EP 14: How to Uncover the Power of Tax Planning and Secure Your Wealth

Are you ready to take the reins on your financial future?

If so, I've got a show filled with insights on the often overlooked aspects of tax planning. I'll guide you through the process of aligning your withholding with your projected tax liability and delve into the tax benefits of retirement funds and savings plans. You'll leave this episode armed with a wealth of knowledge, including how to calculate your tax liability, understand your payroll information, and assess your investment statements and healthcare costs. Plus, we'll unravel the mystery of how a mortgage can affect your taxes.

I'll be exposing some game-changing strategies to reduce self-employment (SE) tax, a revelation that could save you a significant sum, but we'll also underscore the importance of open discussions with your family about your financial plans and the commitment needed to stick to them. 

This episode could potentially change your lifestyle, business, and future. 

Tune in and get ready for a journey to financial freedom!

Thank you for listening to The Millionaire Mindset Podcast with George Dines.

To connect with George visit www.georgedines.com

To Schedule a call with George visit: https://georgedines.com/contact/

Episode Transcript

Speaker 1 (00:02):
Welcome to the Common Sense Millionaire, where we
work to promote your financialadvancement in knowledge process
and education so that you andyour family become financially
secure.
This is the place I shareCommon Sense Action Steps that
you can take today to assistyour financial advancement.
So sit back, grab a drink andlet's get started.

(00:23):
Common Sense Millionaire, hereToday we're going to talk about
tax planning, and you knowthere's a funny saying about tax
planning and it goes like thisif you don't plan, you plan to
fail, and that is very importantin the tax area.
Why is this such a big topic now?
It's because typically, whathappens is you have a paycheck

(00:47):
and you get paid.
Taxes are withheld.
Then you file your taxes andyour tax preparer gives you
either the bad news that you owemoney or that you're getting a
refund.
The reality of the situation isthat the federal government,
through the IRS, they don't wantto pay you money back and they
don't want you to owe money.
They don't want you to owemoney because if you haven't

(01:11):
been managing your activitiesproperly, you probably don't
have the money to pay what youowe and the government doesn't
get its money.
If you have set it up so thatyou get a refund.
The government doesn't reallywant to give you a refund
because that costs money.
Either they have to pay fees todeposit that refund or send you

(01:32):
a check.
So the wonderful neutralsituation is that at the end of
the day, you don't owe them adime and they don't owe you a
dime.
So that's why tax planning isimportant.
When we do tax planning, what wedo is look at all of your
potential earnings for the year.
That would be salaries, alsopotential interest earnings from

(01:54):
investments or other activities, and we all know that these
things vary from year to yeardepending on what you're doing
and especially as to whether ornot you have a small business.
We take a look at that.
We actually compute what yourtax liability is going to be for
the end of the year.
Look at your withholding tomake sure that the withholding

(02:16):
matches up with what theprojected amount that you owe is
.
That means at the end of theyear when you file your taxes,
you don't owe anything.
You don't owe anything, so youdon't have to scratch or figure
out where you're going to getthe money to pay your tax bill.
If anything, you may get asmall refund.

(02:38):
That's okay if you get a smallone, but you don't want a large
one, because if you get a smallrefund, that means you're able
to match up expenses andrevenues.
So instead of getting one bigchunk of money at the end of the
year, you could then divertwhat you know would have been
your refund into investments andthat way you start building up

(03:00):
funds for retirement or funds toassist in the purchase of a
home or something that you needto do for the kids you got to
buy a car.
That's how you do that.
This is very important.
Now, a lot of people are notvery happy with tax planning
because one it makes you getinto for lack of a better word

(03:24):
your business.
Okay, but it's extremely,extremely important.
I've had so many people that Iwork with that once they see
what the plan looks like.
It may be a little roughimplementing in the first year,
but over time it just becomes aregular issue that has to be

(03:47):
talked about and action takenand recommendations on what to
do with the funds that you don'thave to pay to the federal
government.
Tax planning is a little bitmore difficult if you have a
business.
It's very important tounderstand that with your
business.
If you have a simple LLC netincome will result in additional

(04:11):
self-employment tax.
We need to look at that and youalso need to look at that to
find ways to mitigate having topay that money.
I always say that in the caseof a LLC that's making money,
hey, you can do any number ofretirement options, savings,

(04:32):
where the amount that you'reinvesting is an expense to the
entity, and I think it's betterto give the money to yourself
than to give the money to thegovernment.
Those are the important issuesrelating to tax planning.
The tax planning documents weproduce are pretty detailed and

(04:57):
allow for various levels ofanalysis, depending on what
you're expecting your businessto do or any other activities
that you want.
It even takes into accountchild tax credits, any type of
other dependent payments, ifyour mother or father might be a
dependent.
All of that can be modeled veryclearly and concisely, and then

(05:19):
at that point, it's up to youto make decision what you're
going to do.
Are you going to advance or areyou going to stay in the same
rut, worrying about how am Igoing to get this money together
to pay the government?
What do you need for a propertax plan?
First thing is we need to knowwhat happened in the past.
I always ask for two years oftax returns so that I can look

(05:42):
at what your income is, whatdeductions you have and, even
more importantly, what itemsyou've missed, that we could
probably get you some additionalmoney back from the federal
government.
So we look at the returns,analyze that.
Then we also need from you yourmost recent payroll stuff so we

(06:04):
can know where you are fromyour salary and we can look at
what withholdings you have,especially to see if you have
any retirement withholdings.
We also need the most recentinvestment statement.
If you're investing with, say,any of the major brokerages, you
could get a quarterly statementfrom them and we'll take a look
at that to see what you'reinvesting in and also, more

(06:28):
importantly, what you may beselling or what the company may
be selling on your behalf thatcould be generating income that
is reportable.
When you file your taxes, wealso need to understand any
additional healthcare costs thatyou're paying for that are not

(06:48):
part of your health plan.
This is extremely important forpeople who have high deductible
health plans and also justgenerally in case there's a
member of the family that has asituation going on medically
that could be beneficial to youfrom a tax perspective, as long
as it falls within the IRSguidelines Also need to get an

(07:11):
understanding of what yourmortgage is.
So we'll need your mortgageinformation how much you're
paying every month.
We'll also need the most recentmortgage statement, which is
for the prior year.
We wanna just see where you areand we're looking to see if
there are any special chargesthat are in there, like

(07:34):
different mortgage charges,because you may have had to get
mortgage insurance in thatsituation.
Also, any plans that you havefor the current year or the year
going forward.
That might be important.
Are you taking a chunk of moneyout for vacation?
Do you have to buy a car?

(07:55):
We also need information if youhave a business.
What are your expected revenuesfor the year?
What are your expected expensesfor the year?
Is your business funding orretirement plan for you and or
your spouse, if your spouse isin the business?
Are you in the right structurein your business?

(08:17):
Is there a structure changethat makes more sense for you
than what you have right now?
That we could do somethingabout that before the year is
over to make sure.
I think one of the moreimportant issues are folk that
have LLCs that are quiteprofitable, but they are paying

(08:40):
additional tax for the netincome on that entity.
So we look at what entities areout there that specifically can
reduce the SE tax paid as longas you are paying yourself a
salary in that entity.
Those are the real things thatwe need in order to start the

(09:00):
analysis but, most importantly,follow up afterwards with you
and the family so that we canmake sure that you're on track
and that you're moving in adirection that you want to be
moving in, and not that you'reforced to be moving in because
you didn't do any planning.
So, to wrap it up, here's whatyou really need.

(09:21):
One, I need to get informationwhere you were and where you are
right now so that we cancompute where you're going to be
.
Two, don't be embarrassed.
There's nothing embarrassingabout this.
That's hard for me to say foryou, but don't be embarrassed.

(09:41):
This will open up the areas ofdiscussion, not just between you
and me, but also within thefamily, and I think it's very
important that the familyunderstand the process that
you're going through, becausethis is for the benefit of the
family.
And lastly, stick with the plan.

(10:02):
When we look at the plan, whenwe produce the plan that you
want.
Stick with it.
You can't cut it off in themiddle of the cycle.
This is extremely important.
Stay with the plan and yourfuture is going to look a lot
brighter.
You've been listening to theCommon Sense Millionaire, where

(10:23):
you can learn how to go fromzero to a million using common
sense solutions to everydayfinancial issues.
Make sure and subscribe to stayconnected for more content,
tools and help so you canadvance towards your financial
goals.
If you need assistance or havequestions, leave a comment or
you can email me at george atcommonsensemillionairecom.