3 Ways to Save $30,000 in Taxes in 2024 with Carter Cofield

0:01Light that spark fire nation JLD here and welcome to entrepreneurs on fire brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like Creator Science. Today, we'll be breaking down three ways to save$30 ,000 in taxes in 2024. To drop these value bombs, I brought Carter Cofield into EO Fire Studios. Carter is a CPA teaching entrepreneurs how to live tax-free. In today's information, we'll talk about the tax system, truth behind it. We'll talk about how to win the tax game, the rules of write-offs. We'll talk about tax-free vacations, and so much more.

0:36And a big thank you for sponsoring today's episode goes to Carter and our sponsors. Imperfect Action, hosted by Steph Taylor, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Imperfect Action is a bite-sized online marketing podcast for business owners who want to get straight to the point. Join Steph Taylor as she answers all your business marketing questions. Recent episodes include five must-knows to sell your online course, program, or membership, and four steps to grow your email list for your next launch. Listen to Imperfect Action wherever you get your podcasts.

1:07Is this your year? Visit Thrivetimeshow.com to see thousands of Clay Clark's business coaching testimonials featuring over 2 ,000 entrepreneurs to dramatically increase profitability. It's month to month and less money than an average minimum wage employee. Schedule your free consultation today at Thrivetimeshow.com. Carter, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with? First of all, what's up, Fire Nation? I'm happy to be here. I think that a lot of success gurus tell people to try to major in skill sets, in different skill sets.

1:48When you start a new business, people will say you're going to wear different hats, and you should have various skill sets. I think you should really go all in on one skill set when you start a business. For me, that skill set is either sales or marketing, because if you don't know how to sell your product or tell people that you have a product, you won't be in business very long. Fire Nation, we want you to be in business for a very, very long time. And we want to give you three ways to save$30 ,000 in taxes in 2024. But I want to start off, Carter, with some truth bombs. Share with us the truth about the tax system.

2:21Yeah. So I think it's very important that everybody understand the truth about the tax system before I teach them how to save. Like JLD, some people think that saving on taxes is actually a bad thing. So they don't want to even do it. So I think the first thing everyone needs to understand is that the truth about the tax system is this. The tax system is nothing more than an incentive system that was created by the government. And if you do the things that they want you to do, they have no problem with you paying little to no tax at all. But if you don't do the things that they want you to do, if you don't do the things that's in the incentive system, which is the tax code, they're going to take your money and they're going to do the things that they want to do with your money.

3:03So you really have two choices. You can either follow the rules of the incentive system or they'll take your money and follow the rules themselves. So I think once people understand that the tax system is not here to make you pay a lot of money, they actually have the peace of mind to now implement strategies that will help do just that. Now, most people do think that taxes are a lose-lose scenario. People love that phrase, there are two truths in life, which are death and taxes. But the reality is, we can win the tax game. But Carter, how? The first thing that you need to do if you want to win the game of taxes is you must be on the right team.

3:44So just like any other sport, say what you want about the Chiefs. If you want to win the Super Bowl, you probably should be on the Chiefs. But the reason I say that is because The tax system was not created to benefit employees. The tax code was created to benefit entrepreneurs and investors. So if you want to win the game, you must first be on the right team. Now, a lot of people ask me, well, Carter, why does the tax system only benefit entrepreneurs and investors? Well, it's because we are doing the things that the government wants us to do. So as an entrepreneur, just like me and you are, JLD, for every job that we create, that's one less job that the government has to create, right?

4:26For every job that we create, that's potentially one less person off of unemployment. So essentially, we are creating jobs, a.k.a. doing the government's job for them. And if we do so, they'll give us massive tax breaks. Same thing for real estate investors. For every property that we invest in via real estate, that's one less property that the government has to build. That's one less property that they have to worry about affordable housing. So again, if we do the government's job for them, they will give us massive tax breaks. And if we do everything they want us to do, they will even allow us, believe it or not, to live tax-free.

5:06Fire Nation, so much value here. And we have just gotten started because I want to shift into the rules of write-off. So how can we turn personal expenses into business expenses? How do we do that the right way? Yeah, absolutely. So, yeah, so rule number one is get on the right team. Now, rule number two, if you want to win the game of taxes, is you have to understand the rules of write-offs. Now, when I teach this, I think it's very important that people know two things. They need to understand, one, how write-offs work, and then they need to understand, two, what write-offs are. So the simple way to explain the JLD is that if you have$100 ,000 of income, you have to pay taxes on all$100 ,000 of income.

5:50But if you have$100 ,000 of income but$30 ,000 of write-offs, you only have to pay taxes on the$70 ,000 that's left because the more write-offs you have, the less taxes that you actually pay. So now that we understand how write-offs work, the simple formula is the more write-offs you get, the less taxes we pay. So now it's how do we turn our personal expenses to business expenses and make them write-offs? Well, the IRS has this code section. It's the only code section I would ask your audience to remember, okay? It's IRS Code Section 162A, which simply states, if you have a business, any expense that is both ordinary and necessary for you to operate that business is tax deductible to you.

6:45And the crazy thing is, is that we actually get to decide whether an expense is ordinary or necessary based on our business. So, for example, if you have a cell phone and you don't have a business and you're just using it personally, you can't write that cell phone off. That's a personal expense. But if you start a side business and use that cell phone in your business, you can write off not only a portion of your cell phone bill every single month, you can also write off a portion of the actual cell phone costs. So we could be looking at an extra$2 ,000 to$3 ,000 a year in tax deductible expenses for your cell phone, which you were already using anyway.

7:28Like another great example is your home office. So I'm taking this interview right now from my home office. And if you have a business and you leverage your home office for your business, the IRS will actually allow you to write off a portion of your rent every single month. And again, your rent is an expense you're going to pay for anyway. So why not leverage a part of your home for your business and have the IRS come help you pay some of that rent? Fire Nation, some of these things may seem like, ah, is it even worth doing it? But the reality is they add up. They all add up together. And then before you know it, you're like, holy crap, this is a huge potential write-off because I've added all these correct and legal things up.

8:16And looky here, I'm paying a lot less in taxes than I otherwise would be. So we have a lot more to talk about all around these topics when we get back from thanking our sponsors. If you're a startup with big goals, then it's important to find a CRM that can keep up, but I get it. When you're in startup mode, it can be tough to know which platform is right for you and your business. Here's the good news. From marketing and sales to supporting content and everything in between, HubSpot's all-on-one customer platform has startups covered. And with the HubSpot for Startups program, you can save 30 to 90 % on a platform that scales right along with you, increase leads, boost revenue, improve your customer experience.

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10:09Clay Clark himself today at Thrivetimeshow.com. Knowledge will not attract money unless it is organized and directed through practical plans of action. Become the next success story. Schedule your free 13-point assessment today at Thrivetimeshow.com. Hosting on Airbnb is something I hadn't really considered until a couple of years ago, and I'm so glad I did. After purchasing an investment property in our community, we wanted to find a simple way to share it with those traveling to Puerto Rico for a vacation. We thought, why not earn some extra cash? Turns out Airbnb is a perfect fit. Getting started was simple with the Airbnb setup guide, which provided a ton of insights into what amenities and features guests love the most.

10:50And by following tips from other hosts, within about six months, we earned super host status. With how easy it is to get started, I'm just sorry I didn't do it sooner. Later this year, we'll be traveling to see family in California and Maine for a couple of months, and we're considering putting our own home on Airbnb while we're away. That's right. While you're away, your home could be an Airbnb. Find out how much your home could be worth at Airbnb.com slash host. Carter, we're back. And listen, you live in Colombia. I live in Puerto Rico. People love vacations. The Caribbean's an amazing place to vacation.

11:27I just happen to live here. And by the way, only pay 4 % total tax, but that's a whole different topic. I love it. I love that for you. We love vacations, but even more so, we love when they are free or at least less costly. So talk to us about taking tax-free vacations. Amazing. I love this topic so much. This is going to bring so much value to your audience. So I actually want to use you as an example for this. Sweet. So you are traveling down to beautiful Medellin soon, correct? Yes. Okay. So, JLD, let me help you turn this trip into a 100 % tax-deductible experience. So, the first thing I would recommend you do, if you want to turn your personal expenses to business expenses, I would encourage you to travel to and from the location on weekdays.

12:20So if you were planning to travel somewhere on Friday and leave on Sunday, I would simply encourage you to instead of leaving on Sunday, leave on Monday. Right. So we want to travel in and out of the location on weekdays. So let's say you come to Columbia on Friday and you leave on Monday. Now, the next thing you need to do is on the weekdays that you're traveling here, you need to find some type of business activity each of the weekdays. So if you fly here on Friday and me and you were to link up for dinner and we were to have a business mastermind or talk about business at dinner, that would count as business activity.

12:59You can literally tell the IRS you flew from Puerto Rico to Medellin to have this meeting with Carter. Now, it doesn't matter that we can meet on Zoom. You can say, I want to meet with him in person. And that would qualify as business activity for that day. Now, let's say on Monday your flight is at night. and now you would need to find some more business activity on Monday. Now, we can meet again, of course, or you can do something else like go into a website called eventbrite.com or go into another website called meetup.com. And these websites have hundreds, if not thousands, of networking events in every city, in every country, all days.

13:37So let's say on Monday you were to find a networking event about podcasting. You can go there. You can shake hands, kiss babies, keep the receipt, keep your badge, you know, And that would count as business activity, right? So now you found business activity on Friday by going to dinner with me and talking about business. Then you found business activity on Monday going to a podcast networking event. Now, the IRS says if you do these things correctly, which you've now done, all of the days that you're going to be down there are now tax deductible. So your flight to Medellin and your flight home are 100 percent tax deductible.

14:11Your lodging on Friday night, Saturday night and Sunday night are also tax deductible. Now, you're probably asking the question, well, hey, Carter, I didn't do business on Saturday and Sunday. So how is the lodging on those nights still tax deductible? Well, the IRS says it doesn't make sense for you to fly home on the weekend if you have to be at the same place on Monday. So they give you what's called wrapping a weekend and they wrap the weekend inside of the business days. So now, if you do no work on Saturday and no work on Sunday, you still get to deduct your lodging on Saturday and Sunday, not to mention any business meals that you have in beautiful Medellin will also be 50 % tax deductible.

14:52I mean, Fire Nation, this is just an example of how these things can really, really start to add up. I mean, when I was living in California and I was paying 13 % state tax and I was paying 38 % federal tax and I was paying all these other little taxes as well, holy crap, if I could have deducted this kind of stuff throughout the entire course of a year, that would have resulted in definitely five figures, potentially even six figures a year in tax savings for me. I mean, I look back, oh, it's insane. Yeah, and the crazy part, when you were in California, I don't know if you knew this, you're in the 50, you're paying 50 % of taxes.

15:28Like federal tax, state tax. Don't forget about FICA taxes. So I am sure that you are giving 50 % or more of your money to the IRS every single year. And that's my goal. Because think about this, JLD. If you're giving 50 % of your money to the IRS, you're essentially working six months of the year for free. That is not okay. You're speaking my language. I mean, literally, this is what I tell people when they say, John, I'm thinking about moving to Puerto Rico, but is it really worth it? I said, listen, when I lived in San Diego, I worked for the government from January 1st until June 15th of every year, and not until June 16th that I actually start working for JLD.

16:10In Puerto Rico, I worked for the government from January 1st until January 17th, and then the rest of the year, it all goes into my pocket. It's an absolute flipping game changer. Now, for those of us with kids, and I can say us because I now have a four-month-old son. Congratulations. Thank you. How can we correctly go about hiring our kids legally and financially intelligently? And I'm curious about what's the youngest age maybe they can be? Of course. Well, I'll start off by saying this tax strategy is so important beyond taxes because I think that generational wealth is something that we can't be spoken more about, right?

16:53Like it's our goal is take whatever we, you know, create it in our lifetime and pass it down to our kids. And one of those things, you know, D is passing down like the, the, the understanding of how to be an entrepreneur, right? So I think having your kids working your business is just an amazing thing to do tax, tax in, tax out, because they get to learn how to become a boss from their biggest hero, which is their parent. So that's number one. Now, let's talk about the tax strategy, right? Okay. So if you want to hire your kids into your business, a few things need to happen first. Number one, they need to be doing actual work in your business.

17:30Now, by actual work, that means you still have a lot of wiggle room there. They could be like cleaning offices, answering phone. Literally, they could be running your TikTok page, running your social media, because these kids know more about that than we do anyway. So they need to be doing actual work in your business, which also means they need to be of age to do the actual work in your business. So my normal recommendation for ages of paying your kids is from age six to age 17. Now, you can pay them older than 17, but it's the tax strategy. You don't save as much taxes as you would if they were younger than 17.

18:06but younger than six the only time i allow people to pay kids when they're younger than six it's like if their kids are models for their business but then again it needs to make sense that your kid is a model for your business right if you have a construction company it's trying to say a three-year-old's a model that's not gonna work but um uh so that's that that's my parameters on hiring your kids so you need to be doing actual work in your business and they need to be of actual age to do said work. Now, if two of those boxes are checked, we can legally hire the kids into our business. Now, the IRS says in 2024, we are able to hire our kids in our business, avoid child labor laws because they are our actual kids, and we can pay them up to$14 ,600 per year per child.

18:56If you have two kids, that is what, $29 ,200? So almost$30 ,000, right? So you can pay each of your kids$14 ,600 each. And the beautiful part about it is that you being the business owner, you get a$14 ,600 tax deduction as well. So your business gets the tax write-off of$14 ,000 and your kids are going to receive this$14 ,600 tax-free. Why? Because the standard deduction for 2024 is$14 ,600. So the standard deduction is going to wipe out all their income. So they don't need to pay federal taxes. They don't need to pay state taxes. They don't need to pay FICA taxes. They don't need to pay any taxes on this money.

19:44So we just got a double tax benefit on the same dollar. Buyer Nation, I really hope that you are fired up. And I guess a quick question I have, because this kind of circles back to the prior question, is if your kids are checking those blocks and they are able to officially be hired by you, now you take that vacation, are they qualified for that as well? Yes. So I love that question. So now that you've hired your kids into your business, they're a part of your business. And you could bring them to the trip with you as an employee, but a better way, JLD, for you to take tax-free vacations with your children now that they work in the business is as a business owner, whether you have an LLC, S Corp, or C Corp, you're allowed to have board of advisors, right?

20:36Right. And with these board of advisors, they can be anybody. They can be your mentors. They can be your spouse and they can be your kids. So I recommend people have five board of advisors for their businesses. And when you select these board of advisors, you don't have to you don't have to pay them if you don't want to. Or if you already if you already paying your kids and your business for the service, then just hire them as your board of advisors. You don't have to pay them additional compensation. The beautiful reason and the strategy of hiring your kids as your board of advisors and hiring your spouse on your board of advisors as well, is you're able to have quarterly board of advisor meetings, get this, anywhere in the world that you want to have them.

21:18So if you wanted to have your quarterly board of advisor meeting in Medellin, Colombia, you could do that. You could bring your kids, you could bring your spouse, you could bring whoever else you want to bring. All you have to do is have documented meetings every day that you're there. So you can sit down, talk about business strategy, marketing, social media, client acquisition, whatever. You want to take photos of the meetings for proof. And I recommend you use a tool called Adder.ai. This tool is going to transcribe, record, and timestamp all of the minutes from the meeting. So now you have photo evidence.

21:58now you have meeting evidence and you can do this up to four times a year anywhere in the world that you want to travel to and that is a legit business expense for your business. Fire Nation, I hope that your head is spinning with all these opportunities about the three ways to save$30 ,000 in taxes in 2024 but of course, we talked about some ways where you can be saving even a lot more than that depending on the overall revenue and income of your business. So Carter, we've talked about a lot of value, my friend. what is the one thing of everything we talked about that you really want to make sure our listeners get from our conversation today?

22:34I want the listeners to understand that it is your legal right to pay as minimal taxes as possible. One thing I tell people all the time, we want to pay what we legally owe, but let's not leave a tip. I love that. And Fination, think about it this way too. Some people are like, well, I like paying my fair share. Well, guess what? Your fair share is what you can absolutely do legally to pay the minimum amount of taxes. And then if you really want to, take all that money that you saved and donate it to your favorite charity. I mean, you have to imagine that's a better use of the funds than going into the black hole of the government.

23:13So think about that, Fire Nation, if you want to just say, hey, I'm going to take this extra$30 ,000 and donate it to an animal welfare shelter. I mean, how amazing is that? Think about those things. That's really cool. Carter, I want Fire Nation to connect with you. So give us a call to action for people who are listening. They're like, I need me some more of this card or stuff. Where do they go? How do they connect with you? What is your call to action? Yeah. So I actually have a five-day virtual training that I'll be teaching here in a few weeks. And they're going to be able to spend five days with me virtually and learn how to save over$50 ,000 in taxes.

23:47So all they have to do if they're interested in that is go to taxfreechallenge.com. They can secure their seat. and I'm going to give your audience a 60 % off discount code on this five-day virtual training where they're going to be able to spend five days with me and learn how to save over$50 ,000 in taxes. Fire Nation, you're the average of the five people you spend the most time with. And you've been hanging out with CC and JLD today, so keep up that heat. And for links to everything we talked about, visit eofire.com. Type a Carter in the search bar and the show notes page will pop right up.

24:19And Carter, one more time, what was that URL for this great workshop? Yes, the URL is taxfreechallenge.com. Grab the ticket and I'll see them there. Carter, thank you for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute you and we'll catch you on the flip side. All right. Peace out, guys. Hey, Fire Nation, a huge thank you to our sponsors and Carter for sponsoring today's episode. And Fire Nation, what can 4 ,000 of the world's most successful entrepreneurs teach you? How about how to achieve financial freedom and fulfillment? My first traditionally published book, The Common Path to Uncommon Success, is a revolutionary 17-step roadmap that will lead you to the lifestyle you've been dreaming about.

24:59This book took me 10 years of accumulating the genius of the world's top entrepreneurs, and you can get it all in one place when you visit UncommonSuccessBook.com. I will catch you there or on the flippity-flip side. imperfect action hosted by steph taylor is brought to you by the hubspot podcast network the audio destination for business professionals imperfect action is a bite-sized online marketing podcast for business owners who want to get straight to the point join steph taylor as she answers all your business marketing questions recent episodes include five must knows to sell your online course program or membership and four steps to grow your email list for your next launch listen to imperfect action wherever you get your podcasts.

25:38Is this your year? Visit Thrivetimeshow.com to see thousands of Clay Clark's business coaching testimonials featuring over 2 ,000 entrepreneurs to dramatically increase profitability. It's month to month and less money than an average minimum wage employee. Schedule your free consultation today at Thrivetimeshow.com.