October 5, 2023 • 21 mins
As we start looking at the end of the year, many of us look back on the prior year, and ahead towards next year’s tax season.
Tax season can be daunting, especially for nomads and content creators who may not know what's deductible and what's not. This episode features Penny Rose from Fe Fi Fo Fum CPA, an expert CPA who specializes in guiding nomads and content creators through the intricate maze of tax deductions.
Highlights:
- Demystifying Deductions: Get clarity on what you can and can't write off on your taxes as a traveler or content creator.
- The Pros & Cons of Write-Offs: Penny elaborates on why certain deductions are beneficial, while others might not be in your best interest.
- Myth Busting: We address popular myths surrounding business write-offs, offering a reality check to new creators.
- Steering Clear of Tax Pitfalls: Tips and insights to avoid common mistakes that could potentially land creators in hot water.
Whether you're a seasoned content creator, a traveling newbie, or simply seeking insights on tax deductions as a nomad, Penny's expert advice is a must-listen. Equip yourself with knowledge and avoid common tax pitfalls.
…
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Stuart Doing Stuff (00:00):
Tax season can be daunting, especially for
nomads and content creators who maynot know what is and what is not
deductible and why, and we're goingto cover all that and so much more.
We're getting you ready for tax season.
That's all coming up on thisepisode of the RVDreaming podcast.
Welcome to the RV Dreaming Podcast.
This podcast is for today's andtomorrow's nomads who thrive on adventure,
(00:24):
embrace an unconventional lifestyle,and seek life beyond the ordinary.
We dive into stories, tactics, andinspiration that fuel the open road.
Hey there, my name is Stuart fromStuartDoingStuff on Instagram.
I've been a full time nomad for threeyears now, half of which was in a
40 foot Super C RV, and now I'm in aSprinter van, a 24 foot Sprinter van.
(00:44):
I went from big to small, I know it all.
And I travel with my twocats, Camden and Izzy.
I'm that, sorry, that was cheesy.
Follow me on Instagram for more storiesand videos, but I gotta, I gotta put
on my, my serious face right now.
Is this serious enough?
Nobody likes April 15th, and if you don'tknow that date that's not etched in your
(01:05):
mind, then you don't have, obviously,any pain points like I've had in my past.
But, , taxes are somethingthat everybody...
Is going to experience what is it?
They say death and taxes are the twothings that you just absolutely can't
avoid Well our next guest here on rvdreaming is going to try and take away
a little bit of that sting the bestthat she Possibly can she is a cpa for
(01:27):
content creators and is also On the road.
So ladies and gentlemen,welcome to the program.
Penny with E5 FauxFemme.
Penny Rose, welcome to RV Dreaming.
I'm so glad to be here.
CPAs for content creators.
And I love
Penny Rose from Fe Fi Fo Fum CPA (01:41):
that.
I have been an accountant for 25 years.
I want to be the person behind thescenes, making sure that they're.
They're comfortable with theirfinances so that they can continue
to make this amazing content.
Let me
Stuart Doing Stuff (01:56):
kind of just scratch and itch real quick on some of these,
you know, on some of these things,because I've heard all the rumors.
I've owned businesses in sticksand bricks and, you know, and this
and that, and I've gone through.
Uh, CPAs in differentstates and different areas.
I, it's, it's funny when I meet peoplewho are entrepreneurs and they want
to do social media for, for money, youknow, as, as part of their living, as
(02:17):
part of their, especially their fulltime living, they're confused sometimes.
They think that they can just rideoff their, their van, they can
ride off their food because they'recooking, you know, in their videos.
So it's like, ah, it's a write offor I can write off this or, or I
don't have to pay for my gas or Idon't have to do this, you know.
But they're...
There are restrictions as towhat you can and can't do.
Do you want to maybe hit on just some ofthe bullet points on maybe some of the
(02:41):
most common mistakes that influencersthink that they can write off or get away
with, where really they really they can't?
The
Penny Rose from Fe Fi Fo Fum CPA: most important thing for anybody that (02:48):
undefined
thinks that they're going to be ableto write off most of their lifestyle
expenses is that you need to havefantastic records in order to do that.
However you choose to make, makeit electronically, make it paper,
whatever it is, you need to keeptrack of what you did every day.
(03:09):
If you are going to a particularlocation and all you're going to do
at that location is film, Then it'slikely that you're going to be able to
use some of the cost of getting thereas an illegitimate business expense.
But most of us, when we RVand we're traveling, you're
(03:32):
combining business with pleasure.
And that makes it more difficult.
To figure out what you can expense,what's a legitimate business expense
and what's a personal expense andkeeping really, really good records
is the best place to start with that.
Stuart Doing Stuff (03:50):
What's the easiest way for people to get started on that?
Cause a lot of people don'tknow what they need to track.
What
Penny Rose from Fe Fi Fo Fum CPA (03:55):
you could do it on a calendar application.
Um, you can do it on a paper calendaror you can do it in some kind of
calendar where you're keeping trackof your activities for the day
and the locations that you are.
In terms of mileage and travelingexpenses, what most of my clients
(04:16):
use is a software called QuickBooks.
If you have, it's The smartphone,it's free with your QuickBooks
subscription to get an app on yourphone and you can turn on the mileage
tracking within that application.
And it's tracking yourmileage all the time.
(04:36):
What I recommend people do is openit up once a week and go through all
the things that got tracked and youjust swipe personal business, personal
business, personal business, and.
That's a really easy way to keeptrack of it, and you can export that
information within the QuickBooksdesktop, like on your laptop.
(04:59):
You can open up the mileage trackingportion, and you can download a
spreadsheet, and you can use thatspreadsheet as the basis for you
tracking where you are and what you do.
Stuart Doing Stuff (05:11):
That's great for mileage, personal
business, but if I say I'm...
I'm a, if I say I'm going to do dailyvlogging and I'm going to go get, go
to the gas station, normally a run fromwherever you're at to the gas station
wouldn't necessarily be deductible,so to speak, or business mileage.
But if I record it, does it becomeautomatically or are there still rules?
Penny Rose from Fe Fi Fo Fum CPA (05:31):
It does if you have, if you need to go to
that gas station in order to record.
If you're not able to record inthe location where you started and
you need to go to the gas station,then it becomes a business trip.
Stuart Doing Stuff (05:47):
Wow.
There's a lot of littleloopholes over there,
Penny Rose from Fe Fi Fo Fum CPA (05:49):
huh?
Yeah.
And, and what most peopleare going to do is.
In terms of an expense foryour business, most people are
going to write off mileage.
There are two ways to have abusiness expense for your, your
travel expenses in a vehicle, andthe easier one to use is mileage.
(06:10):
It doesn't, unlikely that it'sgoing to make sense for you to
have to keep track of every little
Stuart Doing Stuff (06:16):
expense.
I can take campgrounds, fees.
Mileage, a lot of expenses that I wouldbe paying normally and I can deduct it
from my business, but there's a goodchance that for especially new creators
or people getting started, your expensesare going to outweigh the income from your
business from like your paid sponsorshipsor from endorsements or from AdWords or
(06:39):
views and clicks and stuff like that.
It takes a while for allthat to kind of get going.
So your expenses are gonna be high.
Can I claim a loss?
Yes, you can.
And, and there's, there's norequirements on that either, huh?
So I can totally, I'mgoing to be facetious here.
I don't want anyone thinking that I'mserious with this next comment, but I
can show that I make no money at alland I can never pay tax ever again.
Penny Rose from Fe Fi Fo Fum CPA: So the benefit of having a loss (07:02):
undefined
is only if you have other income.
So having a loss on your taxreturn only benefits you if you
have another source of income.
So if you, if you have a If you'rea freelancer, aside from content
creation, and you have 50, 000 of incomefrom freelancing, that is something
(07:28):
that you would normally pay tax on.
If you have a, if you have 25, 000 worthof expenses for your other business,
which is content creation, those twothings are going to offset each other.
But if all you have, if you'reindependently wealthy, And you have
no other money coming in, a 25,000 loss doesn't do you any good
(07:53):
because it's not offsetting anything.
Stuart Doing Stuff (07:55):
Yeah, it's only going to offset your income
made from other, from other areas.
That's, it's an important kind of a thing.
You can write it off, butthe whole point and sooner or
later, you can't do it forever.
Sooner or later, someone's goingto come knocking or calling, right?
And say, Hey, you have thisbusiness here for four years.
It's not making any money.
Penny Rose from Fe Fi Fo Fum CPA (08:12):
Well, actually the number is five years.
Oh.
And so IRS, you don't have to have aprofit, but for two out of five years, you
have to demonstrate that you were tryingto make a profit, you were trying to run a
business, you were doing things that couldhave made you money, and that, that's the
Stuart Doing Stuff (08:35):
standard.
It sounds like it's apretty loose standard.
Because how do you show you're trying?
It
Penny Rose from Fe Fi Fo Fum CPA (08:40):
comes back down to what I mentioned earlier,
keeping track of what you're doing,where you are, and your expenses.
I mean, if you can't think of anythingright now, but say you, you purchase
something and it creates an expense, butthe reason you purchased it was because
you plan to use it in your business.
(09:01):
You're demonstrating Thatyou are trying to make money.
Stuart Doing Stuff (09:05):
So like this, this fancy new microphone I got here from
Best Buy, because I was like, Oh, we'regoing to launch this podcast and I
need a much better microphone than, youknow, just a casual conversation over
Skype or zoom or something like Skype.
Oh my gosh.
What decade am I living in?
Even though that the podcast doesn'tmake any money, this becomes.
An expense.
Look at it.
It's right here in thepodcast and you can see it.
(09:27):
I guess I'm kind of more sensitive tothis thing because obviously having
other businesses in the past, I know alot of the things that you're talking
about already, but people come up to meand they say, why aren't you doing this?
Why aren't you doing that?
And I was like, well,because that's illegal.
That's flagrantly like.
Defraud, that's flagrantfraud what you're doing.
Yeah, it's
Penny Rose from Fe Fi Fo Fum CPA: funny, those people are, are (09:44):
undefined
watching too much TikTok.
Stuart Doing Stuff (09:49):
Oh my gosh, are you talking about those, those
fake, here's my fake screenshotsof fake revenue and bank balances.
And there's, there's someone I follow onTikTok and gosh, I don't remember who it
is, but his job is he has this, this jet.
I don't know if you've seen it.
It's a private, it's like a golf stream.
It doesn't work.
It doesn't run.
It doesn't fly, but he leases out the jet.
(10:13):
To creators to create, youknow, artificial scenes where
they'll roll out the red carpet.
They got pilots and, you know, uniformsthey've got, you know, photos and special
lighting inside the jet for the things.
It's all Instagram, Instagram, phony.
And
Penny Rose from Fe Fi Fo Fum CPA: that's amazing though. (10:28):
undefined
I love that business model of like,you know, if I had the opportunity
to, to buy something like that,I would do the same thing because
the content that comes out of it.
Is phony, but the business modelthat that person has with the jet and
renting it out is totally illegitimate.
I think the biggest thing, and this isthe reason I bring up TikTok is just
(10:52):
because something is a legitimate tax.
Tactic doesn't mean it's worth youreffort to go through all the work
that it takes to actually apply it.
And we're seeing that a lot in thetax industry because people will watch
a tic tac and they're like, Oh, you.
(11:13):
It's not good enough foryou to just be an LLC.
You have to be an S corporation,and you have to save your self
employment tax, and oh, selfemployment tax is the worst thing ever.
And we're seeing people that are,have Revenue that doesn't make
sense for them to choose to be anS corporation, following advice
(11:35):
on TikTok and setting it up.
And we're, you know, we're having tocharge them to unravel their situation.
Can we talk
Stuart Doing Stuff (11:41):
about some of the dangers of writing off too much?
Because here's.
The scenario, right?
And correct me if I'm wrong,you're the expert here, but
let me kind of nail this down.
Um, you have another job and itpays you, we'll use your example
earlier, it pays you 50, 000.
But you have this content creationcompany and you took a 25, 000 loss.
(12:04):
So now on your tax return, itshows that you made 25, 000
because you took this big loss.
Now, granted, you don't have to pay thattax, you know, because, you know, the
income tax, because you took a loss.
You want to go out and buy a new RV.
You, you want to go out and, and buysomething that you need a loan for.
Now all of a sudden...
(12:25):
The tax return only showsthat you make 25, 000 a year.
No one's going to give you aloan on a 100, 000 van or car
or an RV or anything like that.
So there's dangers to having too manydeductions and not showing enough income.
Yeah,
Penny Rose from Fe Fi Fo Fum CPA: that's an excellent example. (12:42):
undefined
I'm glad you brought that up.
The other thing is if you want to startsaving for retirement, I mean, saving
for retirement is based on your income.
And if you write, if you are onlyrunning a business and you try to,
you know, reduce your income tothe lowest possible amount, you're
(13:07):
also reducing your opportunitiesto invest in your retirement.
Stuart Doing Stuff (13:13):
So there are a lot of dangers into taking too many
deductions, too many write offs.
You've got to really kind of identify,and this is where I think a financial
planner or someone at a higherlevel, like you were talking about,
like you do, um, comes into play.
It's like, well, what's your shortterm and your long term strategy?
You know, because if you're saying thatI'm going to want to buy a new rig in
(13:34):
two years, You need to start a papertrail that shows that you're a good
investment or that you're able to do that.
So maybe taking extensive write offsisn't the right time for you right
Penny Rose from Fe Fi Fo Fum CPA (13:45):
now.
Yeah, that's a really good point.
So prior to becoming an accountant,I was a loan officer for, um, be a
major bank if I still work there now.
And we, Look at two years of tax returns.
So you can't just start a businessand start have, you know, your content
(14:06):
creation, income rolling in, andthen go out and get a loan and two
years of profit, two years of enoughmoney coming in that's left over
in order for you to make payments.
I mean, we use, and this is probablyantiquated because I've been out of.
loan, loan work for along time, but we use 40%.
(14:28):
And so if your paycheck is 100, 000,you're only going to be able to make a
total of all the money that you have goingout, you know, your mortgage, your car
loan, you know, what your student studentloans are going to be a big part of that.
Your total payments for ayear can't be over 40, 000.
And so if you are not thinking ahead,exactly as you mentioned earlier,
(14:54):
you're just trying to nickel anddime every bit of income out as an
expense, there will be consequences.
I always
Stuart Doing Stuff (15:01):
say it's good to start with the end in mind.
You know, you just really have tokind of know all that and you need
a good financial advisor, especiallyif you've never done this before.
If you've never been self employed andyou're not sure how your, you know, your
self employment income combines withyour W2 income, which affects this, which
affects that and your goals here and your.
(15:22):
thing there, you know,it all comes together.
Having a long term strategy is
Penny Rose from Fe Fi Fo Fum CPA (15:26):
helpful.
I work a lot in tax strategies, whichis very popular in personal finance.
And what we look at is we'll make anestimation, a conservative estimation of
how much money we can save somebody basedon looking at their two years of Prior tax
returns, and we'll set our our fee thatthey're going to pay us and show them.
(15:49):
Hey, you know, this is going to makesense because we are, you're going to
save X amount of money, and we're goingto charge you this amount of money
to be able to implement that for you,because, you know, as I mentioned earlier
about keeping really good records.
One of the things that you have todo for tax strategies is to keep Keep
(16:10):
really good records and if you, ifyou have a CPA helping you, they're
going to help you keep track of thoserecords and make those records for you.
And that's part of what you're paying for.
You know,
Stuart Doing Stuff (16:23):
Penny, you've been doing this for quite a while.
I'm curious.
Do you have anything that you'vecome across where you just go?
Oh, my gosh.
I can't believe that you're trying
Penny Rose from Fe Fi Fo Fum CPA: to get away with this. (16:34):
undefined
I went to a personal finance meetup andI met somebody who's a virtual bookkeeper
and it, and it really changed my life.
I also met up with a husband andwife who were in trouble with IRS
and I met with them and asked themto provide two years of tax returns.
And I, I went through theirinformation and I ended up not.
(16:57):
Choosing to work with them.
I didn't bring them on board.
So we can't, so I can't say I fired them,but I said, I'm not a good fit for you.
And that's mostly because in the situationthey were in as the CPA, I would be
representing them in front of IRS.
And that's a higher standardthan just helping somebody with
(17:20):
a tax plan or, or a strategy.
And I was not able to reconcile theirbelief that they should screw the
government every way they possibly can.
And I ultimately said, you know, you'll,you'll need to find somebody else.
But what I saw in theirtax return was shocking.
(17:45):
And we talked aboutsomething similar with that.
You do when you initially said,Hey, I, you know, can I just
create a lot of permanent lossand I'm never paying tax on it.
And what they had done was they moved outof their house, moved into another house.
And during COVID.
They said they were landlords forthe old house that they no longer
(18:10):
lived in, and they created 30, 000worth of expenses, and they never
actually tried to rent the property.
And I think that's one of the.
craziest things that I've seenthat I can actually talk about.
(18:30):
So they, I'm not sure who did their taxes.
They probably did their own taxes.
So they created, you know, the formthat you fill out for rental property.
And it, all I had was expenses on it.
It didn't even have a dime.
And I said, you know, how many oneof the questions that's on that form
(18:51):
is how many days of the year wasthe property available for rental.
And they said, you know, 365 andI said, Well, did you do you have
any records that you tried to.
Did you list it for rent?
Did you, did you do any of thesethings that IRS is going to ask you
that indicate that you're trying?
(19:12):
And they said, no, because it was COVID.
Stuart Doing Stuff (19:15):
For people who have questions and they want to find
you, they want to follow you, they say.
I've been looking for a CPA thatspecializes in content created
because I'm making some money.
I'm doing some things.
I just need a guidance and my CPAdoesn't know anything about my lifestyle.
How can people find you?
How can people reach out
Penny Rose from Fe Fi Fo Fum CPA (19:32):
to you?
The best way to contact me is on Instagramand I'm at fee5fo from personal CFO.
And hit me up in the DM if you have a.
So if you have a specific questionthat you've been struggling with,
I love to get into the details withpeople and meet other RVers as well.
(19:53):
RV content creators are, are really myjam and the DMs are the, in Instagram
are the best way to get in touch with
Stuart Doing Stuff (20:00):
me.
Okay.
Then we will link that Instagramaccount to the show note.
Thank you for joining us on RV dreaming.
You have anything else beforewe, before we sign off?
Penny Rose from Fe Fi Fo Fum CPA (20:09):
So anybody that is just new starting a
business, I have a financial setup guide.
So if you want to pick that up, ifyou just DM me and say, Hey, I heard
you on this podcast and I'd love thatPDF, go ahead and do it and I'll, I'll
Stuart Doing Stuff (20:26):
hook you up.
All right.
Thanks, Penny from Fee Fi Fo Fum CPA.
Man, I learned a lot in thisepisode, and I hope you did too.
That's it for today.
Enjoy your travels.
Make them safe, make themfun, and make them memorable.
We'll see you later.
Thanks for listening tothe RV Dreaming Podcast.
See the action on Instagram.
StuartDoingStuff.
Hear about it on the podcast.
Be sure to subscribe.
(20:47):
We'll see you in the next episode.
Tax season can be daunting, especially for
nomads and content creators who maynot know what is and what is not
deductible and why, and we're goingto cover all that and so much more.
We're getting you ready for tax season.
That's all coming up on thisepisode of the RVDreaming podcast.
Welcome to the RV Dreaming Podcast.
This podcast is for today's andtomorrow's nomads who thrive on adventure,
(00:24):
embrace an unconventional lifestyle,and seek life beyond the ordinary.
We dive into stories, tactics, andinspiration that fuel the open road.
Hey there, my name is Stuart fromStuartDoingStuff on Instagram.
I've been a full time nomad for threeyears now, half of which was in a
40 foot Super C RV, and now I'm in aSprinter van, a 24 foot Sprinter van.
(00:44):
I went from big to small, I know it all.
And I travel with my twocats, Camden and Izzy.
I'm that, sorry, that was cheesy.
Follow me on Instagram for more storiesand videos, but I gotta, I gotta put
on my, my serious face right now.
Is this serious enough?
Nobody likes April 15th, and if you don'tknow that date that's not etched in your
(01:05):
mind, then you don't have, obviously,any pain points like I've had in my past.
But, , taxes are somethingthat everybody...
Is going to experience what is it?
They say death and taxes are the twothings that you just absolutely can't
avoid Well our next guest here on rvdreaming is going to try and take away
a little bit of that sting the bestthat she Possibly can she is a cpa for
(01:27):
content creators and is also On the road.
So ladies and gentlemen,welcome to the program.
Penny with E5 FauxFemme.
Penny Rose, welcome to RV Dreaming.
I'm so glad to be here.
CPAs for content creators.
And I love
Penny Rose from Fe Fi Fo Fum CPA (01:41):
that.
I have been an accountant for 25 years.
I want to be the person behind thescenes, making sure that they're.
They're comfortable with theirfinances so that they can continue
to make this amazing content.
Let me
Stuart Doing Stuff (01:56):
kind of just scratch and itch real quick on some of these,
you know, on some of these things,because I've heard all the rumors.
I've owned businesses in sticksand bricks and, you know, and this
and that, and I've gone through.
Uh, CPAs in differentstates and different areas.
I, it's, it's funny when I meet peoplewho are entrepreneurs and they want
to do social media for, for money, youknow, as, as part of their living, as
(02:17):
part of their, especially their fulltime living, they're confused sometimes.
They think that they can just rideoff their, their van, they can
ride off their food because they'recooking, you know, in their videos.
So it's like, ah, it's a write offor I can write off this or, or I
don't have to pay for my gas or Idon't have to do this, you know.
But they're...
There are restrictions as towhat you can and can't do.
Do you want to maybe hit on just some ofthe bullet points on maybe some of the
(02:41):
most common mistakes that influencersthink that they can write off or get away
with, where really they really they can't?
The
Penny Rose from Fe Fi Fo Fum CPA: most important thing for anybody that (02:48):
undefined
thinks that they're going to be ableto write off most of their lifestyle
expenses is that you need to havefantastic records in order to do that.
However you choose to make, makeit electronically, make it paper,
whatever it is, you need to keeptrack of what you did every day.
(03:09):
If you are going to a particularlocation and all you're going to do
at that location is film, Then it'slikely that you're going to be able to
use some of the cost of getting thereas an illegitimate business expense.
But most of us, when we RVand we're traveling, you're
(03:32):
combining business with pleasure.
And that makes it more difficult.
To figure out what you can expense,what's a legitimate business expense
and what's a personal expense andkeeping really, really good records
is the best place to start with that.
Stuart Doing Stuff (03:50):
What's the easiest way for people to get started on that?
Cause a lot of people don'tknow what they need to track.
What
Penny Rose from Fe Fi Fo Fum CPA (03:55):
you could do it on a calendar application.
Um, you can do it on a paper calendaror you can do it in some kind of
calendar where you're keeping trackof your activities for the day
and the locations that you are.
In terms of mileage and travelingexpenses, what most of my clients
(04:16):
use is a software called QuickBooks.
If you have, it's The smartphone,it's free with your QuickBooks
subscription to get an app on yourphone and you can turn on the mileage
tracking within that application.
And it's tracking yourmileage all the time.
(04:36):
What I recommend people do is openit up once a week and go through all
the things that got tracked and youjust swipe personal business, personal
business, personal business, and.
That's a really easy way to keeptrack of it, and you can export that
information within the QuickBooksdesktop, like on your laptop.
(04:59):
You can open up the mileage trackingportion, and you can download a
spreadsheet, and you can use thatspreadsheet as the basis for you
tracking where you are and what you do.
Stuart Doing Stuff (05:11):
That's great for mileage, personal
business, but if I say I'm...
I'm a, if I say I'm going to do dailyvlogging and I'm going to go get, go
to the gas station, normally a run fromwherever you're at to the gas station
wouldn't necessarily be deductible,so to speak, or business mileage.
But if I record it, does it becomeautomatically or are there still rules?
Penny Rose from Fe Fi Fo Fum CPA (05:31):
It does if you have, if you need to go to
that gas station in order to record.
If you're not able to record inthe location where you started and
you need to go to the gas station,then it becomes a business trip.
Stuart Doing Stuff (05:47):
Wow.
There's a lot of littleloopholes over there,
Penny Rose from Fe Fi Fo Fum CPA (05:49):
huh?
Yeah.
And, and what most peopleare going to do is.
In terms of an expense foryour business, most people are
going to write off mileage.
There are two ways to have abusiness expense for your, your
travel expenses in a vehicle, andthe easier one to use is mileage.
(06:10):
It doesn't, unlikely that it'sgoing to make sense for you to
have to keep track of every little
Stuart Doing Stuff (06:16):
expense.
I can take campgrounds, fees.
Mileage, a lot of expenses that I wouldbe paying normally and I can deduct it
from my business, but there's a goodchance that for especially new creators
or people getting started, your expensesare going to outweigh the income from your
business from like your paid sponsorshipsor from endorsements or from AdWords or
(06:39):
views and clicks and stuff like that.
It takes a while for allthat to kind of get going.
So your expenses are gonna be high.
Can I claim a loss?
Yes, you can.
And, and there's, there's norequirements on that either, huh?
So I can totally, I'mgoing to be facetious here.
I don't want anyone thinking that I'mserious with this next comment, but I
can show that I make no money at alland I can never pay tax ever again.
Penny Rose from Fe Fi Fo Fum CPA: So the benefit of having a loss (07:02):
undefined
is only if you have other income.
So having a loss on your taxreturn only benefits you if you
have another source of income.
So if you, if you have a If you'rea freelancer, aside from content
creation, and you have 50, 000 of incomefrom freelancing, that is something
(07:28):
that you would normally pay tax on.
If you have a, if you have 25, 000 worthof expenses for your other business,
which is content creation, those twothings are going to offset each other.
But if all you have, if you'reindependently wealthy, And you have
no other money coming in, a 25,000 loss doesn't do you any good
(07:53):
because it's not offsetting anything.
Stuart Doing Stuff (07:55):
Yeah, it's only going to offset your income
made from other, from other areas.
That's, it's an important kind of a thing.
You can write it off, butthe whole point and sooner or
later, you can't do it forever.
Sooner or later, someone's goingto come knocking or calling, right?
And say, Hey, you have thisbusiness here for four years.
It's not making any money.
Penny Rose from Fe Fi Fo Fum CPA (08:12):
Well, actually the number is five years.
Oh.
And so IRS, you don't have to have aprofit, but for two out of five years, you
have to demonstrate that you were tryingto make a profit, you were trying to run a
business, you were doing things that couldhave made you money, and that, that's the
Stuart Doing Stuff (08:35):
standard.
It sounds like it's apretty loose standard.
Because how do you show you're trying?
It
Penny Rose from Fe Fi Fo Fum CPA (08:40):
comes back down to what I mentioned earlier,
keeping track of what you're doing,where you are, and your expenses.
I mean, if you can't think of anythingright now, but say you, you purchase
something and it creates an expense, butthe reason you purchased it was because
you plan to use it in your business.
(09:01):
You're demonstrating Thatyou are trying to make money.
Stuart Doing Stuff (09:05):
So like this, this fancy new microphone I got here from
Best Buy, because I was like, Oh, we'regoing to launch this podcast and I
need a much better microphone than, youknow, just a casual conversation over
Skype or zoom or something like Skype.
Oh my gosh.
What decade am I living in?
Even though that the podcast doesn'tmake any money, this becomes.
An expense.
Look at it.
It's right here in thepodcast and you can see it.
(09:27):
I guess I'm kind of more sensitive tothis thing because obviously having
other businesses in the past, I know alot of the things that you're talking
about already, but people come up to meand they say, why aren't you doing this?
Why aren't you doing that?
And I was like, well,because that's illegal.
That's flagrantly like.
Defraud, that's flagrantfraud what you're doing.
Yeah, it's
Penny Rose from Fe Fi Fo Fum CPA: funny, those people are, are (09:44):
undefined
watching too much TikTok.
Stuart Doing Stuff (09:49):
Oh my gosh, are you talking about those, those
fake, here's my fake screenshotsof fake revenue and bank balances.
And there's, there's someone I follow onTikTok and gosh, I don't remember who it
is, but his job is he has this, this jet.
I don't know if you've seen it.
It's a private, it's like a golf stream.
It doesn't work.
It doesn't run.
It doesn't fly, but he leases out the jet.
(10:13):
To creators to create, youknow, artificial scenes where
they'll roll out the red carpet.
They got pilots and, you know, uniformsthey've got, you know, photos and special
lighting inside the jet for the things.
It's all Instagram, Instagram, phony.
And
Penny Rose from Fe Fi Fo Fum CPA: that's amazing though. (10:28):
undefined
I love that business model of like,you know, if I had the opportunity
to, to buy something like that,I would do the same thing because
the content that comes out of it.
Is phony, but the business modelthat that person has with the jet and
renting it out is totally illegitimate.
I think the biggest thing, and this isthe reason I bring up TikTok is just
(10:52):
because something is a legitimate tax.
Tactic doesn't mean it's worth youreffort to go through all the work
that it takes to actually apply it.
And we're seeing that a lot in thetax industry because people will watch
a tic tac and they're like, Oh, you.
(11:13):
It's not good enough foryou to just be an LLC.
You have to be an S corporation,and you have to save your self
employment tax, and oh, selfemployment tax is the worst thing ever.
And we're seeing people that are,have Revenue that doesn't make
sense for them to choose to be anS corporation, following advice
(11:35):
on TikTok and setting it up.
And we're, you know, we're having tocharge them to unravel their situation.
Can we talk
Stuart Doing Stuff (11:41):
about some of the dangers of writing off too much?
Because here's.
The scenario, right?
And correct me if I'm wrong,you're the expert here, but
let me kind of nail this down.
Um, you have another job and itpays you, we'll use your example
earlier, it pays you 50, 000.
But you have this content creationcompany and you took a 25, 000 loss.
(12:04):
So now on your tax return, itshows that you made 25, 000
because you took this big loss.
Now, granted, you don't have to pay thattax, you know, because, you know, the
income tax, because you took a loss.
You want to go out and buy a new RV.
You, you want to go out and, and buysomething that you need a loan for.
Now all of a sudden...
(12:25):
The tax return only showsthat you make 25, 000 a year.
No one's going to give you aloan on a 100, 000 van or car
or an RV or anything like that.
So there's dangers to having too manydeductions and not showing enough income.
Yeah,
Penny Rose from Fe Fi Fo Fum CPA: that's an excellent example. (12:42):
undefined
I'm glad you brought that up.
The other thing is if you want to startsaving for retirement, I mean, saving
for retirement is based on your income.
And if you write, if you are onlyrunning a business and you try to,
you know, reduce your income tothe lowest possible amount, you're
(13:07):
also reducing your opportunitiesto invest in your retirement.
Stuart Doing Stuff (13:13):
So there are a lot of dangers into taking too many
deductions, too many write offs.
You've got to really kind of identify,and this is where I think a financial
planner or someone at a higherlevel, like you were talking about,
like you do, um, comes into play.
It's like, well, what's your shortterm and your long term strategy?
You know, because if you're saying thatI'm going to want to buy a new rig in
(13:34):
two years, You need to start a papertrail that shows that you're a good
investment or that you're able to do that.
So maybe taking extensive write offsisn't the right time for you right
Penny Rose from Fe Fi Fo Fum CPA (13:45):
now.
Yeah, that's a really good point.
So prior to becoming an accountant,I was a loan officer for, um, be a
major bank if I still work there now.
And we, Look at two years of tax returns.
So you can't just start a businessand start have, you know, your content
(14:06):
creation, income rolling in, andthen go out and get a loan and two
years of profit, two years of enoughmoney coming in that's left over
in order for you to make payments.
I mean, we use, and this is probablyantiquated because I've been out of.
loan, loan work for along time, but we use 40%.
(14:28):
And so if your paycheck is 100, 000,you're only going to be able to make a
total of all the money that you have goingout, you know, your mortgage, your car
loan, you know, what your student studentloans are going to be a big part of that.
Your total payments for ayear can't be over 40, 000.
And so if you are not thinking ahead,exactly as you mentioned earlier,
(14:54):
you're just trying to nickel anddime every bit of income out as an
expense, there will be consequences.
I always
Stuart Doing Stuff (15:01):
say it's good to start with the end in mind.
You know, you just really have tokind of know all that and you need
a good financial advisor, especiallyif you've never done this before.
If you've never been self employed andyou're not sure how your, you know, your
self employment income combines withyour W2 income, which affects this, which
affects that and your goals here and your.
(15:22):
thing there, you know,it all comes together.
Having a long term strategy is
Penny Rose from Fe Fi Fo Fum CPA (15:26):
helpful.
I work a lot in tax strategies, whichis very popular in personal finance.
And what we look at is we'll make anestimation, a conservative estimation of
how much money we can save somebody basedon looking at their two years of Prior tax
returns, and we'll set our our fee thatthey're going to pay us and show them.
(15:49):
Hey, you know, this is going to makesense because we are, you're going to
save X amount of money, and we're goingto charge you this amount of money
to be able to implement that for you,because, you know, as I mentioned earlier
about keeping really good records.
One of the things that you have todo for tax strategies is to keep Keep
(16:10):
really good records and if you, ifyou have a CPA helping you, they're
going to help you keep track of thoserecords and make those records for you.
And that's part of what you're paying for.
You know,
Stuart Doing Stuff (16:23):
Penny, you've been doing this for quite a while.
I'm curious.
Do you have anything that you'vecome across where you just go?
Oh, my gosh.
I can't believe that you're trying
Penny Rose from Fe Fi Fo Fum CPA: to get away with this. (16:34):
undefined
I went to a personal finance meetup andI met somebody who's a virtual bookkeeper
and it, and it really changed my life.
I also met up with a husband andwife who were in trouble with IRS
and I met with them and asked themto provide two years of tax returns.
And I, I went through theirinformation and I ended up not.
(16:57):
Choosing to work with them.
I didn't bring them on board.
So we can't, so I can't say I fired them,but I said, I'm not a good fit for you.
And that's mostly because in the situationthey were in as the CPA, I would be
representing them in front of IRS.
And that's a higher standardthan just helping somebody with
(17:20):
a tax plan or, or a strategy.
And I was not able to reconcile theirbelief that they should screw the
government every way they possibly can.
And I ultimately said, you know, you'll,you'll need to find somebody else.
But what I saw in theirtax return was shocking.
(17:45):
And we talked aboutsomething similar with that.
You do when you initially said,Hey, I, you know, can I just
create a lot of permanent lossand I'm never paying tax on it.
And what they had done was they moved outof their house, moved into another house.
And during COVID.
They said they were landlords forthe old house that they no longer
(18:10):
lived in, and they created 30, 000worth of expenses, and they never
actually tried to rent the property.
And I think that's one of the.
craziest things that I've seenthat I can actually talk about.
(18:30):
So they, I'm not sure who did their taxes.
They probably did their own taxes.
So they created, you know, the formthat you fill out for rental property.
And it, all I had was expenses on it.
It didn't even have a dime.
And I said, you know, how many oneof the questions that's on that form
(18:51):
is how many days of the year wasthe property available for rental.
And they said, you know, 365 andI said, Well, did you do you have
any records that you tried to.
Did you list it for rent?
Did you, did you do any of thesethings that IRS is going to ask you
that indicate that you're trying?
(19:12):
And they said, no, because it was COVID.
Stuart Doing Stuff (19:15):
For people who have questions and they want to find
you, they want to follow you, they say.
I've been looking for a CPA thatspecializes in content created
because I'm making some money.
I'm doing some things.
I just need a guidance and my CPAdoesn't know anything about my lifestyle.
How can people find you?
How can people reach out
Penny Rose from Fe Fi Fo Fum CPA (19:32):
to you?
The best way to contact me is on Instagramand I'm at fee5fo from personal CFO.
And hit me up in the DM if you have a.
So if you have a specific questionthat you've been struggling with,
I love to get into the details withpeople and meet other RVers as well.
(19:53):
RV content creators are, are really myjam and the DMs are the, in Instagram
are the best way to get in touch with
Stuart Doing Stuff (20:00):
me.
Okay.
Then we will link that Instagramaccount to the show note.
Thank you for joining us on RV dreaming.
You have anything else beforewe, before we sign off?
Penny Rose from Fe Fi Fo Fum CPA (20:09):
So anybody that is just new starting a
business, I have a financial setup guide.
So if you want to pick that up, ifyou just DM me and say, Hey, I heard
you on this podcast and I'd love thatPDF, go ahead and do it and I'll, I'll
Stuart Doing Stuff (20:26):
hook you up.
All right.
Thanks, Penny from Fee Fi Fo Fum CPA.
Man, I learned a lot in thisepisode, and I hope you did too.
That's it for today.
Enjoy your travels.
Make them safe, make themfun, and make them memorable.
We'll see you later.
Thanks for listening tothe RV Dreaming Podcast.
See the action on Instagram.
StuartDoingStuff.
Hear about it on the podcast.
Be sure to subscribe.
(20:47):
We'll see you in the next episode.
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