#229 – Unlocking Tax Benefits: Strategies for Families with The Tax Goddess Shauna A. Wekherlien, CPA

Welcome to the Money boss parent podcast. In this episode we're joined by Shauna A. Wekherlien known is the tax goddess highly sought after tax strategist with a passion for helping families make smart tax decisions. With her expertise as a CPA, Shauna found a Tax Goddess business services in 2004, assembling a global team of tax specialists who simplify complex tax concepts into plain language. So join us as we dive into topics such as building an effective tax team, what professionals do you need to have in order to pay less taxes on understanding how you can work with strategic tax coach to help you minimize the taxes? What are some of the ideas she has for us in 2024, and what deductions and credits families might be overlooking and how to navigate changes in your life, when you all of a sudden experienced a windfall, either selling your business, selling your property at a gain, maybe selling a stock or mutual fund in your portfolio, we also get to talk about what are some of the thoughts and ideas she has for business owners or those of you who have side gigs, how to hire you kids, and how to write off your dog. And all of these strategies are legally sound. So without further ado, let's get started. Hi, everyone. Shauna, welcome to the show.

Shauna A. Wekherlien: Thank you so much for having me. I'm so excited to be here. I

am, too. And you know what I mentioned this to you before we started the recording that this is the first time we're having a conversation about taxes. So and that happens to be your favorite topic?

Shauna A. Wekherlien: Yes, just slightly, you know, the benefits of being known as a tax goddess. Yes, that goes along with it. Let's

love that. Since you said that. What? So how did you come up with the name? Oh,

Shauna A. Wekherlien: well, if you want the true story, it was honestly completely by accident. People have told me that they don't believe that I'm a CPA, because I'm way too chatty. I love talking to people, I've got a personality, you know, a little bit different than your standard CPA, I was at a networking event, she is now 17 something years ago, and I was chatting away with the person next to me, and it was one of those events where you know, they pass around the microphone and you stand up and give you a 32nd commercial or whatever. So here I am happily chatting away, and I get a tap on the shoulder microphone shoved in my face. And I Hi, I'm Charlotte, the tax goddess and it just kind of rolled out. And there were about 200 heads in that room. And every single one of them was fun. And a very good friend of mine was sitting way in the back marketing genius. He said everything you change that name to everything. And it certainly goes along with the red hair. So you know, hard to argue.

It's amazing. Yes, totally, totally love this story. And it's now I can see you in the video. It's a total match. Personality? Well, um, is as much as I feel like this topic of tax discussion is, and I'm coming from an experience working with clients on the financial planning side. And finally, taxes are a big part of what we cover and you know, in the financial plan, but it feels like for most people, it's the topic that they kind of like want to surface right around this time right at the beginning of the year, get the taxes done and move on. i There's a more involved and I'm sure you have a variety of clients like that. So. So today, I think we should kind of go through and talk anything and everything taxes, and particularly finding different ideas and strategies that that going to help us minimize that tax burden, which is essentially what we all want. So love it. But But before we kind of dive into the technical side, maybe you can tell us a little bit of we know how you got your name, but maybe teeny bit about your practice and what do you do for clients?

Shauna A. Wekherlien: Absolutely. So give me the big picture down to the nitty gritty. So tax got us at this point, we will be turning 20 years old this August and 2024. So I'm very excited. I've got 93 people on staff in 13 different divisions in 17 different countries around the world. So we specialize on American taxpayers. So it really doesn't matter where you live across the country out of the country doesn't matter, but American taxpayers, and what most people call us for is specifically strategies. So according to Google, there are 660,000 CPAs in the US. There are 60,000 that have a master's in taxation. So I'm one of those people. There are 607 certified tax coaches. Then there are six So 67 certified tax professionals. And three, well 15. And I'm in the top three that are certified tax strapped us. And they refuse to tell us who is number one, because they don't want the competition, I suppose. But yeah, so effectively what all of those designations all the way up this little chain mean, is that we specialize in tax strategy. We do file taxes for people, but it's not really what you want us for what you want us for is how do I make changes to my life right now to lower my taxes for the next upcoming tax season? So we've got a couple of things. You know, you talked about people filing taxes right now. Ooh, the years over, it's hard to make changes after December 31. Right, but there's a couple of things that you can go backwards on. So we'll try and see if we have time to cover those today. And of course, what should you be doing moving forward in 2024, so that when you file your taxes, they're as low as legally possible. So,

Yeah, that makes that makes sense. And, you know, one of the questions that I usually get from clients, and I was thinking that's a good one to open this with, is like, what kind of teams should someone build for themselves of professionals? Right? tax professionals, financial professionals, because, like you were explaining, I know, you can see on the screen, but with your hands, like there's a pyramid, right, have different levels of service somebody might need. So what are your thoughts on that? Because does does everybody really need a strategic? You know, whatever, the sorry? The title?

Shauna A. Wekherlien: Goddess? Do they need a goddess goddess? Well, yeah, no, it's an excellent question. So a lot of this has to do with who you are. We call it your chess pieces. Okay. So if you're single and you have a W two and you don't own a house, and you don't have any kids, do you need a strategist? Probably not right? You're probably good with TurboTax h&r block, you know, whatever you feel comfortable with, right? Regular traditional, doesn't even have to be a CPA, just a tax preparer. Okay? Probably good. However, you have kids, you're married, you own a house, maybe you have a side gig, right. So you've maybe you have a W two, but the spouse is working, they're driving for Lyft or Uber, right? There's some sort of side gig, or all the way up to you know, we deal with clients that are over 200 million in revenue. So depending on and we can go all the way down from there, but depending on where you are, is where you're going to build this team. Now, your basic team, I do highly recommend that you have somebody who's looking at your taxes, right? So you've got to have that CPA, the CPA relationship tends to be the most trusted relationship every time Wall Street Journal, or Harvard Business Review does a survey, right, who is the most trusted relationship, it always comes back to the CPA, the CPA tends to be kind of the the hub. Now, the one thing I will warn people about right here, right, because that one spoke on the wheel determines weight a lot else about the other people that are on your team. And one of the most important questions that we tell people to ask themselves and then ask the CPA, whoever it is you're working with? What is your aggression scale? Now, the aggression scale goes from zero to 10. Zero, meaning the IRS never calls you never ever 10 Meaning we're all going to jail. You got to know where you are on the scale. All right. Now, when we ask clients this, let's do some examples. W two owns a house a couple of kids, right note no side gig, no business. Most of those people sit at a two to a four. Okay? They want some strategy, but they would never want a call from the IRS. Like they don't want to get anywhere near a 10. Like, you know, there's no reason to get that aggressive. Most entrepreneurs, right? If you've got a side gig or a business or whatever, you might be a seven to eight, that's the most common. You're okay, getting a call from the IRS. As long as you do everything legal, and you've got all the paperwork and everything to back it up. You're good. And when we asked this question, what do you think your CPA is? The most common answer we get is negative three. Okay, right, which means, and this is why it's important. This is why the CPA you got to pick the right CPA, right? If the CPA that you're dealing with is a negative three, and you're a seven, or even a five, okay? You will never see that CPA will never bring to your attention strategies that can help you and your family get ahead. Whether it's in taxes, whether it's financial investments, whether it's a where to put your money to be safe and secure. Okay, that CPA will never ever bring you that information. They just won't because they're negative three. So one of the most important people to start with is to find that right relationship at the right Eight aggression level for you and for your family, right? Because once you have that CPA, then you start adding well, okay, do we need a corporate attorney? Do we need a financial adviser? Do we need an insurance planner, which can be different than your financial advisor? Some people do it together, some people don't. Right? So as your tax strategist comes along, once you're paying the government about $150,000 a year in tax, that's when you call a tax strategist, because that's the point where most people go, you know, like paying this much money. That's like buying a house every year. I don't want to pay $150,000 a year to taxes. That's where you tend to add a tax strategist, someone who specializes in legal reduction. So

In that 100, that 100, you said, 100,200 50,000. That's combined state and federal tax

Shauna A. Wekherlien: Combined state and federal? Yeah. You know, one of the coolest things about using a tax strategist, for example, with US tax status, our average tax rate for our clients is 6.92%. So if you're paying 150,000, most of the people paying that amount are in the 2025 3035 and up type tax brackets. If you can go from 30% to 6.92. Why would you not right, so yeah,

I mean, I'm almost like dropping here on my knees. Especially clients in California, right? We're, I mean, we're geographically spread out. But yeah, you know, even just to California, state Tahoe, California,

Shauna A. Wekherlien: New York, New Jersey, all of your high state tax rates, we get calls from those people all day, because they're either fleeing California going, This is ridiculous. I'm out. Right? Or they want to say because they love the beach, the family environment is great, you know, these kinds of things. Right. But they're not willing to pay that kind of tax. It's yeah. So what do you do to legally reduce? That's the fun bit that's that is my job.

Your job, totally, no, I love I love how you can kind of introduce someone into the relationship, because the most common complaint I hear from clients is that, like, yeah, my my CPA or, you know, my tax person, or tax professional files, my taxes, but they're really never talked to me about the strategy, right? And so if they, if they never talked to someone to a client about a strategy, how are they going to ever figure out? Is there a way for them to reduce that tax burden, and that's what everybody most wants.

Shauna A. Wekherlien: That's what people want? Well, and that's why I bring it up, as these are two different parties, your strategist and your CPA are supposed to work together on your account, not at odds with each other. Okay. And so, you know, one of the things we tell our clients when they when they first come to us, there always seems to be it's almost like a breakup conversation, like how do I tell my CPA that like, I want to work with you, but I love them, and I've been with them for 20 years, and I want to stay with them. I'm like, Alright, listen, here's here's the deal, here would be the suggestion, go to them and say, Listen, I'm considering talking to a strategist. How would you feel if I bring in the mistress? I was like, the misters half the time here we are, it was a bad guy, you know, I feel the business. How would you feel if I brought in a strategist who is willing to educate you, the CPA, give you all the back and give you all the details? Right? Because that's, that's our job is to make sure your CPA knows how to file the forms to get done, what you need to get done. Right. CPAs are so busy, and facedown. I mean, we're heading into tax season. Do they even return a telephone call for a month? No, they're working on deadlines. Right? So our job is strategist is to come in and help you and help your CPA and really give that CPA guidance. Listen here, the 15 steps. And if you do these 15 steps, you're going to drop that bill by 80 grand. Let's go. Right. So

did you did let's kind of stick on this the strategist topic, when at what point in the year it makes sense to engage someone? Or is this sort of an ongoing relationship you suggest for clients to have?

Shauna A. Wekherlien: Absolutely Well, the best day was yesterday? That way? I think that's the answer at all financial professions, right. Let me phrase it this way, right. We get telephone calls from people like on December 27. I've made a million dollars in profit this year, and I don't know what to do with it. Well, honey, I got champagne and cookies in my hand like, here's the one thing you can do. But if it are the banks open or the vendors open or the people we need to move money instead of entities like you just can't get that stuff done that fast. It just doesn't happen. So we always tell people best days yesterday, okay, because it does take time when we write tax strategies. So just to give you an idea, we look at tax SCOTUS looks out a little over 1500 strategies for every single client. These plans are custom because what works for you is not going to work for me is not going to work for Bob, right? It's just everything is custom for the person. So When you start to look at strategies, it takes a good month or two to really get to know you as a client to understand your goals. Where are you trying to go? You know, we've had clients that called us very first thing have a very clear case in my head, very first thing, this client said to me, I want to buy a yacht and I want to write it off, like, okay, we can do that. But I need to know who are you? Are you married? You have kids? Do you have a business? Like, I need to know all this additional information to help you get to the goals and dreams that you want to get to? Are we trying to fund kids colleges? Are we trying to build the next Roman Empire? Do we want to buy an island by a Yeah, like, what? What are we doing fund retirement? For so many people? It's as simple as I'm older, I didn't do a good job with retirement, and I want to make sure that I'm covering in retirement. Okay. So when we look at when do we start? Yesterday, what I can tell you is that if you are not rolling the ball, at least starting the ball by like, August, you're you're behind the ball, right? And you're gonna have to work. The good things about being a redhead. You know, when when Mama says junk, you say how Heidenhain Okay, so if you start in August, you're gonna have wanting to right up front, you're going to have a tough time of it, I'm going to give you instructions, the team is going to tell you what to do when to do it, and you're going to need to follow them. Otherwise, we're looking at the following year for really for tax for big number of tax savings. So

that's, that's very helpful. Because I want our listeners to realize that even though the deadline to file taxes is 15th of April, right, or sometimes changes that's like really too late at that point. Well,

Shauna A. Wekherlien: yeah, and if we're talking about because when you talk about filing for the deadline for April 15, that's what did you do for last year, right? That's not even this year. I mean, there's a couple of things like of course, you could put money into an IRA. That'll work. In some states, like, for example, I live in Arizona, in some states, you can put into state and local tax credits and local charities, and they'll give you your taxes against the previous year. But basically, once the year is over, you're kind of cooked. So

yes, no, that makes sense. So with that idea that we're, we're pretty much done with 2023. There are still some, some little steps that you can recommend to clients right now. And we're focused on helping families make smart financial decisions here on this podcast, what can we do right now? Like, we still have pretty much, you know, a full year ahead of us, like any suggestions sorted by 2024? So you're giving me a blank canvas in 2024?

Do it Oh, man.

Shauna A. Wekherlien: Okay. All right. Well, so step one, no matter what is if you were a W two person, you need to get a psychic period. Okay? The tax laws are written for those that own businesses. Now, I want to make sure I'm defining this here, okay? Because you don't have to have a brick and mortar with 15 employees, like it doesn't have to be a big established business, but you need to have some sort of income that is not w two income. Okay? Now, this could be you buy a rental property, this could be an Airbnb, this could be literally you driving for Uber Lyft, doing grocery deliveries for Walmart, like really doesn't matter what it is. But if you have some sort of side gig that will be counted by the IRS as a business. Now, the reason why I'm saying this, this is setting the baseline here, okay. Is because once you have a business, remember I talked about like 1500 strategies, there's about eight of those eight, that apply to w two will only be Wow, the rest of them, for 1490 do are out business owners. So things like how do you pay your children to write it off? How do you rent your home from your business and make? Well, typically about $14,000 a year are completely tax free? How do you write off your family dog? Okay. You can only do if you have a business. So step number one, get a business. Yes. And

I can hear that like this, this voice and a lot of listeners has like, well, we've got a lot going on right now. You know, small kids, juggling all that stuff. So yes, but but I love the fact that you can gradually get into it. It doesn't have to be like quit my nine to five job and start a business.

Shauna A. Wekherlien: Oh no, I think wives would kill husbands and vice versa. But yeah, but let me let me come at this from another angle because we hear this a ton, right? Well, Shauna, that's good. That's great. And that's great. There's all these tax shelters, but I don't have time I'm working. I got kids I'm driving. I would suggest that you look for your business that matches with one of your hobbies. Now, big air quotes around this, okay? Because the IRS does not like the word hobby. Okay. This is not a good thing. You never want that word near your paperwork in any your documentation even in your discussions with your spouse about, hey, I'm going to start this thing, okay? In order to have a business, you must treat it like a business. Okay? So you've got to try to advertise, you have to try to make money, you have to talk about it with business, you know, people in the world, right? Like you're trying to get clients, you're trying to make money. Okay? Let me use a perfect example. Everybody wants to know how to write off the Rolex. Okay, now, doesn't matter if your W two, or if you're a business owner, everybody wants to know all my guys, right? Because the women have their hair and the jewelry and everything else guys want to know how to write off the roads. This is probably one of my favorite side businesses. That is a hobby for many men, okay? But they can turn into a business. Now, if you're a Rolex fan, or any fancy watch or whatever, right? Poor poor men, their their accessories include watches and cars, and sometimes shoes, like that's it, maybe the sunglasses maybe, right? It's they don't have a lot of accessories. If you're really into watches, okay, and so for men, this is a hobby, you could start a business buying and selling watches. Okay? Now, this would give you the ability to wear the watch out and about because of course that's advertising. Hey, Anna, I do want my watch. This is a great watch, you shouldn't have this watch. Buy it from me by the watch. Okay, so this gives you an opportunity to change something that is a hobby for you into a business, right? You've got to sell the watch. You can't you can't just show the watch, you do actually have to sell the watch. Okay. But now you get to do something that you love, right? And you have a business. So you were kind of doing it anyway. Now you have a business. So I do really like merging if you can something you enjoy doing with creating a business around that. For some people that's teaching guitar lessons. For some people. That is we had one of our clients just open up a training class, post jujitsu, a training class on how to do better roles. Okay, right. I mean, whatever, it can literally be anything. You just have to treat it like a business to have the business. So yes,

we get to get to get to that first step. Okay. I like that. I think it's it's going to alleviate some of the stress of not having time.

Shauna A. Wekherlien: Yeah, yeah. Well, there's only so many hours in the day, right. And certainly there are people that will come back and say, You know what, to save $5,000 on taxes, it's not worth it for me. So you do want to run these calculations past your tax judges past your tax CPA, right? If I do this, and this is kind of what maybe I think this is going to look like, how much money am I really going to save? Is it worth the what we call the PETA factor pain in the rear end? You know, is is that worth the PETA factor for you? Because for $1,000? Maybe not for 50,000? Maybe? depends on the person, right?

Yes. Okay, so So side gig or up businesses is one idea. What else?

Shauna A. Wekherlien: Oh, okay. Well, so can I can I go on the baseline that at this point, now you have a business? Let's do that. We're gonna Okay. All right. Because that gives me 14 1492 options on things we can do here. So yeah, so if you have a business, let's start with the kids. You said that most of our audience here were families, we got kids, right? So how do we use the kids in our new business? Now, the IRS will allow you to pay a child and there's two different categories. So we'll go over them. But the IRS will allow you to pay a child for 2024. It's a little over $21,000 per child per year. And all of that money is completely tax free. So one of my favorite stories, I've got a client who at this point has 12 children, she has 12 Children, okay, eight of them qualify, we'll talk about qualifications, but eight of them qualify at 21,000 apiece, her family is taking home a little over $170,000 a year, completely tax free. So as you have more children, this can help you now the two classifications, okay, there's, there's the five level of cute, okay, and there's more than seven years old. So, we'll go with the seven year old first, it's a little bit easier, okay. If your child is older than seven, they are allowed to work for your business. So we'll stick with our selling Rolexes on the eBay business. Here's an example. Okay, modeling for news. Exactly. But listen, you can pay your kid to sweep the floor or polish the Rolex or take photos of the Rolex under a light box, you know, whatever it is that the child does, and you have to do some sort of a job, okay? But kids are allowed to be paid whatever the fair market value of wages is for in adults in that job role. So for a lot of people, you know, let's pick your 13 to 16 year olds, okay. They are scatec Killer Lee amazing at tick tock, Facebook, Instagram, all these things right and paying a proper social media manager, at least where I am is about $120 an hour. Okay? So if your kids taking pictures and posting them on Instagram for your Rolex business, you can now pay the child for this work. So once the kid has the money, because you do have to actually pay them, okay? Most of my parents are like, Will Yeah, but I don't want the kid to go out and buy a Ferrari with his earnings like, no, no, this is for college, this is for whatever, okay, as a parent, you are allowed to effectively hide the monies from your child until they hit the age of 18. Okay, it doesn't have to be in their bank account, like their name, but the kid doesn't have to know they have a bank account. So most of my parents will get the money in there, maybe they'll buy a life insurance policy, right, like an infinite banking type policy with that cash, or they'll put the money into treasury bills, you know, something really safe and secure, that's going to be earning some interest. With that money, they can open a business, when they turn 18, they can go to college with that money, right? It's a lot more flexible than something like a 529 plans, where a lot of my parents have been bulking up these 529 plans. And then the kid never goes to school, right? They become an entrepreneur, or whatever. So one path on that side. And the other thing I want to bring up, you can do this with kids younger than seven. But this is where the five levels of cute come in. Okay. The court case says they have to be very, very, very, very, very, and holding a five fingers, five levels of cute in order for you to pay them if they're younger than seven. So how do you prove that they're five levels of cute because of course, you're the mom, you're the dad, worse, you think they're the cutest thing on the planet doesn't quite pass muster, you do have to take the kid to a modeling agency and see if the modeling agency would accept the child for actual professional shoots or not. So there's a workaround, it is a workaround. There's always a workaround. This is the one thing I love about the US tax system, right. If somebody else court case passed, and you have proof of that, you can always at least use it as a basis to make an argument. So yes,

yes. Okay. I like to find levels, cute girls, and I'd like you can argue with the parent forever.

Shauna A. Wekherlien: Grandparents are coming in, of course, there are five levels of beauty. Yeah, you kind of have to have some external proof on that one. So yeah,

you're okay. We're like that. Yes. Those are definitely smart ways of not only, you know, teaching your future generation of how intrapreneurship works, right. Like some of the smart steps. Okay, I like it.

Shauna A. Wekherlien: Well, and so once the child has that money, right, of course, they could use it to go pay for things, they could also put it into a Roth IRA, into a traditional IRA. Right? That money can be used for anything other than food, clothing, and shelter. So you just can't have parents charging their eight year old rent to live in the house? Yes, the IRS did not approve that one.

Yes, I particularly like the ideas of, you know, invest saving and investing the money, you know, on behalf of the kids. Absolutely.

Shauna A. Wekherlien: You might as well set them up, right. I mean, could you imagine if every single year, you were buying Apple stock or Google stock, right, as these prices are skyrocketing? I mean, by the time that kid turns 18, they might already be a billionaire. Who knows? So,

yes. Now there's there's a lot of that trend right now going on on the social media platforms. At least maybe on my feeds.

Shauna A. Wekherlien: Alright, those algorithms, you know,

yes, yes. But I mean, but I mean, there's truth to that, there's definitely Well, the first step is to connect with the right tax professional, but idea ideas of floating. Yes.

Shauna A. Wekherlien: Well, and you bring up a very interesting point, which we like to call it The Tick Tock syndrome, okay. When you go on, and you start to look for some of these ideas, alright, you're going to find people that are going to say, in 30 seconds or less, they're going to explain a very complex tax subject. They are not explaining all the pieces. And that's why we call it the tic toc syndrome, okay, because we will get telephone calls from our parents saying, Hey, I saw you can do this on the video. I'm like, Yeah, but he didn't tell you about the other 23 steps or the paperwork you have to fill out or how that you need to go to a modeling agency to get the kid approved. Like they're not telling you all of these details and all of these background facts. And we've seen unfortunately, we've seen quite a few cases where people followed Tiktok advice right air quotes. Please don't do that. Please work with qualified professionals who are willing to sign their name on the bottom of your tax return right or on the advice given to you written these kinds of things to help you make proper decisions because The tic tac people are great and they give great ideas, but you better know what you're looking at. So, yes, I

agree. That's for entertainment and information only.

Shauna A. Wekherlien: Exactly, yes. 100% Yeah. Um,

okay, what else do you have on your, on your 2024? To Do list for families? Oh, okay.

Shauna A. Wekherlien: Well, normally when we have a family, we have a dog. Okay? Not all the time. So people go with cats and Cat people, you're going to be very upset when I explain why I'm bringing up about dogs versus cats here. Okay. So you've got your business, your kid is the one posting pictures, right? We got those eBay, beautiful eBay, well lit watches, they're all they're all up on eBay, okay, you now have potentially clients coming to your home to purchase your watch or purchase the car or whatever it is that you're selling, okay. You may be inviting vendors over to your home to be able to take better photos or do a group shot of your family to put on the cover flyer for your business, whatever it is, okay? When you have other people coming to your place of business, you may need security for that business. Okay? You don't know these people, you don't know the random guy is coming to buy the Rolex from your home. Okay. So security can be important. Now, one of the benefits and this is where dogs versus cats. Okay, so there are court cases that talk specifically about dogs, if you have a dog whose shoulder is taller than the height of the shortest person in the household neat. Okay, well, if your seven year old is working for your business, their knee is pretty short. Right? So okay, so we got to step one shoulder knee, okay, step two, the dog has to be trained, which is a very broad term. So sit stay calm is kind of your basic understanding of trained, okay. And the third one is the dog has to have a business purpose to be written off through the business. So is the dog providing security to your family when somebody comes to your home to buy the Rolex, right? Or when you have a vendor coming or whatever that is. So if you meet those three qualifications, your dog can now be written off as a business expense, which means food, clothing, trimming, grooming, that shots, treats all the things, okay. Which generally for families, a dog is adorable, but they're also like the fifth expense in the family of four sniffle. So, you know, we can add up we have people that spend between five and $10,000 a year on a dog, right. And that can be a pretty hefty tax deduction for someone. So

I love that. I love that. One area that I think maybe we should touch on, you mentioned briefly about it. Are the college savings like are there any ideas or suggestions particularly around like the 529? College? So I'm

Shauna A. Wekherlien: always a little bit torn on the 529. Okay, I love the 529. It's a great program, I understand what the government was trying to do. But there's pros and cons with the 529. Right? So some of the pros of the 529. Right, the money can go in there and acts like a Roth and the earnings not taxable. I mean, we've got some really cool things on that front. But one of the major cons is that once the money is in the 529, it's in the 529, right? If your child does not go to an approved college or university that can take 529 money, that money can be trapped. Now, you can give it to another child, you can move it, it can become retirement funds, way, way, way, way, way out the future, there's a new program that allows you to pull out certain amounts out of the 529. But for most of our parents, we honestly the tax benefits of putting into a 529 are sitting at the state level. So in some states, I'll pick on Arizona, because that's where I'm from, in some states, the maximum you can put in and get a deduction for is like $1,000 per child, that's only giving you like a $50 tax benefit. And if my money is going to be locked up, do I like is that worth it is $50 worth my money being walked up? Versus and of course, every professional has their opinion on this. I don't sell life insurance, I talk about life insurance as a tool. One of the things that we see a lot of parents kind of moving to from the 529 angle is going into what are typically called Infinite Banking programs. It allows you to put money in it's based on the life of the child, all of that money is also tax free, exactly like the Roth, right. And they can pull it out for any reason. So you want to start a business, you can borrow from it, want to buy a car, you can borrow from it, you want to go to college, you can borrow from it to go to college, right? So a lot of our parents tend to go that route, but 520 Nights can be good. A lot of it I tell people please look at the state benefits, because the federal does not give you any benefits all the 529 so I'm always a little torn as to whether I think that's great or no, you know, like which path to go there.

Yeah, I think a lot of a lot of families also think about okay, well, you know, maybe we're not getting an introduction, right, right this minute, right, generally, or, you know, in the state we live in California does not offer one either. But in the future, and also, you know, the cost of college is increasing tremendously. So they're, they're incentivized by the fact that it's growing tax free. So that's, that's, I think, the biggest advantage of the 529. But but do talk a little bit about the alternative suggestion, because I think that would be interesting for for listeners to know about

Shauna A. Wekherlien: 100%. Well, and so and I always call it infinite banking, but you know, there's probably 80 different structures that can do, I'm going to explain the theoretical, okay, but at different structures that can do what I'm about to describe. Okay, so you talk about the tax free growth, I'm all in, okay, because when you start a child at day one, they were born and you put in $5. Now that $5 turns into 50,000. Like, who would not take that? Why would you not do that? The alternative that we call infinite banking, really what this is, it's a type of life insurance, okay? Can be based on the whole life Indexed Universal Life, there's a bunch of bunch of different options here. But really, what's happening is the same thing. So I'm putting in $5, all of the earning is inside that life insurance policy, okay, life insurance money is 100%, tax free for life period. And when you die, it's also tax free to whoever you get the money to. Okay, so we're talking tax free, tax free, tax free 100%, across the board, tax free. Now, one of the things that I really like about using the life insurance angle on this is because, again, super flexible, so your kid wants to go to a trade school, not a university, your fine kid wants to become an entrepreneur, they have cash this, they call it infinite banking, because you're really banking on yourself, right? You've been putting this money away, all of the earnings are tax free. When you want those funds, you don't have to go to the SBA or a bank. And hopefully, maybe fingers crossed, make it through their banking application program, for your 18 year olds go open a business, they have their own money to open this business. Now, one of the great things about this is that money when they pull that money out, it is not taxable. To them, it is a loan. So earlier, you mentioned you're really teaching your kids about fiscal responsibility, right? Giving them like, this is how the world works. Okay, this is a safe way for your children to do that, versus trying to open up their first business and college on credit cards, and then getting stuck with 30% interest rates and $30,000 in debt because their first business failed, okay? This is a very safe way. Because if they don't repay the loan, as long as there's still money premium still going in there, okay? If they don't repay the loan, when they die, they will, it's a part of the life insurance policy. So these things do need to be structured really carefully. You must must must work with a professional to do this. Okay. And heads up warning for the audience out there. There are good people, and there are bad people. So make sure that you're reaching out, for example, to our lovely host Anna right, to find out who are the good people that she knows, reach out to your tax strategist? Who are the good people that have been vetted, right? To know, where do you go? Who do you need to talk to? So yes,

I love that. I know, it's, it's definitely a typical advice that you will get will get put all your money in the 529 versus consider, consider a life insurance

Shauna A. Wekherlien: policy. Oh, and, you know, I think you bring up a really valid point here, which is there is no one pill, there's no one strategy that is going to solve every prop, there just is. Okay. So having a balance, having a little bit of money in a 529 having some in life insurance, having some in real estate, having some in gold, like whatever, these are the types of things that you would talk about with one of the stools of the of your circle of your we'll have professionals here with your financial advisor, right? This this is their job is to look and make sure that you are balanced and well sorted and you have somebody that's taxable and somebody that isn't and somebody that's quick, accessible, and somebody that is long term accessible, right? This is in my opinion, and probably better to speak to this than I am. But this in my opinion is kind of a big picture job of your financial advisor to look at your life as a whole and say what do you need to do here to get into a good spot a good position? So

exactly, yes, we got carried away on the tax piece.

Shauna A. Wekherlien: The downsides to a goddess you know, ya

know, no, that's all. So my next question for you is, are there any you know, type because clients asked this a lot. Are there any tax credits or like deductions, or anything else that do you typically see people sort of forget to take advantage off? Especially when they have kids?

Shauna A. Wekherlien: Oh, geez, I mean, all the time, right? Where do I even start that? Um, you know, certainly when we start looking at like your child tax credit, childcare credits. I mean, those are kind of the big ones that we see because people just either they don't know what even exists. The CPA doesn't ask them. This is the one that's kind of heartbreaking to me is that sometimes not all the time, but a CPA is just moving so fast that if you don't submit the records, they don't even ask you about it. Right. You know, but childcare is something especially for families with kids, childcare tends to happen. Right? So that's what I've been looking at first credits with kids. Yeah, I'm so sorry. I think I tend to deal more on the business end. So my brain is just constantly going to how do we write off the kids in the first place? Right, forget the credits credits are great. And it is something you should be paying attention to. But yeah, I would certainly be looking at that business. And if it was me,

so yeah. And also to that end, like I think just work as you were talking about Child Child Child Care. And I just recently got a statement from from our preschool. Right, here's all you you've paid a year. Yes, um, I was thinking about a dependent care, you know, FSA type of account, this is for those who have that luxury, like their employer may provide that option for them. So it's not often that I see that, but it's that clients don't take advantage of it. But I think that's a great tool to have some pre tax dollars, right?

Shauna A. Wekherlien: Well, and you know, you bring up a very valid point, which is really making sure that you are maximizing, if you're a W two, maximize all the things maximize absolutely everything that your company is offering to you. Right, if you're going to use it. I mean, obviously the downside to FSA is if it goes in you don't use it. You're, you're in trouble. But yeah, if you have HSA options, use them if you have FSA to offset use them. Now we have one of the new big things coming out for employers to to really, one Sep simples now have Roth options, which is new. So if your employer has that, and you you're in a low enough tax bracket, take a look at that. Yeah. The other one is something called Lisa, which is brand new. It's a pension linked emergency savings account. Okay. And not a lot of employers have set this up yet. But it's a pretty cool feature function. For a lot of people, they are worried about putting money into retirement, because what if there's an emergency, right? What if my AC breaks, or my car breaks, I'm going to need that money. So I'm going to keep it over here in the savings account. The cool thing about the police is that you can fund that account, and the first $2,500, you can pull out for any emergency. And there's no penalty, there's no tax, the whole thing rolls over to a Roth account. So there are some really cool things you can do there. Talk about emergencies, you know, kid just broke his leg, you got to go to the hospital, you know, whatever it is, right. So

that's awesome. Yes. Yeah. So we'll be looking at more, I'm sure there's going to be more information on that. Yeah, one, one. I'm sure this happens to you a lot as well. And you gave an already some of you some examples, but people tend to think about like taxes more seriously, when some some significant life change happens, right? Maybe you're got lucky and you sold your business or you sold your house, although the housing market people are kind of sitting in waiting to sell, right? Interest rates are still kind of like in that not in the best spot, you know, out there. Maybe you've had an investment stock market has been doing great and you sold something that has a gain, what I'm talking about here is that all of a sudden, you have a gain, that you don't know what to do with or you anticipating having of that gain. And we're talking about 2024. So what can what can we do? What can we start to do? Lava?

Shauna A. Wekherlien: Well, I think you know, one of the biggest things if you're talking about a game, let's back up because there's really in my mind, there's two or categorizations, two different types and two different speeds here. Okay, so one of them is Do you know what's coming or not? Okay? Because sometimes, you know, you would hope that you know that you're going to sell your house, but sometimes you don't, and things just have to move and things just have to happen. Okay, so if you can plan for it, it's always better. All right. And the second one is, how big is the game? Okay, because for example, if the game is over, typically we use about $150,000 If the game is over $150,000 that you're gonna pay tax on, okay? There are specific types of taxing structures, right, deferred sales trust, maybe a 1031. If it's real estate 721. There's specific kinds of structures that you can use to at least defer the tax immediately. If it's less than 150,000 dollars again, right? Those structures are gonna be very expensive to set up for you. So you wouldn't go that route. And so then what you want to look at is okay, well, what can you do now during the year to try to offset that gains? So if you've got, let's say, a $50,000 gain, do you have any losses in any of your other stock portfolios? You know, can we do some capital gain or capital loss harvesting? Can we do something like that? Is there something that you have wanted to sell, but you haven't, because it was at a loss? Well, maybe now you've got that gain versus loss type thing, okay, that you can offset it, which is good. And other ways, when you're looking at capital gains, there is something called an opportunity zone. Now that at the moment is supposed to sunset on December 31, of 2025. So we don't have a whole lot of runway with the opportunity zones. But if you have that capital gain, and you want to put it into opportunity zones are specific types of real estate, or real estate portfolios, you can do that that will again at least defer the gain and in some cases, even minimize the amount of gain that is finally at the end, taxable, so we will reduce it by 5% 10% 15%, depending on how long your money is inside that investment. So really looking at how big is the gain? How fast is it coming? If the gain happens tomorrow, and you have zero time to plan? Oh, you better be doing better have that business? Other stuff. Okay. So, yeah,

yeah. Well, it's also like, I think you said, you said it in a nice way that you still have time, right? Because we're looking at this in a calendar year, right. So for anyone listening, like we have, like this is when somebody's reaching out to you in December 31. There's no time for

Shauna A. Wekherlien: there's no time. Well, and so if we talk about some of the bigger games, right, so that that over 150, in order to get some of those structures set up, it takes a month or two. Yeah. So you can't I mean, once the transaction is done, the transaction is done. Even if it's done in April, right. It's it's done. And now you have to use other strategies to try to minimize it. So still have time but you always want to plan ahead is the general good advice. You always want to plan ahead if you can. So, yes,

totally. You mentioned sunset in 2025. Can you clarify what that means for listeners? Absolutely. So

Shauna A. Wekherlien: yeah, one of the biggest tax recent big tax changes that happened was something called the tax cuts and Jobs Act. So the TCGA. Now, before that, for example, we had higher tax rates, lower child tax credits, research and development had to be capitalized, right, there were some very, like specific regulations that we had in place before the TCJ a was passed TCJ a was passed, that law is going to be what's called Sunset, which means that it expires on December 31 2025. Now, in some cases, that's good, right, we go back to expensing some things, but in other cases, that the maximum tax rate will jump from 37% of 39.6. So it really depending on who you are, in your specific chess pieces, can make quite a bit of difference as to whether the government really allows the TCGA to sunset to actually expire, or whether they're going to put into place something to continue it, right. And if I had a crystal ball, I'd be a billionaire sitting on the beach with a margarita. But at the moment, nobody knows. So yeah, so it's probably

harder to do some some of the longer term planning, right, because we were just sprinkling your limited

Shauna A. Wekherlien: direction. Uh, you know, really, you're, you're playing options, right? It's like playing the stock market, right? Are you doing a call or a put, like, with which way are we going? And so you do have some people that will plan for both sides of the fence. If it goes this way, then we're going to do this. And if it goes this way, we're going to do this now. We do, of course, have some political changes happening right now. We're right. We're right in the middle of it. So for many of us that follow these kinds of things, right? We're honestly we're kind of sitting around waiting for like, May June 2025. Are we gonna have any updates? Like we don't know. But you're right. Yeah, sometimes. It's just the way the dice roll. So yes, that's true.

That's true. Well, we're just about at the end of our recording today, and I wanted to see if you have any last minute thoughts for our listeners, how do we do save taxes this year? Finally. I

Shauna A. Wekherlien: love it. Well, step one, get a business if you don't have one, make one right figure out a way to have a business. If you don't have a business, which I know we didn't get a chance to cover, but if we don't have a business, be looking to invest money, because really as a W two, that the best way you're gonna get a write off without having a business is to put your money into some of the specialized types of investments. So oil and gas solar, you know, there are credits for quite a few Different kinds of investments. So be looking there. And I think the other one is make sure that not all of your money is taxable, right? Make sure you have some life insurance and Roth, you know, some of these things to be able to spread out the tax burden as you move forward in life. So

I love that I highly recommend that particular piece to clients as well, because I see them on the other side, when they do get to retirement, and it's like, oh, my money's my in my 401 K. I'm like, great.

Shauna A. Wekherlien: All taxable.

Yeah, you've done an awesome job and saving. That's fantastic. But we need to, we need to start to diversify the income gap a little more as well. Let's thank you so much, Anna, for connecting with us here today. How if someone wants to get into your world and learn about what you do, how can they do that?

Shauna A. Wekherlien: Absolutely. We are really easy to find taxgoddess.com, you can book a call with our team. They'll run through you know, we serve as three really different levels of individuals. So small babies that are just starting, maybe you're just starting your first business, medium size up to about 100 million, and then 100 million plus so tax scotus.com And it'll walk you through where to go and where to collect and where to book a call. So that sounds

great. And we'll include all of this in the show notes as well. So thank you so much again for your time today.

Shauna A. Wekherlien: Thank you for having me.