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Tax Strategy with Shauna Wekherlien

George Grombacher January 15, 2022

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Tax Strategy with Shauna Wekherlien


Tax Strategy with Shauna Wekherlien

LifeBlood: We talked about tax strategy, the importance of bing proactive with your planning, the cost of missing opportunities , the SALT cap limit, and how tax laws change all the time with Shauna Wekherlien, CPA and Tax Strategist in the top 1% in the United States.

Listen to learn about a big tax savings opportunity!

You can learn more about Shauna at TaxGoddess.com, Facebook, Twitter and LinkedIn.  Access Shauna’s Facebook Group HERE

Thanks, as always for listening!  If you got some value and enjoyed the show, please leave us a review wherever you listen and subscribe as well. 

You can learn more about us at MoneyAlignmentAcademy.com, Twitter, LinkedIn, Instagram, Pinterest, YouTube and Facebook or you’d like to be a guest on the show, contact George at Contact@GeorgeGrombacher.com.

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Our Guests

GG Headshot 2021

George Grombacher


Shauna Wekherlien

Episode Transcript

you know, maybe you get looked at maybe you don’t get looked at. So side note, I suppose if you’re going to go to level nine on our famous aggression scale, now might be the time to do it. But you didn’t hear me say that, right? Yes. We always want to stay at the eight legal but pushing the envelope. Yeah, I appreciate that. So I don’t know if this is an inappropriate question or not. But I heard about

george grombacher 4:37
the government was considering monitoring all of our bank accounts, if we had like more than like eight, six or 800 bucks in them or something like that. What are your thoughts on on on on that? Yeah. So it’s $600. Right? If there’s any specific transaction that is $600 or more, they’re talking about monitoring it again, as you just said, Do

Shauna Wekherlien 5:00
have enough people? Are they even writing the software to be able to do that properly? That is a massive, massive undertaking. Now I have smiling half not here. This sounds like really big news like, oh my goodness, they’re gonna be monitoring everybody with $600 transactions, they’ve actually been doing this for a while for quite some time. Normally, it applies to something called a 1099. contractor. So if you pay somebody as a business owner, if you pay somebody $600 or more, you’re supposed to give them a 1099 form for them to file taxes on at the end of the year. So really, I think what’s happening here is they’re expanding, they’re trying to expand that program to now catch anything that is $600 or more across the board. So I can’t terribly say I’m shocked. Of course, with COVID The government’s printing money like water, right, they’re handing the stuff out. So they’re definitely looking for ways to recoup money that they believe is lost.

So it’s this white substance that makes steak tastes really good? Yeah. So the salt limit the salt limit? The IRS does love their acronyms. That is for sure. Salt stands for state and local taxes. Okay, so salt, if you hear that, and it typically is impacting people in higher income tax states. So California, New York, New Jersey, Pennsylvania, Virginia, you know, a lot of these higher income tax states. But even here, for example, I live in sunny Scottsdale, Arizona, if you’re making more than $80,000 a year of income, you’re going to get hit with the salt limit. So what is the salt limit?

Back in January 1 2018, the government implemented new rules that says any of your state and local taxes are now going to get capped, the maximum that you can deduct is $10,000. So if you’re paying that would include your property taxes, that would include vehicle license taxes, that would include of course, the state taxes that you pay to whatever state you live in. Okay? So for a lot of people, they’re bypassing that $10,000 limit, just by owning a house, right in many, many states just by owning a house, let alone the state taxes they’re paying to California in New York or wherever. So what we were seeing on January 1 2018, for that 2018 tax year, is that people that used to get a $40,000 tax deduction for paying their state taxes and paying their house tax, you know, the property taxes, these kinds of things. Were getting capped at 10. Their tax payable went through the roof because they just lost a $30,000 tax deduction. So this was a big bad moment for a lot of people, and especially if their CPAs weren’t keeping up on these changes in the rules were spit is a lot of people were expecting a refund, they get their tax from back in the CPA, they now owe 10,000 20,000 whatever that number is. So it was really kind of heartbreaking for a lot of people that were not prepared for this. So the state’s the reaction here, right? Is this the salt limit? Okay. The state said, Well, wait a second. We we don’t really like this because effectively you’re telling our constituents in our state that they no longer get a deduction for paying us but we’d like them paying us this is important to us. We like them paying money to us. We don’t want them doing tax planning.

george grombacher 12:34
Sorry, feel like I just went on a map. That’s awesome. So So what if somebody has an LLC?

Shauna Wekherlien 12:41
Yeah, great question. So an LLC is actually a legal entity and not the taxation type of the entity. So this specifically relates to how the LLC would be taxed. So if it’s an LLC, taxed as an S corp, or taxed as a partnership, you still qualify for these rules. Got it? Nice trick question. And just some, I don’t know if it’s inside baseball or not. Does does one state sort of figure this out? And then they say, Hey, Alabama, do you see what we just judge?

I do not. Why did they change their name? It’s not.

george grombacher 16:59
I don’t I figured there had to be a tax reason, you know, it must be about money.

Come on won’t let blood This is George G. And the time is right. Welcome. Today’s guest is strong and powerful. Sean McErlean. Shauna, are you ready to do this again?

Unknown Speaker 0:20
I am ready to rock start with you. Any day.

george grombacher 0:24
I love it. Let’s, let’s go Sean is a CPA. She is the tax goddess. She is in the top 1% of all tech strategies, the United States specializing in business tech strategy and real estate again, excited to have you back on shore. Tell us a little about your personal laughs more about your work and why you do what you do.

Unknown Speaker 0:43
Oh, okay, personal life. Let’s see. So I’ve got three dogs. Two of them are giant monsters that eat me out of house and home and one of them is a lap puppy. So if I have to admit, but he’s adorable 50 pound lap puppy. love playing tennis, love to garden. And of course love taxes, which makes me a complete and utter tax nerd. But that just is what it is. Why do I do what I do? I so I’m ex KPMG used to help the big boys, right? Get them down to the one 2% 0% that we hear all of the super wealthy people pay 0% in taxes. I never thought that was fair. And I’m a big fan of fair. So wanted to make sure that we could bring all those strategies down to the little guy. So now we help small to medium sized businesses. And that is definitely my passion. This past year, we’re now at $423 million in tax savings for our clients. So it’s pretty, pretty Rockstar cool that we get to keep the money in the business owners pockets rather than the government. So

george grombacher 1:46
I love it. Awesome. Well, congratulations to you and the clients $423 million in tax savings. That was awesome.

Unknown Speaker 1:54
Thank you. I’m happy. And yes, I’ve had one of them bought a yacht with his tax saving. So I’m pretty sure the clients are generally pretty happy that

george grombacher 2:02
outstanding. Yeah, I’m nice. How about that for a testimonial? All right. So I know that taxes are our tax is a moving target, Shawna?

Unknown Speaker 2:16
Always, always, there’s a minimum of three IRS updates every single day that come out, let alone all 50 states and all the territories, I get something like 20 I think it’s 23 emails a day, just with the updates of what’s happening in the tax code for that day. It’s pretty cool.

george grombacher 2:38
Yeah, that’s super cool.

Unknown Speaker 2:42
Make that face I didn’t totally understand yet. It’s cool for a tax nerd. Let’s put it that way.

george grombacher 2:49
A minimum of three updates every day. It’s amazing. How many folks are so I heard. All right. I may have heard some some time ago or recently that the IRS was understaffed, and they were staffing up to potentially audit. Is that. Is that true? If there’s people making three updates a day? Is that an algorithm? Is that a human being? Oh, it’s

Unknown Speaker 3:13
a great question. So yes, you were absolutely correct. The IRS got hit with COVID just like everybody else, right? So massive layoffs, a lot of people trying to switch to working at home but the government is not you know, we have a lot of companies normal day to day companies that were not set up to go work from home, the IRS was about 20 years behind them, right. So massive layoffs couldn’t keep people employed. Now they are trying to rehire. But the most recent statistics that we’ve got says that the IRS will not be fully staffed again for probably another three years. So you’re really looking at 2023 2024, maybe even 2025. Before the significant you know, we’re back up at full capacity with the IRS. Of course, that causes some problems for people that are waiting on refunds. You might be waiting for a while. But on the other side, when you’re looking at audits, that’s actually very helpful, because now you’ve got this potential three to four year window where,

george grombacher 6:00
That they believe is lost. We lost all this money. What do you mean, you lost all this money? Yet? You made decisions to distribute that money? He did not, anyway?

Unknown Speaker 6:11
Uh huh. Yeah, brother. Uh huh. But this is why as a business owner, you want a tax strategist because you hear the words I’m choosing that they think they lost. A good business owner reports every dollar of income anyway. Right? You guys know that famous digression scale zero to 10? Zero, meaning the IRS never calls you never ever 10 mean, we’re all going to jail tax got to sits at an eight, right? So we’re taking all the opportunities but crossing all the T’s and dotting all the i’s, right? Nothing illegal, nothing. Nothing wrong. So a good business owner and in my perception, my two cents, but a good business owner is going to report every dollar of income that they make cash, whatever, however, it is that you’re receiving your report all the income. And I say that because there’s 1000s of tax strategies that you can use to lose that money in the eyes of the IRS, right so that you get to keep your money, all legal, all valid, all aboveboard. So I’m, you know, report all the income report. All of your legal expenses shouldn’t be a problem.

george grombacher 7:18
Got it? Nice. All right. So in the spirit of things changing. Tell us a little bit about about the salt. Just tell us about salt.

Unknown Speaker 10:00
To reduce those taxes, right, the federal government, we feel like you should bear this burden. The states are being very tricky. They’re being very, very sly about how they’re doing this. So I feel like I can’t let you get a word in edgewise. George, should I explain how they’re getting please? Tricky and sly Oh,

george grombacher 10:18
tell you more.

Unknown Speaker 10:21
That’s exactly what it feels like. It feels like state espionage, like I get to do. So there are certain states that have actually passed new tax regulations within the state that have said that if you own an S corp, so 1120 s, were a partnership, a 1065, one of those two entities, the business is actually allowed to pay for your personal state taxes and get the deduction with no $10,000 Salt limit. This is huge. Because not only are you allowed to now get that deduction at you know, you, you’re not capped by that $10,000 self limit, you also get the deduction on your business tax return, which can also reduce your self employment taxes. That’s huge. That’s an extra 15.3% That you’re not paying on whatever those state local taxes are. So this was a huge change. Absolutely huge change. And at the moment, there are about 13 states that have already approved this. There’s more that have pending legislation that are coming out, okay. And I’ll give you a list of states just for the listeners. So everybody’s got the states here. So if you are in Alabama, Arkansas, Arizona, yay, my state, California, Colorado, Connecticut, Georgia, Idaho, Louisiana, Maryland, Minnesota, New Jersey, New York, Oklahoma, Rhode Island, South Carolina, and Wisconsin. Sorry for being boring and listing out states. But if you’re in one of those states, you are covered by this. So if you have a business, an S corp or partnership, go talk to your CPA right now. And if your CPA doesn’t know about this, call your favorite tax strategist. Okay? And talk to us about how do you make this work, because you must pay whatever those taxes are. If you’ve already paid them personally, you might be able to use an accountable plan. So if you don’t know what an accountable plan is, definitely check again, check with your CPA, reach out to your favorite tax strategist. Okay, if you have an accountable plan, you might be able to get them reimbursed through your accountable plan.

george grombacher 13:12
You? Why don’t you folks do this too,

Unknown Speaker 13:15
huh? Yep. So generally, these types of rules, these types of changes come from those super high tax states, right. And I believe this one actually started in California, which between California and New York, they’re the highest to tax state rates in the entire country. So that’s exactly what happens is they all start chit chatting with each other and say, Hey, we figured out a way around this. Check it out.

george grombacher 13:41
Got it. Okay. And then at the level at the legislative level, there, that’s that’s how this becomes becomes law.

Unknown Speaker 13:50
Correct? Yep, you got it. So it does have to pass in your state. So there are certain states that may or may not do it. So for example, the pending legislation, states are still fighting about it. We’ve got Illinois, Massachusetts, Michigan, North Carolina, Oregon and Pennsylvania, that are still in the middle of fighting about this. Okay, so side note, if you’re active in politics, and you would like to deduct your taxes, please call your state rep. Right. Call your senator. Call your Congressman. Get them to pass this for you. But yeah, I mean, if we see this go across the country. This is no longer a problem, the salt cap limit, at least for business owners. So side note, and I’m sure if you guys have been on George’s podcast for as long as he’s been doing it because you guys are amazing listeners. You know that if you don’t have a business, you don’t get tax deductions. Right? If you’re straight up w two, you lose a lot. So highly, highly recommend that you form a business. Make your hobby and actual business do something do Uber or Lyft or grocery delivery. I don’t care do something to have a business.

george grombacher 14:56
Nice. So fascinating. that, let’s just assume that in because you said that it was California that sort of put this fall off, and they are losing money all the time in a million different ways. So is it in? I don’t know if this is knowable? Is it like the governor’s office that as the executive of the state, and they say, Oh, my gosh, we are going to be running a deficit, we need to figure out a way to recoup some or increase tax revenue.

Unknown Speaker 15:33
So great question. And I’ll be very honest with you, Georgia, I follow more of the tax law than I do the politics of it. So but yeah, this I mean, my understanding is this definitely comes from the state political level, right? This is not the state tax collection offices. This is actually the government level. So if that helps it all is

george grombacher 15:55
fascinating. No, not at all. It’s in you know, I don’t think anybody can really probably know that unless we were sitting at the table when they’re having these discussions. But it just seems like that, and what a fascinating time when people are leaving high income tax rate states, like, like California, and they’re headed to Arizona, or Texas, or Florida. How how states will respond, because, again, they’re losing revenue?

Unknown Speaker 16:27
Absolutely. Absolutely. Well, I’m living in Arizona, myself, the most recent statistic was something like 40% of all new people coming in are specifically from California. So yeah, there’s a mass exodus coming from a lot of the states, you know, higher tax states going to the lower tax states.

george grombacher 16:45
So fascinating. Do you know why Facebook changed their name?

Right? Otherwise, Facebook wouldn’t be interested in doing that. Very true. Probably not because they’re trying to help people, China. Oh, wow. Yeah, shots fired at everybody’s favorite social social media platform. Anyway, alright. So. So it should be if all 50 states adopt this, this, this, this new way of having your S corp, or your partnership cover, is that the right language, it can cover the amount that you’re losing in, in, in the deduction.

Unknown Speaker 17:46
Kind of let’s tweak it just a little bit. So basically, the company is allowed to pay for the taxes on your behalf. So the company will then be able to get the tax deduction, you won’t need to worry about the tax deduction, because it’s already taken by the company. And your taxes. Of course, whatever that tax bill is, is still being paid to the state. So the state is happy, you’re happy, your business is happy. Federal Government is not so happy. But they wrote a bad law. So everybody’s trying to get around it. No big surprise.

george grombacher 18:15
Got it? And should all 50 states do this, or 30, or whatever, or a tipping point where the federal government says, Hold on? Do they just rewrite laws

Unknown Speaker 18:27
all the time, which is why I get three updates a day? Oh, we’ve decided that we wrote this poorly. And now instead of the word and we want to put the word or in there to now be more inclusive of collecting more tax revenue happens every day, all day.

george grombacher 18:41
And this is why the this is why we should be working with somebody who is a strategist, not a reaction just

Unknown Speaker 18:49
Yes, sir. You got it. Because if you’re not take, for example, a reaction as your CPA may find out this information. But if they find out this information on March 1, next year, March 1 of 2022, but you needed to get this done by December 31, of 2021. You’re Sol, you’re done the years over, there’s nothing you can do about it, now you’ve lost this tax deduction.

george grombacher 19:15
And if people come to you, and for some miracle, you’re not able to save the money, when you don’t get paid, is that right?

Unknown Speaker 19:23
That is correct. We’ve got a money back guarantee on our stuff. So as long as you do what I tell you to do, if you don’t save as much as you paid us, we write you a check for the difference, which has never happened. So

george grombacher 19:36
so that’s one of those win wins.

Unknown Speaker 19:39
You know, I am all about win win for you win win for me and the government can make the wrong choice.

george grombacher 19:44
Right? Exactly. They can they can change the laws or whatever and take their ball and go home or whatever they’re into. Yeah, avoid losing, losing more of this tax stuff or money or whatever. It was shot up. It seems like a no Brainer How do folks get in contact with you? How do they engage with you?

Unknown Speaker 20:04
Absolutely easiest place to find my team and I is tax goddess.com. And you can book a call with my team and we start looking at your situation and seeing how much of this 423 million we can find for you.

george grombacher 20:17
Love it. Well, if you enjoyed this as much as I did, so showing your appreciation and share today’s show with a friend who also appreciates good ideas, go to tax goddess.com and find out if in fact you could be saving money on your taxes. Thanks good. Shauna.

Unknown Speaker 20:34
Thanks so much for having me. It’s a pleasure as always,

george grombacher 20:37
and until next time, keep fighting the good fight. We’re all in this together.

Transcribed by https://otter.ai

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