The X’s & O’s

Many people are preparing their taxes right now, so we thought this would be a great opportunity to talk about some tax-saving strategies you can possibly implement. On today’s show, Brent, Matthew, and Joshua discuss the different ways you can be proactive in your tax planning and some of the lesser-known strategies.

The Hosts:

Brent Pasqua, Matthew Theal and Joshua Winterswyk

Transcript:

Brent Pasqua: Welcome to the Retirement Plan Playbook. The crew is back. We’re ready for a great show. Today, we’re going to be talking about strategies to reduce your taxes. And to be honest with you guys, the only time I like talking about taxes is when it’s about saving money. I don’t know if you guys feel the same way?

Joshua Winterswyk: Yeah. And then it’s just a lot more of a positive conversation.

Brent Pasqua: Yeah. I mean, I think everybody dreads tax time. And so, if it’s about saving money though I’m all for that.

Joshua Winterswyk: Me too.

Brent Pasqua: So I’m Brent Pasqua, founder of RPA Wealth Management. I’m here with Matthew Theal, certified financial planner, and Joshua Winterswyk, certified financial planner. So, let’s get into some of these topics in a second about some of the strategies you can use to reduce your taxes. But as we get into that, obviously spring is here. Birds are starting to chirp. And that means baseball season. Are you guys excited for baseball season?

Matthew Theal: It came fast, huh? But yeah, I’m very excited. Baseball season’s started. It was good to watch it on TV. I know they got the fans back this year at all the games, which is really cool to see. And hopefully they have a good season, and go Angels.

Joshua Winterswyk: Yeah. I’m excited. I think seeing fans in the stands yesterday at the opening day, and seeing those ceremonies, it really was nice to see. And looking forward to flipping the TV and seeing baseball on TV, and potentially even going to a game this summer. So, I’m excited.

Brent Pasqua: Do all stadiums have different capacity restrictions? Is that what it is?

Matthew Theal: Yeah. I was watching the Rockies/Dodgers game, and outside of the first few rows, for some reason, there wasn’t a lot of people sitting in those. But the rest of the stadium looked like it was packed.

Brent Pasqua: Is Texas a hundred percent?

Matthew Theal: I’m not sure. I think so. Yeah.

Brent Pasqua: That’s my understanding.

Joshua Winterswyk: Yeah?

Matthew Theal: Oh yeah.

Brent Pasqua: So yeah, they all got different regulations all over which would be kind of cool for the players to too. To be now playing back in front of their fans, I’m sure that feels good for them.

Matthew Theal: Yeah. Actually Mike Trout was getting interviewed after the Angel game and that’s what he said, that the fans, even though there’s only like 10,000 there because it’s so tight here in California, he was saying just that 10,000 was making enough noise that it was fun and motivating.

Brent Pasqua: It should make the game more exciting. Last year was a little bit more… It was obviously boring without fans. I mean, it’s nice to have fans there.

Matthew Theal: Yeah, really nice. And then Josh and I could get back to LAFC coming up here in a week or two. So, that would be great.

Brent Pasqua: Yeah. I think that the only thing that baseball could probably do to make it more exciting is just tell the pitchers to hurry up.

Joshua Winterswyk: Yeah. Put a time limit on the game.

Brent Pasqua: Jesus. 20 seconds.

Matthew Theal: They had some really cool rules last year that they should have implemented, like the runners starting on second base for extra innings. And then also the designated hitter in the NL, I think they got rid of both of those rules. So, they should just kept them because they got to make the game exciting, but it seems like they just want to make it boring.

Brent Pasqua: Did they keep the pitcher’s got to pitch to three batters, like they did last year?

Matthew Theal: I don’t know. You know who would probably know that answer is our intern, Jacob.

Brent Pasqua: Yeah.

Joshua Winterswyk: Yeah. We got to ask him. Those are all good questions. I didn’t know that they switched all of those back to from last year. So, I liked all of the changes to speed up the game and make it more fun. But I guess baseball did it.

Matthew Theal: Baseball’s strategy is let’s make it as boring as possible. Drag it out as long as we can go.

Newspaper Boy: Extra! Extra! Read all about it!

Announcer: Let’s hear the latest hot takes on some recent news items.

Brent Pasqua: All right. So, let’s get into hot take headlines. Krispy Kreme announced you will actually get a free donut for everybody who shows proof of vaccination every day this year. What’s your thought on this? Is this really the first corporations to come out with something like this?

Matthew Theal: It’s the first one that I’ve seen. I think it’s really cool, and I think we’ll probably see more of this. It’s just a shame that government can’t provide incentives for people to get vaccinated. You’d think they would. But again, here’s a private corporation having to do it, do the government’s job. Really cool. Maybe I’ll get it done once I get my vaccine.

Brent Pasqua: I don’t believe you.

Matthew Theal: Krispy Kremes are good. But we’ll probably see more of this. I’m sure more corporations will step up and offer incentives for people to get vaccinated and help end the pandemic.

Joshua Winterswyk: I think also what you saw it was corporations giving employees time I’m off, as well, to go get vaccinated, and kind of incentivizing them to get a vaccine. So, again leave it to these corporations to implement some of these incentives. But I think it’s positive. I mean, if it can bring light to helping save more lives and getting more people vaccinated, all for it. And maybe Matt will have to go grab a Krispy Kreme once we’re all fully vaccinated.

Matthew Theal: Yeah. That’d be fun.

Brent Pasqua: And I think it brings attention to them, the company, and it gives incentives for people to go through there, obviously. So I mean, it’s kind of a cool idea. I guess it keeps them up-to-date, really, with what’s going on.

Matthew Theal: It boosts sales too, because if you have kids they’re not vaccinated yet. So, you go get your free donut and you got to pay for your kids.

Brent Pasqua: Yeah. You’re not getting yourself just a donut.

Joshua Winterswyk: And I doubt, yeah, you’re going to buy a dozen donuts.

Brent Pasqua: Yeah. Okay. Let’s get into the second one. Joe Biden unveiled his long awaited infrastructure bill. We have $621B for surface transportation, $400B for caring for elderly and disabled Americans, $300B for domestic manufacturing, along with hundreds of billions of dollars for other efforts. It also includes a series of tax increases on companies, including raising the corporate tax to 28% from what was before 21%. The White House said would cover the cost of spending for about 15 years. What’s your thoughts on this?

Matthew Theal: This is a difficult one to unpack. We obviously don’t have a ton of information here on what’s included. But the numbers are ginormous. And one has to ask is this necessary? The government’s pretty inept at getting things like this done. It’s probably better if this is left to private companies to build, and get America that infrastructure it badly needs.

Joshua Winterswyk: I just have so many more questions. I mean, this is the first real news about his infrastructure plan, the first time we’re reading into it. So, my thoughts are I’m going to need to dig under the hood a little bit further before I have a really good opinion on this infrastructure plan. And I think it’s also going to be difficult to get something that big past as well. So, we’ll see what actually happens. But again, I have just so many more question.

Matthew Theal: A couple of things I’ve been seeing on the headlines once this came out was a lot of blue senators got together and basically said, “Hey. We’re not going to vote for this unless the salt deductions are put back in, which that would help a lot of middle-class families and upper middle-class families who live in blue states. So that would be great, especially for those of us who live in California.

Matthew Theal: And then the other thing, I think the big reaction on the other side of the table, the Republicans, because this is obviously political, is this “things like this are going to cause inflation.” And then the next question you should ask yourself is what is inflation and is it bad? And most people just say “inflation’s bad,” but I think the jury’s out on that.

Brent Pasqua: Being a money guy, the thing that I would want to know the most though is I want to know where every penny is going and not one single contract that they’re issuing out for this work is going to be being overpaid for. I think that’s the thing that would drive me crazy is they’re just handing out money to companies and making companies rich by doing this.

Matthew Theal: Yeah. It’d be so much better actually is if say they put it to the private companies to do this, or if they create a corporation, call it the American Infrastructure Corporation, and it’s a quasi-private corporation. And people can invest money in it and then they get to reap the benefits of this actually happening. But what’s going to end up happening is the bill’s going to get passed, all this money is going to go to a bunch of developers and contractors, and nothing’s going to get done after that. They’re all going to be rich, there’s going to be no new highways, no high speed trains, nothing.

Joshua Winterswyk: Yeah. And how much is actually going to infrastructure? I guess that’s where my questions come from is show me another bill that we’d have every dollar accounted for, like you just said Brent, where all of our taxpayer dollars are going towards what you said they were. I want to get more detailed, more in depth. I have these questions about making sure that if you’re this is an infrastructure build it’s going to benefit America and prove that to the American people.

Matthew Theal: Imagine if they made Elon Musk the CEO of the American infrastructure corporation. Everybody would be lining up to give him money and he’d actually get the job done. But I just don’t think that anything that goes to the government like this is actually going to get done.

Brent Pasqua: I think the frustrating part for me too is it seems like it’s almost the most lazy way to get something funded. It’s just like, “Oh. Well let’s just tax corporations.” And, “It’s the easiest way to get more money.”

Matthew Theal: Yeah, that is too. And the thing with being a corporation is it’s a fake tax because most of the large corporations are going to always find a way around it, because they hired teams of accountants and spend $1B plus on learning the corporate tax code. And they’ll probably move more money offshore into tax havens. And we’ll end up where people say, “Oh. Amazon doesn’t pay any tax.” And we’re in the same cycle.

Joshua Winterswyk: And it’s just really hard for this to be a headline for so many companies that have struggled over the last year. I know there’s been a little bit of aid through some of the stimulus package, but there’s a lot of corporations that aren’t doing well. And then now to come out, I know it’s part of their agenda, but now to come out and say, “We’re going to raise the tax by 7%,” is just going to be another hit to these corporations that aren’t doing very well.

Brent Pasqua: Yeah. I mean, it seems as this pandemic is hopefully coming to an end, now to hit corporations with higher tax rates seems not maybe the best strategy.

Announcer: Now that we’ve warmed up with some hot tips, let’s go to the retirement planning corner and see what’s on the docket for today.

Brent Pasqua: All right. Let’s get into the retirement planning corner. Today’s retirement planning corner is all about, really, strategies that rich people use to reduce their tax bill. I think that’s what we want to know the most. Lots of strategies need to be put into place before the calendar year ends which I think is important. So, don’t think of these as strategies you can implement for the 2020 tax season. Think of them as strategy can really implement if you want to save money next year.

Brent Pasqua: Josh, what’s the first strategy we have on deck today?

Joshua Winterswyk: The first strategy is retirement account contributions. When we talk about retirement accounts, just a few examples, we have 401ks, 457 accounts, these are employer sponsored plans. Just a couple of examples there. Then we also have IRAs and Roth IRAs, these are all going types of retirement accounts. So, we can contribute into these retirement accounts. And what that’s actually going to do is lower your income saving you effectively money in taxes. So in 2021, you can actually save up to $6,000 in retirement contributions in an IRA. And if you’re over the age of 50, you can add another $1,000 bringing your total IRA contribution to $7,000. That’s effectively lowering your income by $7,000. So, you don’t have to pay taxes on that $7,000 contribution if you’re over 50.

Joshua Winterswyk: So again, just a really good strategy to hold onto some of that money because that money is going from you earning it, and you’re holding onto it in the form of putting it into a retirement account. And then you reap the taxable advantage of doing so.

Matthew Theal: You know what bugs me? Is when I hear somebody complaining about taxes. “Oh, I’m paying this and that in taxes. The Government’s taxing me left and right.” And then maybe you look at their tax return, or you work with them and you start asking questions. And it’s like, “Okay, well how much are you contributing to your 401k or IRA?” “Oh. I’m not contributing,” or, “I’m only contributing a couple thousand dollars.”

Joshua Winterswyk: Right.

Matthew Theal: And it’s like, well, here’s a tax saving strategy that you could use. It’s going to save you a boatload of money and you’re not taking advantage of it. It just really bothers me when people complain about taxes but don’t realize that, “Hey, there’s a really simple strategy that the government has put in place for you to better yourself in the future and save money now. And you’re not taking advantage of it.”

Brent Pasqua: I think it’s mental accounting for a lot of people. Making an IRA contribution is taking money from your front pocket and putting it into your back. If you’re under 59 and a half, obviously you’re not going to be able to get that money back out of the IRA for quite some time without a tax penalty on it. So, to take that money out of your bank account and then put it into your IRA, you’re kind of putting it in your back pocket. But it does provide such a substantial savings, and putting it into your back pocket just means it stays there now. It’s back there. And you’re getting more back as a tax benefit for doing it. So, I don’t know why there is such a hesitation to make those contributions as well.

Matthew Theal: The same with 401k though too, right? I mean, it should just be deducted from your check. It’s money you never saw and you’re saving for the future. Oh. And you’re saving on taxes.

Joshua Winterswyk: And most of them in your 401k when you increase your contributions, because it’s pre-tax, it’s not affecting your net check by very much, right?

Matthew Theal: Yeah.

Joshua Winterswyk: That’s the common theme we see when we recommend 401k to increase contributions is, “Oh. It didn’t actually affect my net pay too much.” And you’re getting a really, really good tax benefit from that. And like you said, you get to hold onto the money. It’s not like the money’s going somewhere else, it can be invested. And there’s also reasons that you can actually take from there if you did need it in an emergency. If that was your biggest concern, for emergencies, or even a first time home buyer could withdraw from an IRA penalty free. So, there are strategies that if that is your only worry, let’s look into those further because, again, you’re getting able to hold onto that money and it’s going to be there for your future. And if potentially you need it for any reason in between, there are some rules that are in place that potentially you can get it out of that account penalty free.

Brent Pasqua: Can you still make your 2020 IRA contribution?

Matthew Theal: You can. Yeah. Up until May 15th. A good way to save money if you’re eligible for an IRA.

Brent Pasqua: So, there still is a way that potentially you could save money for 2020, correct?

Joshua Winterswyk: Yep, absolutely. So, you can actually contribute for last year and just consult with whoever’s preparing your taxes and making sure you can actually contribute to an IRA, because there are some rules about if you’re eligible to contribute. And if you can, you can still save money on your taxes for 2020.

Brent Pasqua: Do you have an opinion on why people should, when they’re looking at making their 401k contributions, they should really establish what they’re going to put in for the year early on in the year versus later in the year?

Matthew Theal: Well, that’s where we’re getting the tax plan would come into play. So, it’s probably something you should do around the January/February timeframe. Or, even in the spring after you’ve hit your tax bill. But I think it’s one of those things where you need to look at how much your savings per year, and then you want to get your income under certain thresholds. So, I think the big threshold to be under coming up for the high earners is going to be $400,000. And with a lot of these things we’re seeing with President Biden come across, it seems like $400,000 is going to be the magic number.

Matthew Theal: So, you should have an idea of what your income is going to be heading into that next year, because you have your W2, you kind of know what your bonus range is going to look like once you talk to your company. You should be doing everything in your power to make sure your income is staying below $400,000 and 401k contributions are a great way to do that with the $19,500 if you’re under 50 and then the $26,000 if you’re over 50.

Brent Pasqua: Yeah. And one of the other things that I think can get lost in translation is if you don’t do contributions, let’s say for the first three quarters of the year, and then you’re like, “Oh wait, I got to make my 401k contributions.” There’s not that many paychecks in the last quarter where you’re going to be able to dump in the max of $24,000 or so into your 401k plan. So, you’re have a real challenge trying to get all of that money into your 401k plan in that last quarter.

Joshua Winterswyk: Yeah, absolutely. That’s a good point because it’s correlated to your earned income. So, you can only defer what you’re actually bringing in each, let’s say, bi-weekly or monthly in income. So yeah, you’re in a mad dash to max out your 401k contributions in that last quarter. You might not even be able to get to the max and not be left with much net income because you’re deferring so much. So, definitely the sooner you plan the better.

Brent Pasqua: Right. And I think that’s how it’s very different than the IRA contribution. The IRA contribution you could still make until May 15th for the previous year. 401ks doesn’t work like that. At the end of the year it clocks over. Whether you put in or not, there’s no time to go back and put it all in. It has to be done by paycheck. So, get those contributions early in the year and spread them out.

Matthew Theal: I agree.

Joshua Winterswyk: That’s a good point.

Brent Pasqua: The second one on here for a tax saving strategy is tax-loss selling. Matthew, why don’t you get into this for us?

Matthew Theal: All right. So, tax-loss selling is let’s say you’re managing a portfolio of investments for yourself and it’s in an after tax brokerage account. And what you could do is you could sell the positions you’ve lost money on and get a deduction from your income on your tax return. And the deduction is capped at $3,000. So, it’s relatively small. But for the most part if you’re trading stocks, investing in ETFs, owning mutual funds, you most likely have something that’s lost money and you should be putting that loss on your return. I analyze a ton of portfolios and I see people with five, six different losing positions. And I’m like, “Well, why wouldn’t you tax-loss sell these? You could buy them back in 60 days.” Is it 60 or 30 days, Josh? I think it’s 60, right?

Joshua Winterswyk: Well to avoid a wash sale, I believe it’s 30.

Matthew Theal: Is it 30?

Joshua Winterswyk: I could be wrong. Let me look that up.

Matthew Theal: Yeah. Look that up. So, what a wash sale would be is you can actually buy the stock back. It’s either in 60 or 30 days.

Joshua Winterswyk: 30 days.

Matthew Theal: 30 days. So, you have to wait 30 days and you could buy the same position back. So, you get the tax-loss and you could buy it back. I mean, it’s probably not going to go up that much in 30 days if it’s down anyways and you lost a lot of money on it. So, a great strategy that’s really underutilized by people who are doing the active trading, and the Robinhooding, that kind of investing.

Joshua Winterswyk: When should somebody look at doing this? Should they do it at the beginning of the year? Mid year? At the end of the year? When’s a prime time to do tax-loss servicing?

Matthew Theal: When you have a position that’s lost money. That’s the best time to do it because, I mean, say you pick a stock on January 1st, then it falls 20% and you’re down $5,000 by March 1st, I mean, you could sell it, reap the benefit, buy it back on April 1st.

Joshua Winterswyk: Yeah. Or even by a different investment. Let’s say you didn’t even like that fund or you didn’t like that investment. What a great way to get out of that position, potentially save some money on taxes by declaring that loss, and then get into a new position. I think it’s good to always be analyzing your portfolio. But like Matt said, when there’s a loss and we can use that strategy, let’s take it and get the tax benefit from doing so.

Brent Pasqua: Should people reach out to their advisor if they don’t know how to do that themselves for this type of advice?

Matthew Theal: Yeah, absolutely. You should always reach out to your advisor, or even a CPA could probably help you. I mean, they’re not going to give you investment advice because they legally can’t. But an investment advisor can give you that investment advice and they’ll be a little walk you through how to do it.

Brent Pasqua: So, how do people find out what their gain and losses are? And what are they looking for in their portfolio to determine where the losses are at?

Matthew Theal: If you look in your portfolio you’d go to the cost basis. And then you’ll see. And if you’re you’re down, it’s usually red, and it’ll tell you’re down $3,000 and $10,000, $5,000 or whatever it is.

Brent Pasqua: And if they have more than $3,000, then what happens?

Matthew Theal: It gets carried over the next year.

Brent Pasqua: So, not only just a benefit for that year, but for the years following.

Matthew Theal: Yeah. And what’s important about that too is you got to make sure you note that to your CPA so they know to carry that over into that next tax season.

Brent Pasqua: Can it get more complex if you have some gains in your portfolio and then you have some losses, and you want to start making some changes to your portfolio but you want the tax-loss to total out?

Matthew Theal: Yeah. That’s the best case scenario because then you could sell some of your winners, and then sell some of your losers, and you can net it out, and you don’t pay any tax at all.

Brent Pasqua: Yeah. I think it’s one of those strategies that have to be analyzed on an ongoing basis because really, as part of the tax plan, I mean, I think it should be implemented.

Joshua Winterswyk: Yeah. And I think that one important thing is it is for the tax year. So again, if you aren’t doing it throughout the whole year make sure you are at least looking at that portfolio in December. You want to get those tax-losses right before the end of the year so you can take advantage.

Brent Pasqua: Matt, tell us about the other way that we can save money.

Matthew Theal: Are you talking about tax credits?

Brent Pasqua: Yes, please.

Matthew Theal: All right. So, here’s the thing. The two strategies we talked about before, the retirement account contributions and tax-loss selling, they are deductions from income. So, it’s kind of what people think write-offs are. So, it deducts your taxable income.

Joshua Winterswyk: So, if you have $100,000 of income but you do a $5,000 IRA contribution, now your income’s $95,000.

Matthew Theal: Exactly.

Joshua Winterswyk: So, it’s a deduction.

Matthew Theal: And then if you add the $3,000, there’s another $8,000. So, now you’re down to $92,000. There’s actually a much more powerful strategy to reduce your taxes. And it’s called a tax credit. It is by far the best tax reduction strategy there is. And so, what a tax credit is is everybody at the end of the year with the amount of money you made has what we call essentially your taxes, right? Let’s call it $40,000, $50,000, whatever it is. It’s how much that you paid in taxes. A tax credit will directly reduce your taxes owed. So, it’s more powerful than an income write-off.

Matthew Theal: So, I pulled some of the tax credits and there’s really three to four main ones. The first is going to be the Tesla credit, your electric vehicle credit. You want to know why a bunch of millionaires or high earners are driving Teslas? Because the tax credit was $10,000. So, it made the Tesla a lot cheaper. Plus they don’t have to pay for gas, the car, it looks nice. And with that electric vehicle tax credit you could also get them on Prius’s. I did one on myself. I got a $8,000 tax credit. It was really nice.

Joshua Winterswyk: They have to be new, right?

Matthew Theal: They do have to be new. Yeah. So, you can’t buy it used.

Brent Pasqua: Is this a selling point to your spouse?

Matthew Theal: Well, actually we’re in the new car market and I want to do it again because it’s such a great tax reduction strategy. I want to get her an electric SUV because we’re going to save so much money.

Brent Pasqua: Yeah. I mean, I guess every listener who’s ready to go home and really wants a Tesla or electrical car, I mean that’s the way to sell it to your spouse. Right?

Joshua Winterswyk: Absolutely. But I also think then it does have to be factor in when you’re comparing different vehicles. If one vehicle is electric and it’s going to offer you that plugin electric drive motor credit, then you need to factor in that cost savings to actually be able to compare apples to apples between the different vehicles. Like I know Matt, you did. And that was something that you really researched when you bought your Prius, is how much you’re actually spending when you actually calculate that tax credit into the situation.

Matthew Theal: And here’s the other thing I did. And you could take this a step further. I mean, I’m a financial planner so I could do my own tax planning. But when you’re having a high income year go get your tax plan done, because it turned out that buying an electric vehicle essentially made it that all this money I had made, I didn’t owe any tax on it because I timed it perfectly in this year.

Joshua Winterswyk: Yeah. Really important.

Matthew Theal: So, there’s not only electric vehicles though. I mean, kids give you a tax credit.

Joshua Winterswyk: What kind?

Matthew Theal: The same. Is it $2,000, $2,500 per child? So, you get-

Joshua Winterswyk: It’s up to $3,600.

Matthew Theal: $3,600. Wow. So, you get $3,600 per kid.

Brent Pasqua: Does this mean we should have more kids?

Joshua Winterswyk: I didn’t want to overlook though, because just another, we call them the green tax credits, like the vehicle you did. But then also solar has that as well. So, there’s other like different green tax credits out there. So definitely with your homeowner, look into those as well. Just wanted to touch on that.

Matthew Theal: Tankless water heater, too.

Joshua Winterswyk: Yeah. I wanted to touch on that before you move on to the child tax credit. But I think that’s another good way if you’re upgrading home, or looking at solar and stuff like that, is to look into those tax credits as well.

Matthew Theal: Yeah. I agree. And the tankless water heater one’s small, but you can get one for that right now.

Joshua Winterswyk: Mm-hmm (affirmative).

Matthew Theal: Okay. And then, so we’ve got the kids, right? $3,500 per kid.

Joshua Winterswyk: 3600

Matthew Theal: $3,600? Sorry Josh, you’re the numbers guy. And then there’s also the learning credits, right? If you want to go get education, you want to either finish up that college degree, or you want to get another degree, or a master’s degree. You could look into the American opportunity tax credit and the lifetime learning tax credit, both of which will increase that tax base. But then also hopefully increase your income because you’re going out and getting that education you need to maybe get promoted.

Brent Pasqua: So buy electric vehicle, have a kid, and then get some education. And I think you got yourself a well-rounded tax year.

Joshua Winterswyk: You’re going to save money on a lot of taxes. I think these are just a really good trigger events. So, if you’re planning to have a child, I’m looking into a tax credit because cost probably will increase. It will Increase in your household if you’re going to have a child. But some of that might be offset by a tax credit. But if you’re going to go buy a car, know that there are some tax credits out there. And then also as a homeowner looking into all of the tax credits that are out there for upgrading any sort of green power efficiency to your home. So, I just think these are all really, really good tips that if you didn’t know already to be researching and looking out for if any of these trigger events in your life are happening.

Matthew Theal: Before we move on to the recommends, can I just say one more thing that bugs me about people with taxes? Another pet peeve I have is people tell me about write-offs. And let me tell you, there is no such thing as a tax write-off. It’s your own money. You’re spending it one way or the other. If you’re getting a write-off because you lost money in the stock market, well you lost money and they’re giving you a benefit. It’s probably not a good thing. There is no such thing as write-offs. So, please stop saying write-off.

Brent Pasqua: So, if you bet at the casino and you lost money and you’re writing it off, then-

Joshua Winterswyk: You still lost money.

Matthew Theal: You still lost money. Who are you writing off too? Do you think there’s an agency sitting back at the government being like, “Oh yeah. That’s an acceptable write-off?”

Brent Pasqua: Right.

Matthew Theal: No. It’s your own money that you spent. And one way or the other they’re just giving you a slight benefit for it.

Joshua Winterswyk: I think on that show, a really good skit you could probably find online, but on Schitt’s Creek-

Matthew Theal: Yep. There is.

Joshua Winterswyk: … they have a parody about it, or a skit about it, about write-offs and the son actually not understanding. He’s like, “Well, I get to just write it off. It goes away.” And the dad says like, “Who pays for it?” He’s like, “I don’t know. I got to write it off.” Look that up if you haven’t seen that. It’s pretty funny. The show’s called Schitt’s Creek.

Brent Pasqua: Do electric vehicles still have carpool access though?

Joshua Winterswyk: They do. It depends which one you buy. It’s constantly changing. It’ll depend on what state you live in. And then each electric vehicle, I think, only gets a certain allotment of carpool stickers. So for instance, I believe Tesla might be out of their carpool stickers.

Brent Pasqua: Got it.

Joshua Winterswyk: And I actually have a hybrid and mine did not qualify. It has to be fully electric, correct?

Matthew Theal: It has to be able to run for a certain amount of mileage on electric only. So, my Prius can do like 35 miles on electric, so it qualified.

Brent Pasqua: Save money, save time, electric vehicle.

Matthew Theal: And stop talking about write-offs.

Brent Pasqua: One last strategy really quick, going back to the contribution to 401k. I just want to bring up one option that people can do, because I think it’s a good possible option. Let’s say you have, and I’ve seen it come across with a lot of clients. But let’s say you’re working, you have $100,000 of after tax money in the bank. And you’re not making a 401k contribution so you don’t think that your income can support it. Take $1,000 a month from that after tax money that’s sitting in your savings account and pull that over to your checking account once a month. And then take $1,000 from your paycheck and put it into your 401k plan. You’re keeping your income basically the same and you’re getting money into your 401k, and then you’re saving money in taxes.

Brent Pasqua: Just kind of a way to switch buckets of money from one pocket to the other. But it’s a very helpful way to also save money. So, with the different amounts of money that you have in different places you have it there’s quite a few different strategies on the way that you can kind of work it out so your money can go into your 401k.

Matthew Theal: Oh, I have one more pet peeve. Don’t get mad at your tax guy because you have a high tax bill.

Joshua Winterswyk: I agree.

Matthew Theal: That means something is wrong with your tax plan. That’s not your tax guy’s job to lower your tax bill.

Brent Pasqua: Right. The game’s already over, right?

Matthew Theal: Yep.

Brent Pasqua: By the time you go get your taxes done, the game’s over.

Joshua Winterswyk: And that’s… I guess, talking about pet peeves, it’s like, “I want a big, huge refund.” Well, I don’t. That means the government’s holding onto my money for me.

Brent Pasqua: At a 0% interest rate.

Joshua Winterswyk: I’d rather have my money in my pocket or being investing your savings in it. So, I don’t want to a big refund. I think the goal for taxes, when we’re talking about, you want to break even.

Brent Pasqua: Yeah, absolutely. No penalties. You want all your money back. You want to break even.

Matthew Theal: Maybe you write a small check to the feds and then you get a little state bonus or vice versa. But you don’t want a big refund and you don’t want to owe a lot.

Brent Pasqua: Yeah. The perfect tax plan is breaking even.

Matthew Theal: Yeah. I agree.

Announcer: It’s time for RPA recommends.

Brent Pasqua: All right. Let’s get into the last segment of the show. Let’s go into the RPA recommends. Matthew, what do you have for us today?

Matthew Theal: Well Brent, it’s early April here as we’re recording this show, 2021. And a lot of people have been stuck in this world of fear for the last year. And we’ve had a lot of restrictions put on us that a lot of us have never faced as Americans before. But like you said, the spring is here, the sun is out. And restrictions are being lifted all across the country. Despite what you hear on the mainstream news coronavirus cases are plummeting, vaccines are increasing. I think like almost 30% of the population has received at least one shot. Coronavirus is disappearing. Get out and do something you haven’t done in over a year, whatever it is. Attend a sporting event, go to a theme park, gather with friends you haven’t seen. Take your life back.

Brent Pasqua: Yeah. I think it just gives people that sense of normalcy again, and the feeling of just that social interaction that we’ve all been missing so much for the last year.

Matthew Theal: Yeah. I agree. Live life like it’s 2019, not 2020.

Joshua Winterswyk: Yeah. Good recommendation, Matt. It’s just been such a tough year. It’s a great recommendation. Mine comes from gearing up now that, just like you had said Matt, with all the vaccinations happening, numbers coming down, people are probably gearing up to go back to work in some sort of capacity here in the near future. And so, I know we had upgraded a little bit of our equipment preparing for that as well. So, my recommendation is wireless keyboard and mouse, which I’d always have had a wireless mouse, but I upgraded a keyboard and it is a game changer. I didn’t know how bad my keyboard was before.

Joshua Winterswyk: So, if you don’t have that already… I might just really be behind everyone else. But upgrading the keyboard felt really good. I like it wireless. Go out and get one.

Brent Pasqua: So, if you’re in a hybrid situation, you have a home office and an office office, are you trying to have the same keyboard?

Joshua Winterswyk: Yes, I am. Yeah. That’s the next step. So, I only have one wireless keyboard right now. I’m going to need two.

Brent Pasqua: So, is this another expense coming down that pipeline?

Matthew Theal: Brent, just think of it like a write-off.

Joshua Winterswyk: It’s a write-off.

Matthew Theal: It’s a write-off. I’m going to need a new keyboard.

Brent Pasqua: I have a recommendation. So, a couple of weeks ago I turned 40. And I crossed over that pivotal age, which was extremely uncomfortable, but I’m there now and mentally I’ve moved past it. But we had an outdoor gathering, which was really nice. Mostly everybody there was vaccinated except for a handful of kids that were there. And so, it was very comfortable to do that. We took all the proper precautions. But in doing it we wanted to do something different for food.

Brent Pasqua: So, we hired a company called Kalana Kitchen and a friend of mine from high school owns a company and he’s a sushi chef. And he basically made roles, prepared roles, and would do custom roles for anybody who was at the party. He had a whole sushi station set up. He had pre-made roles, he had roles that he made that day already while he was there, and then rolls that you could order while you’re standing there. And it was a different type of vibe of food, which was a great experience, I think, for guests to be able to do something completely different.

Matthew Theal: You know Brent, I happened to be in attendance at this party and I can confirm that the sushi chef was game-changer at a gathering. It was a very nice.

Joshua Winterswyk: It was really nice. I got an invitation to this party too. And it was just so different, different experience, which was really nice. The food was excellent. And both me and my wife had just a great experience. And the food was delicious. So, I back this recommendation.

Brent Pasqua: I think what’s cool too is we all have done a lot of the traditional types of either catering or foods, but to do some other kind of experience for people that are coming together, that was just a great way to kick off a little normalcy. So, it was nice.

Joshua Winterswyk: It was absolutely.

Brent Pasqua: All right. So, as we close out any parting thoughts, Matt? Josh? Tax credits? Tax savings?

Matthew Theal: Put the tax plan in now to save you money next year. If you owe money on taxes it’s your fault, not your CPAs. Hire a planner, do the work, and your tax bill will decrease.

Joshua Winterswyk: I agree. And you want to break even. That’s cool.

Brent Pasqua: Yeah. Your tax guy’s busy right now. Don’t try to do tax planning or tax while he’s busy till the middle of May. Maybe give them till June to start doing tax planning. Don’t wait to talk to them or November, call your advisor, do tax planning with them. Get the total team involved to do tax planning. Don’t wait till next year to do it because you aren’t going to save money that way.

Brent Pasqua: As advisors, we really love helping people. That’s why we do it. More importantly than any of that, we love helping people save money. If you’d like to schedule an appointment with any of us please go to rpawealth.com and schedule a complimentary consultation with any of us. And you can also download our ebook from our website. If you’d like a copy of the show notes, you can go to retirementplanplaybook.com. As always, thank you so much for listening.

Joshua Winterswyk: Thank you.

Matthew Theal: Thank you.

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