January 30, 2025 • 11 mins
Discover how the 2025 Pass-Through Entity Tax (PTET) strategy can help business owners maximize tax savings and reduce their tax liabilities. In this podcast, we’ll break down how PTET works, why it’s a powerful tax planning tool, and how it benefits S-Corporation owners and other pass-through entities. Learn how to leverage state-level tax deductions and create effective strategies for your business to save thousands on taxes. Whether you’re focused on deductions, write-offs, or advanced tax planning, this approach is a game-changer for entrepreneurs and small business owners alike. Don’t miss these actionable tax strategies that can make a real difference in your bottom line. Stay ahead in 2025 and take control of your taxes today!
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7 Write-Offs Every S-Corporation Business Owner MUST Know
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*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this reason, ...
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
PTET tax strategy continues to be one of the best
tax strategy for business ownersgoing into 2025 and, as a
matter of fact, it's going toget even better.
If you haven't utilized apass-through entity taxation
PTET in your business, staytuned, because I'm going to show
you what is this tax strategythat can generate significant
(00:22):
tax deductions for you and yourbusiness, and what can you do
today, starting today, toimplement it and start
generating business taxdeductions in your business
using PTET tax strategy.
Ready, let's go.
Speaker 2 (00:36):
Welcome to the Tax Reduction Podcast for
money-making entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is
(00:57):
all about saving you money ontaxes.
Boris will share with youin-depth and easy-to-understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.
Speaker 1 (01:09):
All right, awesome, let's get started.
Let's get into what is a PTET.
I'm going to talk through anexample over here, exactly what
you need to do as a businessowner to get this deduction.
But we first need anintroduction of what is a PTET.
In 2017, there was a Tax Cutsand Jobs Act a new tax law
passed by President Trump.
(01:31):
What that tax law did is itlimited?
How much you can itemize yourstate taxes on your personal
income taxes $10,000 salt capdeduction by now.
You probably know about thisright?
Basically and I just want togive you a little bit of
introduction there was a tenthousand dollar limit that they
can they put how much you canitemize.
(01:52):
I'll give you a quick example.
Let's say you live in a statelike california.
I'm using california becauseit's a high income state tax
rate, but also helps us with anexample.
Your property taxes for thisexample is $15,000.
So before TIGJA, you were ableto deduct $15,000 when you're
itemizing your tax return.
(02:12):
Okay, additionally, if you paidstate income taxes to
California for earning income inthat state $30,000 in my
example, altogether it's $45,000, right?
Property taxes $15,000.
State income taxes $30,000.
Before TICCHA, before passingof this law, you could deduct
excuse me, entire $45,000 onyour personal income taxes.
(02:37):
After TICCHA was passed, theyput a SALT cap.
Salt stands for state and localtaxes.
They said you know what?
Whatever you pay your state intaxes, it's no longer deductible
.
You can only take $10,000.
Huge slap to a lot of taxpayers.
Okay, although TIGJA had a lotof great provisions on the tax
(02:58):
law and so forth, but this onewas my least favorite until
until until.
Okay.
So let's just take a step back.
Now you can only deduct $10,000, okay.
Before I continue, what thestates did in your favor right
now, president Trump wasreelected again and, as a matter
of fact, today in the morning Iran in Bloomberg Businessweek
(03:20):
he's meeting with someRepublicans and they're thinking
to increasing the SALT cap to$20,000, which is actually even
better news for us.
I will explain to you how.
Now let's take a step back.
We said you can only deduct$10,000.
So what happened?
States were not happy about it.
They're like what do you mean?
(03:40):
The residents of our states arepaying us income taxes.
They were able to deduct theseincome taxes and now they can't.
So they came up with what'scalled PTET I should have wrote
it here but Pass-Through EntityTaxation it's a completely
voluntary tax.
Okay, the states said listen,why don't you pay us a business
(04:02):
tax instead of state incometaxes?
For example, you can convertyour state income taxes into a
business tax instead of stateincome taxes.
For example, you can convertyour state income taxes into a
business tax and get that as abusiness tax deduction.
More details on this rightafter this break.
Speaker 2 (04:15):
If you have a tax preparer and you do not have a
tax advisor, the only way youcan save money on taxes is by
using proactive tax planningstrategies that only a tax
advisor can give you.
Bora's put together a free PDFfor you, the business owner
Seven tax write-offs everyS-corporation business owner
must know.
In this PDF you can find seventax strategies that you can
(04:39):
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.
Speaker 1 (04:46):
All right.
So now that we're back, let'stalk about states, right?
So the states came up, majorityof the states, most of the
states I believe at this pointit's more than 30 states that
came out and said you know what?
We don't like this.
We don't like the $10,000 limit, so we're going to create for
business owners what's called apass-through entity taxation.
It's a completely voluntary tax.
(05:06):
So, coming back to our example,we have $30,000 in state income
taxes that is no longerdeductible.
So states like California theysaid you know what?
Why don't we convert the$30,000 state income tax that
you paid to us on personalincome taxes?
We're going to convert it as abusiness tax and it's going to
(05:27):
be PTET tax.
So you're going to pay as abusiness instead of you paying
it personally.
You as a business will pay$30,000, okay, we're basically
converting it and creating abusiness tax deduction, which
means it is no longer anitemized tax deduction, which
means it is now a business taxdeduction.
And now you get a $30,000deduction.
(05:49):
All you did is basicallyconverted your state income tax
of $30,000 into a business taxof $30,000, okay, and that is
called P-T-E-T pass-throughentity taxation.
Now California says you'regoing to have two taxes to pay.
(06:11):
You're going to have to pay$30,000 on state income tax and
$30,000 on state business tax,but on your personal income tax
return we're going to give you acredit.
We're going to wipe that out soyou no longer have that tax.
Now you're left with a businesstax and that business tax
becomes tax deduction.
I don't know why a lot of taxadvisors still don't use this
(06:32):
tax strategy for their clients.
A lot of business owners haveno idea about this tax strategy.
As a matter of fact, if you area single member LLC, most
states don't even allow you totake a PTET tax deduction or pay
PTET tax.
We just spoke to a client whoenrolled with us for tax
advisory services almost$500,000 in net profit in his
(06:55):
business single member LLCpaying ridiculous amount of tax
and self-employment and he doesnot utilize PTET because he
can't.
He's a single member LLC.
We're converting him to an Scorporation.
Now not only is he only savingmoney on the self-employment tax
, but he's also not qualifyingto pay PTET tax, which creates a
(07:17):
huge tax deduction for him andhis business.
He was blown away and if you'renot using PTET tax strategy
with your accountant, you'recompletely missing out on huge
tax strategy.
This is not something for whichyou have to pay extra.
You don't have to invest intoanything like a retirement
account.
You don't have to take themoney out of the business to
create certain deductions.
(07:37):
You're just converting the taxthat you are already paying from
a personal to a business andyou get a deduction.
Now your next question, borishow do I do this?
How do I sign up for PTT?
What are the requirements?
(08:10):
How can you start convertingyour personal income tax to a
voluntary tax?
You have to make an election.
I'll give you an example.
For example, states like NewYork and New Jersey.
You need to voluntarily applyfor it before March 15th, if I'm
not mistaken.
Michigan, you have to apply forit before June 15th.
With the state of California,you don't have to apply for it,
but you have to make yourquarterly estimated payment
before June 15th.
The point I'm trying to makethis tax has a deadline, so you
(08:32):
can speak to your tax advisor.
I hope you have a tax advisor.
Please tell me you have a taxadvisor, so you can speak to
your tax advisor and be like hey, are we doing this?
If we're not, can we apply forit?
I want to make sure I'm gettingthis Okay.
Number one apply for it.
Number two pay your quarterlytax, ptet taxes.
I tell all of my clients I'mlike look every quarter, my team
(08:54):
is going to work with you tocalculate your estimated
quarterly tax payments.
If, for whatever reason, youdon't want to pay quarterly
estimated tax payments, youdon't believe in it.
You make more money in themoney market account on those
tax payments you paid at the endof the year.
All is great, I'm okay with it.
The only thing I want you to do,if you see the word PTET, pay
it, because generally you don'tget a tax deduction for paying
(09:18):
taxes, but you get a taxdeduction for paying PTET taxes.
So, either paid quarterly or atleast paid before December 31st
.
Calculate what you pay,estimate it and pay it so you
can get a deduction before yourend.
A lot of business owners wantto maximize their deductions
before your end.
They call up their vendors andthey say can I prepay you for
this?
They start prepaying for theirrent and all that stuff.
(09:46):
Hello, you've got a PTET thatyou can pay before December 31st
and get a huge tax deductionand get a huge tax break and
save money on taxes.
Now what happens is that ifyou're paying your PTET taxes
(10:08):
quarterly, guess what?
You don't have to pay quarterlystate personal income taxes for
that amount.
Why your tax advisor?
Amazing, amazing strategy for2025.
And it's even more amazing ifthey're going to increase the
limit to $20,000.
Because not only are you goingto get the $20,000, if your tax
liability is more than $45,000,for example, if we redo this
(10:29):
example a little bit and you'rereally paying more than $45,000
in state taxes overall propertyand state income taxes, you got
this $20,000, plus you got thePTET.
Honestly, it's like one ofthose missed tax strategies by a
lot of people.
Definitely speak to your taxadvisor.
See you next time.
Speaker 2 (10:46):
That's it for today's episode.
Be sure to check out thedescription below for some free
tax reduction resources thatBoris put together for you.
If you're ready to work with atax advisor on your tax planning
, be sure to schedule your callby heading over to
wwwtaxplanningcallcom.
That's wwwtaxplanningcallcom.
And be sure to subscribe to ourpodcast to be notified when the
(11:08):
next strategy is released.
PTET tax strategy continues to be one of the best
tax strategy for business ownersgoing into 2025 and, as a
matter of fact, it's going toget even better.
If you haven't utilized apass-through entity taxation
PTET in your business, staytuned, because I'm going to show
you what is this tax strategythat can generate significant
(00:22):
tax deductions for you and yourbusiness, and what can you do
today, starting today, toimplement it and start
generating business taxdeductions in your business
using PTET tax strategy.
Ready, let's go.
Speaker 2 (00:36):
Welcome to the Tax Reduction Podcast for
money-making entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is
(00:57):
all about saving you money ontaxes.
Boris will share with youin-depth and easy-to-understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.
Speaker 1 (01:09):
All right, awesome, let's get started.
Let's get into what is a PTET.
I'm going to talk through anexample over here, exactly what
you need to do as a businessowner to get this deduction.
But we first need anintroduction of what is a PTET.
In 2017, there was a Tax Cutsand Jobs Act a new tax law
passed by President Trump.
(01:31):
What that tax law did is itlimited?
How much you can itemize yourstate taxes on your personal
income taxes $10,000 salt capdeduction by now.
You probably know about thisright?
Basically and I just want togive you a little bit of
introduction there was a tenthousand dollar limit that they
can they put how much you canitemize.
(01:52):
I'll give you a quick example.
Let's say you live in a statelike california.
I'm using california becauseit's a high income state tax
rate, but also helps us with anexample.
Your property taxes for thisexample is $15,000.
So before TIGJA, you were ableto deduct $15,000 when you're
itemizing your tax return.
(02:12):
Okay, additionally, if you paidstate income taxes to
California for earning income inthat state $30,000 in my
example, altogether it's $45,000, right?
Property taxes $15,000.
State income taxes $30,000.
Before TICCHA, before passingof this law, you could deduct
excuse me, entire $45,000 onyour personal income taxes.
(02:37):
After TICCHA was passed, theyput a SALT cap.
Salt stands for state and localtaxes.
They said you know what?
Whatever you pay your state intaxes, it's no longer deductible
.
You can only take $10,000.
Huge slap to a lot of taxpayers.
Okay, although TIGJA had a lotof great provisions on the tax
(02:58):
law and so forth, but this onewas my least favorite until
until until.
Okay.
So let's just take a step back.
Now you can only deduct $10,000, okay.
Before I continue, what thestates did in your favor right
now, president Trump wasreelected again and, as a matter
of fact, today in the morning Iran in Bloomberg Businessweek
(03:20):
he's meeting with someRepublicans and they're thinking
to increasing the SALT cap to$20,000, which is actually even
better news for us.
I will explain to you how.
Now let's take a step back.
We said you can only deduct$10,000.
So what happened?
States were not happy about it.
They're like what do you mean?
(03:40):
The residents of our states arepaying us income taxes.
They were able to deduct theseincome taxes and now they can't.
So they came up with what'scalled PTET I should have wrote
it here but Pass-Through EntityTaxation it's a completely
voluntary tax.
Okay, the states said listen,why don't you pay us a business
(04:02):
tax instead of state incometaxes?
For example, you can convertyour state income taxes into a
business tax instead of stateincome taxes.
For example, you can convertyour state income taxes into a
business tax and get that as abusiness tax deduction.
More details on this rightafter this break.
Speaker 2 (04:15):
If you have a tax preparer and you do not have a
tax advisor, the only way youcan save money on taxes is by
using proactive tax planningstrategies that only a tax
advisor can give you.
Bora's put together a free PDFfor you, the business owner
Seven tax write-offs everyS-corporation business owner
must know.
In this PDF you can find seventax strategies that you can
(04:39):
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.
Speaker 1 (04:46):
All right.
So now that we're back, let'stalk about states, right?
So the states came up, majorityof the states, most of the
states I believe at this pointit's more than 30 states that
came out and said you know what?
We don't like this.
We don't like the $10,000 limit, so we're going to create for
business owners what's called apass-through entity taxation.
It's a completely voluntary tax.
(05:06):
So, coming back to our example,we have $30,000 in state income
taxes that is no longerdeductible.
So states like California theysaid you know what?
Why don't we convert the$30,000 state income tax that
you paid to us on personalincome taxes?
We're going to convert it as abusiness tax and it's going to
(05:27):
be PTET tax.
So you're going to pay as abusiness instead of you paying
it personally.
You as a business will pay$30,000, okay, we're basically
converting it and creating abusiness tax deduction, which
means it is no longer anitemized tax deduction, which
means it is now a business taxdeduction.
And now you get a $30,000deduction.
(05:49):
All you did is basicallyconverted your state income tax
of $30,000 into a business taxof $30,000, okay, and that is
called P-T-E-T pass-throughentity taxation.
Now California says you'regoing to have two taxes to pay.
(06:11):
You're going to have to pay$30,000 on state income tax and
$30,000 on state business tax,but on your personal income tax
return we're going to give you acredit.
We're going to wipe that out soyou no longer have that tax.
Now you're left with a businesstax and that business tax
becomes tax deduction.
I don't know why a lot of taxadvisors still don't use this
(06:32):
tax strategy for their clients.
A lot of business owners haveno idea about this tax strategy.
As a matter of fact, if you area single member LLC, most
states don't even allow you totake a PTET tax deduction or pay
PTET tax.
We just spoke to a client whoenrolled with us for tax
advisory services almost$500,000 in net profit in his
(06:55):
business single member LLCpaying ridiculous amount of tax
and self-employment and he doesnot utilize PTET because he
can't.
He's a single member LLC.
We're converting him to an Scorporation.
Now not only is he only savingmoney on the self-employment tax
, but he's also not qualifyingto pay PTET tax, which creates a
(07:17):
huge tax deduction for him andhis business.
He was blown away and if you'renot using PTET tax strategy
with your accountant, you'recompletely missing out on huge
tax strategy.
This is not something for whichyou have to pay extra.
You don't have to invest intoanything like a retirement
account.
You don't have to take themoney out of the business to
create certain deductions.
(07:37):
You're just converting the taxthat you are already paying from
a personal to a business andyou get a deduction.
Now your next question, borishow do I do this?
How do I sign up for PTT?
What are the requirements?
(08:10):
How can you start convertingyour personal income tax to a
voluntary tax?
You have to make an election.
I'll give you an example.
For example, states like NewYork and New Jersey.
You need to voluntarily applyfor it before March 15th, if I'm
not mistaken.
Michigan, you have to apply forit before June 15th.
With the state of California,you don't have to apply for it,
but you have to make yourquarterly estimated payment
before June 15th.
The point I'm trying to makethis tax has a deadline, so you
(08:32):
can speak to your tax advisor.
I hope you have a tax advisor.
Please tell me you have a taxadvisor, so you can speak to
your tax advisor and be like hey, are we doing this?
If we're not, can we apply forit?
I want to make sure I'm gettingthis Okay.
Number one apply for it.
Number two pay your quarterlytax, ptet taxes.
I tell all of my clients I'mlike look every quarter, my team
(08:54):
is going to work with you tocalculate your estimated
quarterly tax payments.
If, for whatever reason, youdon't want to pay quarterly
estimated tax payments, youdon't believe in it.
You make more money in themoney market account on those
tax payments you paid at the endof the year.
All is great, I'm okay with it.
The only thing I want you to do,if you see the word PTET, pay
it, because generally you don'tget a tax deduction for paying
(09:18):
taxes, but you get a taxdeduction for paying PTET taxes.
So, either paid quarterly or atleast paid before December 31st
.
Calculate what you pay,estimate it and pay it so you
can get a deduction before yourend.
A lot of business owners wantto maximize their deductions
before your end.
They call up their vendors andthey say can I prepay you for
this?
They start prepaying for theirrent and all that stuff.
(09:46):
Hello, you've got a PTET thatyou can pay before December 31st
and get a huge tax deductionand get a huge tax break and
save money on taxes.
Now what happens is that ifyou're paying your PTET taxes
(10:08):
quarterly, guess what?
You don't have to pay quarterlystate personal income taxes for
that amount.
Why your tax advisor?
Amazing, amazing strategy for2025.
And it's even more amazing ifthey're going to increase the
limit to $20,000.
Because not only are you goingto get the $20,000, if your tax
liability is more than $45,000,for example, if we redo this
(10:29):
example a little bit and you'rereally paying more than $45,000
in state taxes overall propertyand state income taxes, you got
this $20,000, plus you got thePTET.
Honestly, it's like one ofthose missed tax strategies by a
lot of people.
Definitely speak to your taxadvisor.
See you next time.
Speaker 2 (10:46):
That's it for today's episode.
Be sure to check out thedescription below for some free
tax reduction resources thatBoris put together for you.
If you're ready to work with atax advisor on your tax planning
, be sure to schedule your callby heading over to
wwwtaxplanningcallcom.
That's wwwtaxplanningcallcom.
And be sure to subscribe to ourpodcast to be notified when the
(11:08):
next strategy is released.
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