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Maximize Tax Savings: Expert Strategies with CPA Kevin Rhoton · The Millionaire Dentist™

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  Speaker 1: Hello, everyone, Welcome to the Millionaire Dentist Podcast, brought to
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  Speaker 1: you by four QUADNANS Advisory. On this podcast, we break
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  Speaker 1: down the world of dentistry, finances and business practices to
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  Speaker 1: help you become the millionaire dentists you.
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  Speaker 2: Deserve to be.
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  Speaker 1: Please be advised we do speak with an honest tongue
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  Speaker 1: and may not be safe for work.
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  Speaker 2: Hello and welcome. This is Casey Heiters back at the
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  Speaker 2: Millionaire Dentnist podcast in studio with co host Jared Bridgeman.
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  Speaker 3: Casey, good morning. How are you.
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  Speaker 2: You know, anytime we get our expert, Kevin wrote in
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  Speaker 2: NBA CPA, mister letters, it's always a good day because
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  Speaker 2: he's going to give our listeners some technical advice. Yep.
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  Speaker 2: That hopefully they're getting some from already. But if they're not,
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  Speaker 2: then there's your red flag. Kevin, Welcome to the show.
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  Speaker 4: Hey guys, thanks for having me.
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  Speaker 3: Kevin, you are in a numbers accounting genius. You are
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  Speaker 3: one of the guys I go to personally just to
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  Speaker 3: ask the most random of accounting questions. And you know,
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  Speaker 3: we wanted to start this new year with maybe some
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  Speaker 3: you know, maybe someone missed some tax deductions or some
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  Speaker 3: way to maximize their taxes last year. Do you have
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  Speaker 3: some major tips or points that maybe they should start
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  Speaker 3: looking at now prepare for this year.
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  Speaker 4: Yes, you know, we talked to practice owners all the time, especially,
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  Speaker 4: you know, going into the end of the year. They
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  Speaker 4: were like, what kind of tax deductions can we take?
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  Speaker 4: And what should I do? And there's quite a few
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  Speaker 4: things that well you probably should have started at the
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  Speaker 4: beginning of the year. It's a little bit too late,
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  Speaker 4: you know, really too hard to go back and do
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  Speaker 4: these things. Maybe they don't have the cash to catch
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  Speaker 4: up on some of these things.
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  Speaker 2: Oh you mean, like go buy an eighty five thousand
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  Speaker 2: dollars truck because your CPA gave you no advice throughout
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  Speaker 2: the year, and then the hail area is for you
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  Speaker 2: to go spend a bunch of money on something. But
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  Speaker 2: don't worry. Yeah, don't don't, but don't worry. It's you know,
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  Speaker 2: it's better better for your taxes. Sure, spending eighty five
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  Speaker 2: thousand dollars in a new truck. Yep, that's that's the
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  Speaker 2: big plan.
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  Speaker 4: Yeah, and it's I mean, it's.
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  Speaker 3: Just future you problems. Can you just keep pushing it
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  Speaker 3: down right?
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  Speaker 2: Yeah?
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  Speaker 4: Yeah, that's a great strategy, let me tell you. But
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  Speaker 4: so I just wanted to, you know, just bring out
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  Speaker 4: some tax deductions, some things to uh to do as
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  Speaker 4: a practice owner to make sure you get on top
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  Speaker 4: of here at the beginning of the year so that yeah,
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  Speaker 4: you miss might have missed out on some of these
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  Speaker 4: or maximizing some of these for twenty twenty four, but
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  Speaker 4: jump on it right now for twenty twenty five, and
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  Speaker 4: then you can definitely reap the benefits next tax season.
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  Speaker 2: When I talk to practice owners, I think what we're
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  Speaker 2: going to talk about today is one of their favorite topics,
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  Speaker 2: right like, how can they get cute with deductions and
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  Speaker 2: employee gifts and some some you know CPA magic trick,
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  Speaker 2: right like, Yeah, like a lot of people's minds are
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  Speaker 2: wired that they've got to do something cute edgy, and
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  Speaker 2: so we are going to talk about that today. Because
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  Speaker 2: there are areas where, yes, you can do some things
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  Speaker 2: to benefit you. But Kevin and I think you can
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  Speaker 2: agree a comprehensive picture of everything, taking everything into account
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  Speaker 2: and then mastering the tax situation on a monthly and
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  Speaker 2: quarterly basis. That's winning success. This is a small piece
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  Speaker 2: of the pie that matters, and as important, and as
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  Speaker 2: they'll see, it's all connected. But this isn't like, oh,
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  Speaker 2: I've just got to rearrange some things and I'm all
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  Speaker 2: of a sudden my overheaded. But an income is going
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  Speaker 2: to be where I want it? Is that accurate, right.
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  Speaker 4: If you put the time in, if you look ahead,
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  Speaker 4: get started right away. It's a lot easier to maximize
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  Speaker 4: a little bit at a time instead of.
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  Speaker 2: Playing catchup and then making a bad decision at the
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  Speaker 2: end of the year because you feel like you have
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  Speaker 2: to m all right, So deductions, retirement contributions, employee gifts,
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  Speaker 2: get out that magic wand and sure go nuts.
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  Speaker 4: Well, I guess the easy one to start off with
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  Speaker 4: is make sure you're maximizing your retirement contributions. Whether it's
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  Speaker 4: a four to one K or a sep Ira simple
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  Speaker 4: four one K, different vehicles for retirement for practice owners,
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  Speaker 4: but make sure you're planning to maximize those contributions. It
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  Speaker 4: went up five hundred dollars to the employee contribution to
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  Speaker 4: twenty three thousand, five hundred, make sure you know, go
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  Speaker 4: ahead and divide that by however many payrolls, make sure
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  Speaker 4: that's what you're putting back each payroll. If catchup contribution
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  Speaker 4: is still the same seven thousand, five hundred, So that's
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  Speaker 4: and they catch.
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  Speaker 3: Up as over what age pifty fifty five? Then if
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  Speaker 3: I remember correctly this year though, there is that like
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  Speaker 3: super duper catchup period from like age sixty to sixty
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  Speaker 3: three or something like that.
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  Speaker 4: Sixty to sixty three, and that is eleven thousand, two
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  Speaker 4: hundred and fifty dollars over the thirty one over the
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  Speaker 4: twenty three five.
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  Speaker 2: Gotcha.
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  Speaker 4: And then overall, especially as a practice owner, look at
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  Speaker 4: your total contributions, the employ employer match and all that
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  Speaker 4: goes up from sixty nine to seventy thousand, So you
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  Speaker 4: can maximize that just with the the employer contributions. Just
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  Speaker 4: make sure you get with your payroll specialist and have
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  Speaker 4: those numbers set for you.
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  Speaker 3: Kevin, let me ask you. You often are on some
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  Speaker 3: initial calls when we bring on new clients and things
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  Speaker 3: like that, when you have found or I have talked
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  Speaker 3: to a prospect or you know, a brand new client
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  Speaker 3: who may not have maximized their their their retirement savings
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  Speaker 3: correct you know correctly or all the way. What are
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  Speaker 3: some of the common mistakes you've seen them do? Is
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  Speaker 3: it something like they wait till the end of the
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  Speaker 3: year and like, shoot, I need to dump an entire
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  Speaker 3: paycheck into four one.
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  Speaker 4: Yes, okay, yeah, we see that often they've under withheld
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  Speaker 4: and maybe they you know, wait and do just a
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  Speaker 4: bonus They just pay themselves a little bit throughout the
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  Speaker 4: year and then do a year in bonus payroll where
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  Speaker 4: they pay in all their taxes all, you know, catch
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  Speaker 4: up on all their four one K with holdings and
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  Speaker 4: contributions and things like that, and that we have heard
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  Speaker 4: and seeing that. Yeah, that's stressful, but that's how my
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  Speaker 4: accountant that they see once a year said to do it.
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  Speaker 4: And that's just not the best for it.
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  Speaker 2: Well, their strategy out there to make it very consistent
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  Speaker 2: and predictable. Yeah, but high level around here, we always
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  Speaker 2: we say, if somebody's collecting over a million dollars in dentistry,
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  Speaker 2: well why aren't you saving one hundred thousand dollars a year?
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  Speaker 2: Because they should be. But ultimately it ties into everything else. Well,
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  Speaker 2: my overhead's high. My insurance adjustments are challenging, Like how
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  Speaker 2: all this is connected is really important because people tell
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  Speaker 2: us I just don't know how I can save anymore.
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  Speaker 2: These are just minimum benchmarks. That you'd be a damn
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  Speaker 2: fool not to take advantage of, not to mention, you know,
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  Speaker 2: saving it via brokerage and other vehicle. But the whole well,
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  Speaker 2: I just I don't have any money to save. Well,
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  Speaker 2: there's a deeper problem than within the practice and the
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  Speaker 2: way incomes are structured, entity structured. All taxes are managed,
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  Speaker 2: cash flows managed like you can't just say well I can't.
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  Speaker 2: I mean, that's I'll get off my soapbox. But we
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  Speaker 2: hear that a lot. Then somebody goes from saving forty
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  Speaker 2: five a year to a one hundred and forty five
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  Speaker 2: a year when they get this right. And that's fun
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  Speaker 2: for us to see for people that we're helping. I
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  Speaker 2: think it's fun for the clients too. Yeah, they tend
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  Speaker 2: to they enjoy to enjoy that.
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  Speaker 3: Yeah.
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  Speaker 2: Yeah, but that's the overarching you know, don't just settle
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  Speaker 2: for what I can't or I don't know. Well, then
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  Speaker 2: there's other issues need to solve. But Kevin will get
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  Speaker 2: back into you know, what is the best way to
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  Speaker 2: master this?
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  Speaker 4: Yeah, And actually before we move on, I want to
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  Speaker 4: hit on a couple other items. The health savings account contributions. No,
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  Speaker 4: it's just a little bit of an increase. But for
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  Speaker 4: a lot of practice owners, they have a high deductible
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  Speaker 4: health plan and make sure you're contributing to an HSA.
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  Speaker 4: If you have one of those, I mean, that's easy.
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  Speaker 4: It's went up to single four thy three hundred for
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  Speaker 4: a family eight thousand and five point fifty.
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  Speaker 2: Just don't forget about it. Make sure you use it. Yeah, definitely,
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  Speaker 2: that's my mister obvious statement for the day. But if
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  Speaker 2: you're not organized, and I mean I think right, people
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  Speaker 2: an't organize, the don't know their numbers. It's an easy
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  Speaker 2: one to forget and then they do that and then
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  Speaker 2: ten months later like, don't forget about it.
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  Speaker 4: It's amazing how well on both ends of it. But
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  Speaker 4: it's amazing how many practice owners have a high deductible
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  Speaker 4: health insurance plan and don't contribute to an HSA. I mean,
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  Speaker 4: that's easy tax savings. That's an easy deduction. You're paying
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  Speaker 4: for health health expenses anyway, throw that money into health
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  Speaker 4: Singing's account and then.
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  Speaker 2: Pay from there.
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  Speaker 4: Just just an easy thing to get a eighty five
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  Speaker 4: hundred dollars eighty fifty tax deduction in twenty twenty five.
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  Speaker 3: For something you're probably gonna end up needing to use
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  Speaker 3: at some point anyways. Yeah, something you're already doing, or
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  Speaker 3: your kids or somebody. Yeah, just structuring it correctly.
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  Speaker 2: Yeah. How about employee gifts. Everybody wants to you know,
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  Speaker 2: shower their employees with U with joy.
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  Speaker 3: Speaking, which guys, I'm still waiting on my Christmas gifts.
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  Speaker 2: Yeah. Yeah.
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  Speaker 4: So this is an interesting one because a lot of
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  Speaker 4: practice owners don't realize that the IRS is actually very
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  Speaker 4: strict on tax deductible gifts to employees and really to anyone,
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  Speaker 4: and they have a limit set a max set at
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  Speaker 4: twenty five dollars per person per year. So if you're
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  Speaker 4: giving an employee one hundred dollars gift certificate or even
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  Speaker 4: a gift that's valued more than twenty five dollars, only
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  Speaker 4: twenty five dollars of that is per the IRS tax deductible.
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  Speaker 2: The rest is deductible. I call that government overreach. Yeah,
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  Speaker 2: you know, you can you know, there's how about a
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  Speaker 2: gym bag full of cash.
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  Speaker 4: Unmarked bills the consequence first twenty five dollars is tax.
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  Speaker 3: With with in terms of pre planning and thinking about
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  Speaker 3: this for for you know, maybe the next you know,
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  Speaker 3: someone's next birthday or the next time, you know, on
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  Speaker 3: Christmas holiday? Whatever? Is this because some some practice owners,
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  Speaker 3: uh maybe have gotten a small tax surprise in terms
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  Speaker 3: of they owed more than they thought because of the situation.
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  Speaker 4: Yeah, because you know, if the CPA is doing what
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  Speaker 4: they're supposed to do, they will mark those as non
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  Speaker 4: deductible expenses on the on their financials on their tax return,
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  Speaker 4: and that might take the practice owner by surprise. That
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  Speaker 4: wait a second, I what are all these non deductible expenses?
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  Speaker 4: You know that that can really mess with your tax situation.
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  Speaker 4: So it's important to run those through payroll. RS wants
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  Speaker 4: you to run any any of those gifts through payroll.
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  Speaker 4: If you do that, there's a little bit of you know,
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  Speaker 4: tax will be calculated on that employer and employee payroll taxes.
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  Speaker 4: But that makes the whole amount tax deductible. And if
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  Speaker 4: you set that expectation at the beginning of the year
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  Speaker 4: with employees that yeah, and you can pay them cash,
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  Speaker 4: you know, if you if you like giving them one
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  Speaker 4: hundred dollars or whatever it is, you know, you can
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  Speaker 4: still do that through cash. It just needs to be reported,
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  Speaker 4: at least reported through payroll.
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  Speaker 2: Yeah. Well, let's get back to the big d word deductions.
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  Speaker 2: What are some other areas of note.
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  Speaker 4: Yeah, this is a I've seen through various practices practice
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  Speaker 4: owners giving charitable donations, and I don't want to get
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  Speaker 4: too much into the weeds, but I you can give
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  Speaker 4: charitable donations through the practice or individually. When it's ran
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  Speaker 4: through the practice. We'd prefer you to do it personally,
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  Speaker 4: but that runs through itemized deductions. Charitable donations are if
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  Speaker 4: you give one hundred dollars to the American Heart Association.
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  Speaker 2: I get two examples. Sponsor a little league team, or
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  Speaker 2: you go to a silent auction for like a dental
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  Speaker 2: overseas group that does good work, and you buy something
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  Speaker 2: very expensive like an autograph jersey or an autograph jersey,
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  Speaker 2: a trip something you drop twel hundred bucks at some event,
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  Speaker 2: a little league team or I mean, is all that
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  Speaker 2: you can throw under deductions.
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  Speaker 4: Or separate I mean, yes they are, but they are
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  Speaker 4: handled separately. So anything above. So take for example, going
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  Speaker 4: to the Bay or whatever silent auction you buy something.
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  Speaker 4: The amount that you pay over the value of the
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  Speaker 4: object is a charitable donation that flows through to the
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  Speaker 4: schedule a itemized deductions, which you know, maybe you can itemize,
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  Speaker 4: maybe you can't. The standard deductions so high these days,
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  Speaker 4: so that changes my view. When you're doing a silent auction.
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  Speaker 4: If you get a good deal, then it doesn't help
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  Speaker 4: you from a tax perspective. If you buy a thousand
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  Speaker 4: dollars package for a suite at an NFL game and
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  Speaker 4: it's only and it's you knows well, if you pay double,
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  Speaker 4: then that can potentially help you tax wise. Okay, Yeah,
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  Speaker 4: the standard deduction for twenty twenty five is thirty thousand,
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  Speaker 4: so we won't get into the weeds of all the
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  Speaker 4: things that apply under itemized deductions. But if you're taking
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  Speaker 4: the standard deduction, charitable donations don't help you. So that's
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  Speaker 4: maybe the first question. Am I hitting the standard, am
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  Speaker 4: I getting the standard deduction or am I itemizing? If
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  Speaker 4: you're doing the standard deduction, definitely go the local sponsorship
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  Speaker 4: route because you're paying for advertising, whether it's a banner
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  Speaker 4: at the local Little League field or your name and
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  Speaker 4: the band concert, and the key is to make sure
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  Speaker 4: that you get some sort of advertising in return, your
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  Speaker 4: name on the program or banner or mentioned if that's
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  Speaker 4: the case, or your name on the T shirts or whatever.
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  Speaker 2: So any other tips just get ahead of it. Don't
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  Speaker 2: do end of year hail.
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  Speaker 4: Mary's really the last one, The last big one is
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  Speaker 4: start tracking your mileage. Easiest way to get auto expenses
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  Speaker 4: in the practice is to track your mileage. Doesn't your
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  Speaker 4: commute tune and from the office from the house doesn't count.
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  Speaker 4: But anytime you're doing any business runs, whether it's to
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  Speaker 4: the bank to get supplies, maybe it's a continuing education
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  Speaker 4: conference that you're driving to, those those miles count.
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  Speaker 3: Does it matter if the car is under your personal
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  Speaker 3: name or versus like a company car.
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  Speaker 4: That's if it's a personal car, so it's different the IRIS.
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  Speaker 4: That's that's a good thing to point out is for
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  Speaker 4: the IRIS says that for it to really be a
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  Speaker 4: business vehicle company car, you need to use it for
• 15:41
  Speaker 4: fifty percent or more business usage. Sometimes it's kind of
• 15:45
  Speaker 4: hard for a dentist, practiced owner to hurt to get
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  Speaker 4: that hurdle. I mean, because you're mostly in the office
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  Speaker 4: the rest a lot of times the vehicles used more
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  Speaker 4: than fifty percent for personal use. Uh So that that's
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  Speaker 4: really the baseline.
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  Speaker 2: So we're going the Yankee Dental and we're having multiple events,
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  Speaker 2: but one of them is in one of the suburbs
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  Speaker 2: at a nice steakhouse. So people that are coming to that,
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  Speaker 2: could your track of that mileage, track that mileage. These
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  Speaker 2: are little things. I mean, we you know, but but
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  Speaker 2: I think the point is you're paying your CPA, uh
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  Speaker 2: you know, hopefully it's not just an H and R
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  Speaker 2: block situation. You're paying your CPA some money. They need
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  Speaker 2: to be keeping track of this and helping helping guide you.
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  Speaker 4: Overall, just better record keeping, be more diligent at these things.
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  Speaker 4: Make sure you're on top of them at the beginning
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  Speaker 4: of the year, and you won't have to be scrambling
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  Speaker 4: around trying to find how can I squeeze one more
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  Speaker 4: a tax deductible dollar out of my out of my situation.
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  Speaker 3: Kevin, thank you so much for coming in today. If
• 16:53
  Speaker 3: you need more help, or you know, you should be
• 16:55
  Speaker 3: talking to your CPA, if you don't have a team
• 16:59
  Speaker 3: behind you, or if you are very unhappy with your
• 17:01
  Speaker 3: current team, you know, visit our website fill it off form,
• 17:04
  Speaker 3: you know, give us a call and maybe we can
• 17:06
  Speaker 3: sit down and talk and then maybe see if we
• 17:08
  Speaker 3: can help you. Guys, thank you so much for stopping
• 17:10
  Speaker 3: in and we'll see you next week.
• 17:15
  Speaker 1: Hello everyone, Welcome to the Millionaire Dentist Podcast, brought to
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  Speaker 1: you by four Quadnance Advisory. On this podcast, we break
• 17:22
  Speaker 1: down the world of dentistry, finances, and business practices to
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  Speaker 1: help you become the millionaire dentists you deserve to be.
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  Speaker 1: and may not be safe for work.