhead City, Atlantic Beach area.
So the website is actually FRM inc dot com Financial
Resource Management, North Carolina frm NC dot com. Guess what

(21:47):
we are archive our radio shows on there, so you
can click on the website FRMANC dot com and click
on the radio tab and scroll down and listen to
shows that we've done. Maybe a topic that you are
really interested in, and maybe you inherited money, maybe you
change jobs and have a rollover, or maybe maybe unfortunately
you lost a loved one. We have shows on all

(22:09):
kinds of topics, fifty or sixty or seventy. We rotate
over the years, and uh, they're very helpful, they're very educational.
So take advantage of that website frm NC dot com.

Speaker 2 (22:22):
Uh, we're going to go to.

Speaker 1 (22:23):
Other ways to shelter taxes, but before we do, I
want to mention one thing. I have this question about
five or six times a year people retire, they aren't
working and they'll say to me, well, I'm going to
fund my wrath this year and I go, no, you're
not uh into conversion, right, you can't fund, you can't find,

(22:43):
you can't fund it, right, Yeah, you can roth convert anytime.
Oh yeah, but I'm talking funding. They'll say I want
to put eight thousand in my wrath. Well, I'll say,
did you make eight thousand this year? They're going no,
I'm retiring. I go no, sorry, how it's if there's
spouse wor well somebody has my point. My point is
it's based on you earning income whatever. So if you're

(23:04):
if you're a teenager earns five thousand a year in
the summertime job, they can do a raw. If you
earn five thousand or three thousand and a part time
fun job, you can do a rock. But you can't
fund if you don't make income.

Speaker 4 (23:15):
But if your spouse to clear up the spousal wroth
in ira contribution. So like if you are a non
working spouse like my mom, and then my dad works
and has an income, my mom, yes, even though she
has no income, can still contribute to a ROTH because
she can kind of tag along to his income. Correct,
And so for a couple, Yeah, as long as you
meet the other the contribution limits and everything or the

(23:38):
income limits. Then a couple can put up to sixteen
thousand dollars a year if they're ever fifty right now
and to a ROTH.

Speaker 1 (23:44):
Yeah, and and be aware of your high income. You
can't do it either. The government's always putting the screws
to the.

Speaker 3 (23:51):
Limits are crazy and that on that, but the handcuffs
on anything.

Speaker 4 (23:55):
It's a good question. We got a what do we
do last week? We just biggered about the government the
whole time. So we've done enough of that. But the
backdoor ROTH is a strategy if it allows you to
put money into a ROTH if you are higher, if
you are over the income limit, and for couples right
now married filing jointly, it's about two hundred and twenty
thousand dollars. However, understand that there is a lot of

(24:17):
professionals out there who are doing this incorrectly and it
can get you in some serious trouble down the road.
You cannot do a backdoor wroth if you have other
IRA assets. And so if you have money in an
IRA or simple IRA or step IRA and your advisor says, hey,
let's do a backdoor wroth, I got this really interesting strategy. Well,
this is why not all financial planners should be doing

(24:38):
tax planning because they might not understand little nuances that
can really hurt you down the road. And so if
that's something that's happening to you, you might want to
look at reversing that because you'll be subjective as whole
proratur rule. And it's just crazy. That's the only time
and I've ever recommended a client put money back into
a four oh one K because if you have pre
tax money that's in an IRA and you want to

(25:00):
do the back door off, you can roll that money
back into an old four oh one K that's maybe
still open and now you have no more IRA money
and it opens up the door to that strategy again.

Speaker 3 (25:08):
Well, the other one, Greg, you do this a lot,
and I do too, and I'm sure you do as well.
But is the clients that are in that required minimum
distribution age. Maybe it was seventy and a half you started,
maybe it was seventy two, now it's seventy three. I
have quite a few clients that give half of their
required distribution to charity, and they do it on a
monthly basis. We figure out what they're going to give,

(25:31):
divide it by twelve send it on to the charity
so nobody has to remember to do it every year
and they keep half.

Speaker 2 (25:38):
Yeah, and you don't pay tax the charity, right, Yeah.

Speaker 4 (25:42):
The only person you're leaving out is Uncle Sam's best case.

Speaker 3 (25:45):
The charity.

Speaker 1 (25:45):
It's called a QCD qualified Charitable distribution.

Speaker 2 (25:49):
I do the same thing.

Speaker 1 (25:50):
I just if you're over seventy and a half, I
send my whole RMD to different ministries. Good for me.

Speaker 4 (25:57):
It's a great way. I didn't win way to get
money out of your IRA and pay no taxes on it.
And there's another way. So I actually had a client
bring this to me, and this is legal.

Speaker 3 (26:10):
So what D when they bring stuff up?

Speaker 4 (26:12):
I know, I'm like, man, this is such an incredible idea.
And so he's got several different kinds of accounts. You know,
he's got his Wroth accounts, he's got his big brokerage accounts,
you know, like a million dollars in after tax money.
And he's like, bo, I know you've got management fees,
but can we consolidate all of my management fees to
come out of my IRA? And I said, huh, that's

(26:33):
an interesting concept. Let me check in on that. And
I did, and so he has all of his management
fees come out of his IRA. No, he doesn't get
a ride off, but he takes the money from his IRA,
which would otherwise be taxed, and so investment fees can
come out of iras not tax And so this is

(26:53):
this is something to maybe carry forward to your advisor
if you have And I haven't mentioned this to all
my clients. So if I have clients out there that
are listening, which I'm sure I do, give me a
call it we'll get this done. I mean, logistically it's
a little challenging for Susan, but she can handle anything.
And so yeah, it's a good way to get additional
money out of that pre tax account and pay the
government a little bit less.

Speaker 1 (27:14):
Let's go to another subject, real estate. Since the beginning
of taxes, real estate has been a favorable way to shelter.
There's many many things. You get deductions and depreciation, which
is you don't get on anything else. You get depreciation
on rental properties, for example. But there's still confusion in that,
Like people will buy a piece of land and then

(27:34):
they'll come and meet with us and say how much
can I depreciate? And I'll say well, dirt doesn't depreciate
real well, so you can't depreciate land. Buildings fall apart
over time, so you can depreciate, which lowers your taxes.
Another misconception real estate, by the way, we are all
for there's many ways to shelter taxes using real estate.

(27:56):
Even real estate stocks in the stock market call reats.
But the other thing that's interesting is I have this
this come to me probably two or three times a year.
I'm going to do a rental property and we're gonna
we're gonna diversify into a rental property and in order
to save taxes. And I go no, well, I'll say, yeah,

(28:16):
you can appreciate, you can write off your taxes, but
what about your rental income is that taxable? And they go, uh, yes,
so you're really not saving per se taxes. But we're
not against rental properties. But there's just stuff in your
head that gets confusing on the tax law.

Speaker 4 (28:33):
I think real estate, particularly rental real estate, for people,
is a mental thing. And what I mean by that
is it acts like a like a mandated savings account
almost because people have to pay that mortgage that they
may otherwise spend that money, and they're maybe getting a
little bit of rental income off the property, but if

(28:55):
the real estate market continues to grow, you know, they'll
get a little bit of growth on that and maybe
when they take a step back and look at the
history of the twenty years that they were invested in
that property, maybe they see that they could have potentially
done better in the market. But the big variable there
is what I have put is much money into the
market that I put into this property that I was
required by the bank and everybody else to put into

(29:17):
this property. And so I've talked to a lot of
clients about that. And you know, as Greg and Wanda
y'all know, for clients who kind of dip their feet
into real estate, oftentimes they go head first and they
understand that, Okay, this works and this is something that
I'm comfortable with, and they end up buying more properties
and buying more properties. We've met lots of people with
tens of millions of dollars in net worth and they

(29:39):
may only have five hundred thousand dollars liquid and majority
of that money is tied up in real estate, and
in a way, that's fine. The big issue there is
if they have a huge portfolio that's over the estate
tax exemption. Well, when their kids are going to be
putting a very hard spot, or their spouse or no
other kids, their kids are gonna be putting a very
hard spot if they were to pay away, because the

(30:02):
government's going to want that tax and they're gonna want
it quickly, and so the kids will be forced to
sell potentially some of those properties to a fire sale
within just a couple months. So anyways, it's important to have,
like we talked about earlier, diversification of assets.

Speaker 3 (30:17):
From my experience with kids being left real estate me
they get a step up in basis and all that,
but the parents seem to think we ow older parents
seem to think that the kids are going to want
to keep that and they don't. Then nine times out
of ten, they don't want to manage property.

Speaker 2 (30:33):
They want money.

Speaker 4 (30:34):
They want money, and they got the golden ticket to
sell it because they got that step up in basis
no taxes.

Speaker 3 (30:39):
But the only caveat to that is if there's discord
in the family and they wait a couple of years
to sell it, they will have some capital gains at
the property.

Speaker 1 (30:48):
Keep Why I'm shocked that there's discord in the family. Yeah, well,
I experienced it as advisors. We're shocked when there is
not discording. I mean, it's the other direction.

Speaker 4 (30:57):
Yeah.

Speaker 1 (30:58):
But yeah, And let's remember this real quick. When they
depreciate your two hundred thousand dollars house thirty years later
and you sell it for three hundred, your capital gains
is three hundred. They've depreciated it to zero. And a
lot of people get blown out of the water. They
don't even realize that happens. Well, that will take a break.
We'll come back for a last segment of tax planning.

(31:21):
Welcome back to the last segment of the Greg Hicks Show.
We're talking about tax planning, but we're specifically talking about
saving taxes in this tax season. We're glad you tuned
in if you missed the show. The show's recorded on
our website FRMNC dot com and if you want to
do the iHeartRadio app in Raleigh, North Carolina, you can
click on the Greg Kicks Show and go backwards and

(31:41):
hear the whole show. Want to give you a heads
up of what we're planning in April here coming up
next week, it's on income strategies during retirement and then
two weeks from now is a topic that sounds so simple,
social security, but it's so complex, and we're going to
spend the whole time on social security planning, something that

(32:03):
a lot of advisors don't do.

Speaker 2 (32:05):
We do it all the time.

Speaker 1 (32:07):
We're not super experts, but we're expert enough and we
can give you the pros and cons of when to
take it, when not to take it, whether your spouse
should take it first. That's a fun show, very informative,
and then kind of looping into that idea is retirement
planning for yourself, your personal self. So anyway, the month
of April is focusing on retirement.

Speaker 4 (32:27):
And one more thing we have coming up outside of
the radio show is this relates back to today's show. If
you've been sitting on tax files for years and years
and years and you've got an attic full of fire hazards,
we'll get rid of that. What's the is it seven
years you got to save tax records?

Speaker 2 (32:45):
Greg?

Speaker 1 (32:45):
It used to be Now it's like three or four.
It's really dropped. I asked my CPA, and I was shocked.

Speaker 4 (32:51):
And so we know there's people out there that I
just have boxes on boxes of records from the nineties
and the eighties and the sixties and beyond. And so
we're red truck at our office like we do every
single year on April twenty third, and that's going to
be from ten until two. So get in touch with
us if you want to come by. We'd love to
have you. But we do ask that you are SVP
just because that gets a little crowded. So give our

(33:12):
office a call nine one nine eight five six one
nine six eight or shoot us an email and we'll
we'll send more reminders out about that to radio listeners
and the email address. You just go to our website
which is f r m NC dot com Financial Resource
Management North Carolina fr MNC dot com and you can
reach out and say, hey, I got some boxes to
shred and we'd love to meet you.

Speaker 1 (33:33):
And you do have to sign up. It's just a
regulation that whenever we do an event, we have to
register the people who.

Speaker 3 (33:39):
Attending and getting through the parking lots.

Speaker 1 (33:42):
Yeah, so anyway, let's talk about some sophisticated stuff here. Uh,
let's talk about charitable remainder trust and charitable charitable trust
or only for the wealthy, but we know there's wealthy
people listening to.

Speaker 3 (33:55):
Our shows all that stuff.

Speaker 1 (33:57):
Yeah, well that's well. If you know, you could have
a million dollar old piece of land that's not productive
and you're stuck in it because your capital gains taxes
might be two hundred grand or three hundred grand. You
can donate that to a trust. It's pre set up
by an attorney. It's to costs maybe one thousand or
fifteen hundred dollars, and you have your very very very

(34:17):
best friend be the trustee because when you donate the
land in you get a partial income tax right off,
which is really cool depending on your age.

Speaker 2 (34:26):
And then your a very very.

Speaker 1 (34:27):
Best friend who's trustee sells the property, so the million
dollars sale, there's no capital gains because it's in a
charitable trust.

Speaker 2 (34:35):
How about that? That's kind of clever. And then do
I think, yeah, yeah.

Speaker 1 (34:39):
We've done a few, but when we do them, it's
like unbelievable. And guess what the irs requires. It requires
the trust to pay you an income for life or
for a set number of years, and it's it's generally
about five percent. So you're stuck in a piece of
land and all of a sudden you're getting fifty thousand
a year from something and you got a tax right

(35:01):
off and a partial donation to charity right off. It's
incredibly strong on the tax strategy part. So if you
have highly appreciated stock that you can't sell your lockdown
because of cap gains or a piece of land or
whatever it may be, call us at nine one, nine
eight five six, nineteen sixty eight and just say I

(35:22):
need to talk about the charitable trust and it's a
it's an incredibly cool way to do things and save taxes.

Speaker 4 (35:28):
And if you don't need the income, there's another charitable
trust called a charitable lead trust that pays the charity
the income. You kind of flip the rolls around and
the charity the income, you get the tax break still,
and then what's left over after a said amount of
time goes to your heirs. And you know, it's a
good way to preserve assets and go ahead and get
a tax deduction.

Speaker 1 (35:48):
Now, bo I got a quick story. I did one
of these about twenty five years ago, and it's a
lead trust. So the only problem was the couple loved
Carolina and I mistake.

Speaker 2 (36:00):
But I tried.

Speaker 1 (36:01):
Couple was but anyway, those dang tar Hills got But anyway,
so what you what they did was okay, real quick,
you put in the money and let's say it. Let's
say you put in one hundred grand, it's five percent
to charity for twenty years. But guess what we did.
People poopoo annuities, right, so we we did an annuity.

(36:23):
So twenty years later, let's say they put in two
hundred grand, they gave over two hundred to them tar
heels charitably.

Speaker 3 (36:32):
That's why.

Speaker 1 (36:33):
Yeah, that's right one. But guess what when it when
it ended, they had over two hundred thousand left.

Speaker 3 (36:39):
That's why they got God's Country. What can I say?

Speaker 1 (36:43):
And there and their kids were like hollylujah. I mean
twenty years later their kids were, you know, twenty years
old now they're forty. They got they were beneficiary. So
they got they they split the two hundred.

Speaker 2 (36:55):
I mean, it's.

Speaker 3 (36:56):
Unbelieved, wouldn't you know?

Speaker 1 (36:59):
And that it was like, man, this work like incredibly cool.

Speaker 2 (37:03):
You know.

Speaker 1 (37:03):
So anyway, just saying, if you, if you're a person
of means, call us and just just say let's talk
about charitable trust. We'll be glad to show you how
it works. And we work with attorneys here. We're not
we're not by ourself on this so well.

Speaker 3 (37:14):
The other thing I want to touch on today we
haven't spoken about is tax refunds. I still once in
a while, see especially the forty five year olds or
forty year olds. Yeah, I'm due a five thousand dollars
tax refund. I'm like, you do know you could have
funded a wrath every month with that tax that the

(37:37):
taxes that you are getting back.

Speaker 4 (37:39):
Man, when I was in my early twenties, that was me.

Speaker 3 (37:43):
IRIS has released their figures on the average tax refund
twenty twenty four, twenty eight dollars.

Speaker 1 (37:50):
That's average, and they keep it and screwed up with it.

Speaker 3 (37:53):
So you know that there's people that are getting more
and some that are getting less because that's the average.

Speaker 4 (37:59):
Think about it this way. What it is is it's
a loan interest free to the government. So it's an
overpayment on taxes, and so you've paid too much, You've
had too much withheld from your paycheck, and so you
get a refund back. Well, right now, interest rates are
four plus percent, so that twenty eight hundred bucks gonna
be sitting in an account if you're a very higher and
or it's likely a lot higher than that. Also, if

(38:19):
you use Venmo or even Starbucks or anything like that
and you keep money in your Starbucks account, or you
keep money in your Venmo account and you just don't
send it to your bank, it feels harmless, right, But
this is their business model. So they aggregate all that
Venmo and Starbucks and they say, okay, Bob Smith has
one hundred bucks in here, and then so and so
has two hundred times. You know, however many there are.

(38:42):
They take that money, they invest it, it earns their
company money. It's the exact same thing the US government
is doing with your tax dollars. The US government needs
a lot of money right now. So if you have
sympathy for them, keep on doing what you're doing. But
if not, if you'd rather have that money in your
own pocket, well then stop overpaying on taxes. Yes, stop
getting scat And.

Speaker 1 (39:01):
A common comment I'll hear on the refund. They'll say,
I'm gonna the government's going to send me my refund
next month, and I go, let me correct that the
government's going to send your money back. For some reason,
it gets labeled the government. It's not the government, it's
your money coming back. So again, the most the fun

(39:21):
kind of humorous refund story.

Speaker 2 (39:23):
I'll tell is.

Speaker 1 (39:25):
I had a couple of years ago they purposely wanted
a big refund to pay college tuition for their kid,
and I went, good, gosh, you could have done a
five twenty nine plan and got tax.

Speaker 3 (39:39):
Free growth for years that kind of money. Yeah.

Speaker 1 (39:41):
Yeah, but again I told him you, I mean, how
much was tuition? My gosh, it was thousands of dollars.

Speaker 3 (39:46):
I wish they would bring back allowing a tax deduction
for those contributions. They used to allow that.

Speaker 4 (39:55):
Well, stay by state. McCrory actually shut that down. So
I've got buddies in Georgia who's we'll get the tax
Virginia does too. It makes sense, it does.

Speaker 3 (40:04):
I mean you want to shut these student loan situations
down and allow for this kind of tax break, whether
it's the grandparent or the parent or whatever.

Speaker 2 (40:12):
Now, I'll tell you. You know.

Speaker 1 (40:13):
Trump is throwing out lots of ideas as a president.
But he said the other day something that used to
be years ago. If you buy a car and you
pay interest, your interest will be tax deductible on a
US made car. And I went, that's not even a
new idea. That's a thirty five years ago when we
grew up Wanda.

Speaker 3 (40:33):
Credit card interest with credit CARDI in.

Speaker 1 (40:35):
Which I don't agree, but anyway, God the hours up.
Okay everyone, we're gonna have to go. So we've had
such a fun time today. The next two weeks we're
going to talk about dealing with retirement and so security
and all those fun things. We're glad you tuned in.
We love you, and remember our number to call eight
five nine five six, nineteen sixty eight. And remember this,

(40:57):
it's your money, it's your future.

Speaker 4 (40:59):
Services. FULE Investment Advisory Services LLC Security is offered through
Capital Investment Group Bank member FINRA and SIPIC. One thousand
East six Forks Road, Raleigh, North Carolina nine one nine
eight three one twenty three seventy. Past performance is not
indicative of future results.