1543 – Tax Strategy is Like A Chessboard with Tax Goddess’s Shauna A. Wekherlien, CPA

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0:58with us right now it's shauna weckerling aka the tax goddess and shauna your website is taxgoddess.com shauna thank you so much for joining us oh thank you so much for having me you get to talk about my favorite subject this morning so i'm super excited yeah and i was mentioning to you there aren't too many people that i get to interview they have the word goddess on their business cards. So it's great to have you, but give us an overview of your work. Absolutely. So I specialize in tax strategy. And so really when you look at it, you know, they're, according to Google, there are 660 ,000 CPAs in the US and a CPA does all sorts of things.

1:38They could be an auditor, a CFO, a tax preparer, or whatever it is. There are 60 ,000 that have masters in taxation. There are 607 certified tax coaches and there are 15 certified tax strategists. So I'm one of the 15 and they tell us we're in the top three, but they refuse to tell us who's number one, which always drives me nuts. But you know, that we specialize in tax strategy. That's what we do. So last year we were able to save our clients a little over 847 million. So it's a very specialized field. Yeah. And Shonda, like you and I were talking just briefly about this. As a business owner who you have access to so many deductions and you can make so many decisions which will have huge tax implications, there is a huge range of tax professionals that you can hire.

2:36When I talk about range, my experience is it can mean based on who you hire, it can mean the difference between tens of thousands of dollars of tax liability or even potentially refunds coming your way, whereas like you were paying before. Or I think this is an area, in my opinion, that I think as business owners, business leaders, we need to shop pretty aggressively here to make sure that we have the right fit. Your taxes are the largest bill that you pay, right? Most entrepreneurs, if they're doing well, they're paying 30, 40, 50. The highest tax rate in the country is California at 63 % if you're doing well, right?

3:20So if you are using a standard traditional CPA, and typically this is a team, right? Typically, you have a bookkeeper. You have the CPA tax preparer, the person who's taking the numbers, putting them on the return, making sure you're not going to jail. And then your tax strategist is generally a completely separate expert. And really what you're looking at is we have coined a term called the aggression scale. So zero to 10, zero meaning the IRS never calls you never, ever. And 10 mean we're all going to jail. Where do you as an entrepreneur want to sit on that scale? now most bookkeepers are like a zero to two most good they're good cpas they are really trying to find deductions they're at like a four or five okay tax strategists are generally where the entrepreneur is which is an eight so we're not going to jail but we're taking all the legal deductions and the irs might call right but you have all the proof all the backup all the court cases everything you need so that you're not in trouble right so one of the biggest things that we hear is, you know, I love my CPA.

4:21I've been with a guy for 20 years. I've never been audited. Well, that's great. But that also side note, for example, a case I'm just working on right now, that I'll be delivering later today, he's been overpaying his taxes by$333 ,000 a year. And his CPA never said peep about it. And not because the CPA was intentionally trying to hurt him. CPA is not a specialist, not trained that way. So when there's only 15 people in the country that do what we do. Yeah. Right. That makes complete sense. So, yeah, just think of what you could do with that$333 ,000. Like if you were to reinvest that in your business, which this is why the tax laws are there is so that you use them, take advantage of them.

5:04You're incentivized to keep the economy going. Great jobs, build wealth, all the good things in life. As a W-2, you get no deductions of any kind. It's awful. Yeah. What are maybe some of the more popular tax saving strategies that you recommend that you often see probably getting underutilized? Absolutely. So three of my favorites. So the first one is if you have children that are older than the age of seven and they're not on your company's payroll, you're missing out on about$20 ,000 a year per child, completely tax-free. So that's the first one. I have one of my favorite stories. I've got a client with 10 children, seven of whom are over the seven-year-old mark.

5:52So$140 ,000 a year deduction against their business, and that money stays in the family. So it can be a huge deduction. The second one is something called the master's exemption, sometimes called the Augusta rule. And effectively, you can rent your home. You have to own the home. A mortgage is okay, but you can rent your home to your business and you can get up to 14 days of rent per year, 100 % tax-free. Now those rental rates can range. The lowest I've ever seen is about$500 per event. The highest I've ever seen per day, highest I've ever seen is 17 ,600 per day. So the average, you're really coming in normally around$3 ,500, which is a$49 ,000 per year tax deduction.

6:38So it's a big chunk of money for a lot of businesses, especially when you're first starting up and you're just trying to get, you need cash flow. So you're not really trying to spend money giving it to someone else, right? You really want to keep that cash in your pocket. So paying your kids, using the master's exemption. The third one that I'm absolutely in love with is something called an 831B captive insurance company. And you do need to be a little bit bigger for this one. You have to have at least$750 ,000 worth of gross revenue, but it gives you an automatic off the top 15 % tax deduction.

7:10You never pay tax on that money ever again. So there's some pretty cool options. Wow. Yeah. Wow. Yeah. So Shauna, is there like, let's say that, you know, there's a business owner, business leaders, let's start a conversation and maybe they make the grievous error of not hiring you, which would be the best course of action. But let's say that they're already having a conversation with a tax professional. Are there any like questions that you would recommend that they ask so that they can figure out, hmm, am I dealing with a bookkeeper? Am I dealing with a CPA or am I dealing with a tax strategist?

7:50Like how can we figure that out? Absolutely. So I'll give you a couple of different versions of questions depending on who you are. One that can be used by anyone is definitely that aggression scale, because I promise you, they've never heard that question. No one's ever asked them that. Okay. So when you ask them zero to 10, zero meaning the IRS never calls never ever, and 10 meaning we're all going to jail, you need to think about that answer for yourself first, right? Are you an eight? Are you a six? Are you a two? Okay. Because whatever you are is what you want out of your team. So if your CPA A says, oh, I'm middle of the road.

8:25I'm probably a four or five. And you're a two, you're fine. If they say four or five and you're an eight, you definitely need to go looking. Now, a couple of technical questions to be asking. Okay. So let's say you own some real estate. That's pretty common these days. You own an Airbnb or some sort of rental property. Ask them what a cost segregation is. If they give you the blank look or have no idea or have to look it up, run away. That person does not know anything about real estate. Okay. So if you're in real estate in any way, cost segregation should be a very easy tip of the tongue. You should know how to do this kind of thing.

9:01And the third question that applies to many, many people is if I have a dog, how can I write off the dog? If they're a strategist, exactly. Oh, we can go into the details if you want, Josh, because I've got four of them and they're big, big German shepherds. right? So, but if your strategist or CPA can't answer that, they're probably, again, a level three or four. They're a great CPA. They're not, you know, you're not going to get in trouble for this, right? But they're not a strategist. So with a dog, the correct answer is if the dog at its shoulder is taller than the height of your knee when it's standing, okay, and it's got basic commands and you bring the dog with you for some business purpose.

9:46So maybe clients are coming to your home or you're taking the dog with you to the office, something like that. Your dog can actually be written off as security. So depending on what kind of dog you have, right. If you have a Shih Tzu, Chihuahua, there has been one case where Chihuahua won for a security case, even though it's tidy, they've got the personality of a big dog, you know. But generally you're looking at the German shepherds, the pit bulls, the sharpays, you know, the larger kinds of the great Danes. I have a client with two great Danes that comes with them to work every day. So, and they eat like horses.

10:18So it's very nice to be able to write off all their expenses. So, well, that's kind of crazy. Wait a minute now. So Levi is a social Levi is my Australian shepherd and he's a social media celebrity. Love it. Love it. Well, he's got a different version of a write-off. If he really, truly, if you have a YouTube channel or a Josh and Levi. Yeah, we, we do. Well, I wouldn't say it's not a YouTube channel. We've produced a lot of like stories together. So it's he and I, you know, but that's the big draw. Like the whole brand, but everybody loves a dog. He actually gets a completely different exemption.

10:54So he would fall under the actor category. So as long as you're making any money from that, right. If you can point to a client shows to speak with me or whatever, or whatever, right. You're done. He can be written off as marketing and advertising actor expense. You know, there's lots of different ways. The way I look at tax strategy, you have a chess board. Okay. And you have lots of little different pieces. So you have a dog, you have a business, you have a spouse, you have kids, you own your house. All of these things are pieces. They're players on the chess board. And as long as you know, the rules of the game, which is the IRS tax code, you can move those chess pieces to obtain your goal, basically pay a 0 % tax.

11:35So, you know, the more options you have, the better it is, and the easier it is to play the game, because you have 50 different ways to skin the cat. So. Oh, bad analogy. Sorry. Sorry. No. In that case, it would just be what just the the pet's expense, It's not like that bills, but that food, toys, vests, you name it, toe trim, whatever it is about that animal. Absolutely. If they're making you money or they are protecting a business asset, right? Security, right. You're good. And of course, you can also have animals that work specifically in the medical field. But those, you know, trauma dogs, these kinds of things.

12:20Yeah. But they get a different they get a medical exemption versus a business exemption. So, well, looks like Levi's going to get an upgrade. He's our, I didn't recognize he's an MVP here. And there we go. Sean, how do you work with clients? Like, what does that typically look like? Your website is taxgoddess.com, but like, say someone's listening to our conversation and they want to know where they go, what they do. How do they, what are the next steps? Absolutely. So taxgoddess.com is absolutely the first place to go. I think it's in the top right-hand corner. You can book a call with my team.

12:57It starts with a conversation because every person is different, right? As I was just talking about, every person has different chess pieces. If you're single versus married, kids, no kids, right? Every chessboard is different. And so what we do, we start with a pretty in-depth conversation. We call it a deep dive. And this is all a part of our tax rhythm formula. So what we do, we do the deep dive. We gather as much data as humanly possible, right? We come back to you with a range. so for your case josh it looks like we can save you between 200 ,000 and 400 ,000 uh the cost on a tax plan you know you do have to pay us to write a tax plan but the cost on the tax plan might be fifty thousand dollars is this something you want to look more into and most people if the low end of that range is saving 200 ,000 it's going to cost me 50 kind of a no-brainer because you can pay us or you can pay the IRS either way, right?

13:48It's your choice. But yeah, then we deep dive, we get really into the details, we create a plan, that plan gets worked over the span of a year or two, you know, kind of depends on when you come in, right? And we're trying to get as many of the tax strategies implemented as possible before December 31. Because anything not implemented by December 31, there's like three or four strategies that you can go retroactive to a previous year, but there's about 400 strategies you can do if you're in the current year. So the sooner you can get started, the better it is for you and your time. Yeah, no kidding.

14:25All right, Sean of the Tax Goddess. Again, the website taxgoddess.com right on the front page there, it says free consultation, click that. You've got another button at client testimonials that's got some great clients. Well, look at all these great videos of people that you've worked with. But again, that's again, all at taxgoddess.com. Shauna Weckerlin. Weckerlin. Yes. Just call me honestly, Shauna, the tax goddess guys. I'm very informal from that standpoint. Sure. Again, and you're the, you're the founder of taxgoddess.com. Shauna, great, great conversation. Thank you so much for joining us.

15:04Thank you for having me, Josh.

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