Vanessa Correa, a visionary tax strategist, joins us to flip the script on what you thought you knew about taxes, especially if you're clocking in nine-to-five. She's on a mission to bust the myth that corporate employees can coast through tax season without a second thought. The truth is, there's a whole world of savings that most are missing out on, and Vanessa is here to guide us through the maze. From the significance of year-end planning to the unexplored advantages of side gigs and LLCs, this episode is a goldmine for anyone looking to keep a bit more of their hard-earned cash come April.
Expect to walk away from this conversation with a suite of actionable tips that can help transform tax time from a source of stress into a strategic opportunity. Vanessa's enlightening advice not only sheds light on common oversights but also illuminates the potential refunds lying in wait for the well-informed taxpayer. Whether you've been making payments for years or you're just starting to navigate the complexities of the tax code, this episode promises to equip you with the knowledge and confidence to approach tax season in a whole new way.
Vanessa Correa, a visionary tax strategist, joins us to flip the script on what you thought you knew about taxes, especially if you're clocking in nine-to-five. She's on a mission to bust the myth that corporate employees can coast through tax season without a second thought. The truth is, there's a whole world of savings that most are missing out on, and Vanessa is here to guide us through the maze. From the significance of year-end planning to the unexplored advantages of side gigs and LLCs, this episode is a goldmine for anyone looking to keep a bit more of their hard-earned cash come April.
Expect to walk away from this conversation with a suite of actionable tips that can help transform tax time from a source of stress into a strategic opportunity. Vanessa's enlightening advice not only sheds light on common oversights but also illuminates the potential refunds lying in wait for the well-informed taxpayer. Whether you've been making payments for years or you're just starting to navigate the complexities of the tax code, this episode promises to equip you with the knowledge and confidence to approach tax season in a whole new way.
Speaker 1:
Now I am so excited to bring you someone else from our community. Now I want to talk a bit about the difference between a network and a community. Your network is about you and it's all the people that you're connected to, and if you go away, that network really doesn't exist anymore, because it was you, a community. However, once you've created this community, the people started as a network, but now they're talking to each other and they've really started to help and support each other, and if you stepped out, that community is still thriving. So Vanessa Correa, who is our tax strategist, came into us through our network, actually came into us through a cold LinkedIn outreach, probably five years ago. I ignored it, I didn't pay any attention to it. I didn't need a tax strategist. I had a normal corporate job, and so why would I need a tax strategist? You just pay your taxes and move on with life.
Speaker 1:
Well, we had this barefoot business event in December of last year, and after we had met with Vanessa and had incredible conversations with her, she became our tax strategist and told me that for the last 20 years, I've done it all wrong. Even with a corporate job, you should have a tax strategy. There are things you can do. That will help you come April every year and then helping us with our business, the community factory and Club Ichi, and actually making sure that we know what's coming and it's not a surprise. She has just been magical for us. We wanted to bring her in front of you, our community. She is one of the OG of Club Ichi and she has got some tax strategies for you, whether you're laid off right now whether you have a business or a solopreneur, whether you're a corporate event professional.
Speaker 1:
She's got some suggestions that you should wrap up by the end of the year to make next April a little less scary for you. Vanessa Hi. Hi everybody, I'm going to turn it over to you because I know that you have all the tips and tricks.
Speaker 2:
I do so. First of all, I just want to thank you for having me to speak with all of you. I think that anybody that knows Liz and Nicole know how phenomenal they are, and it's a privilege, honestly, to be here to help all of you. So, that being said, I want to dive right in and start looking at the different things that you guys can start doing right now to make taxis and even better.
Speaker 2:
I know that taxes are a source of frustration and pain for most taxpayers, and it doesn't have to be that way. Honestly, most people think I'm insane when I tell them that I love taxes. I don't love paying taxes, I love using taxes as a strategy. So what we see most often than not is that taxpayers just are not aware of their rights and the opportunities that exist for them. Like Liz said, a lot of people think that you know, if I've got a W2 and I don't have self-employment, there's really nothing I need to do. I just need to wait for the end of the year to happen, and then I will receive some documents in the mail that I will give to my accountant, and my accountant will tell me how much I owe, and that's the typical process that most people follow. The problem is is that there's this false assumption that when you have an accountant doing your taxes for you, that they're actually saving you money, and that's not the case. Most people don't know what this crazy thing called tax planning or tax strategists are, and it's kind of a new field. Honestly, my background is in preparing expat tax returns, so I've done literally some of the most complicated tax returns in the world, and in doing that, what I've seen is that, excuse me, america is the only country where the taxpayers are terrified of the taxing authorities, and so, taking some of the things that I've learned from just the tax code in general and the crazy labyrinth of legal mumbo jumbo, confusing words, references to different paragraphs and different publications, it's crazy.
Speaker 2:
As somebody that's actually hunted through the tax code and actually figured out what those rules and regulations are by having to go through 50 different pages to understand a simple sentence I realized that well, of course, no wonder 94% of Americans overpay their taxes. It's because they don't know any better. And when they do try maybe a friend has said what they're doing to save money and taxes, or you hear through the grapevine different ways to save money and taxes, and so most people will go ask their accountant and say, hey, I heard so, and so is doing this to save money and taxes. How can I do that? And really the tip of the iceberg is maximizing deductions. I think we're supposed to drink when I say the word deduction, so if you have a cocktail, cheers All right. Now that I'm drinking on camera, I'm talking about taxes. I swear I'm not a drunk CPA, that just willy-nilly people taxes.
Speaker 2:
So what I want to do is I want to make sure all of you have a little bit of information, whether you own a business or whether you are just an employee, or even if you're not an employee or own a business. One of the biggest things to keep in mind is that entrepreneurship truly is a path to financial freedom, and it relates to taxes. Having a side hustle or a side gig is more common than you may realize, and a lot of people actually already have a side gig. They just do it as a hobby and they incur expenses personally, but they don't get any tax benefit for doing so. So there's a couple of different ways that you can look at your tax situation through a different lens and then see what steps you can tweak a little bit in your life or in your business or with how you manage your finances in order to pay less tax.
Speaker 2:
Because if we think about it, I mean, most people wait until the very last second because it's something that's confusing, it's complex, it's overwhelming and really the end result is that you're going to have to pay money to Big Brother. So my partner likes to refer to me as Big Brother's Big Sister, and I'm very protective over my clients and the ones that I hold close, and that's kind of what developed me starting my business and being able to kind of have that protective nature over my clients, being able to inform them of the different things that they have no idea about. And really that's what it comes down to is, as accountants, as tax strategists, as tax professionals, we are equipped with tremendous amount of knowledge, and it's very rare to see anybody share that knowledge proactively, which I think is part of the problem. And so in trying to rectify that and make sure that taxpayers are only paying their fair share, as opposed to the egregious overpayments that happen typically every single year, my goal is to stop that and to keep more money in the taxpayers' pocket, because when you pay less in tax, you have more options with what you do with that dollar. The dollar is going to be a lot more impactful when you decide how it gets spent whether that's back into your business, whether that's to your family, your future, your children's future, et cetera. There's just so many more options when you're not overpaying in tax, and so let's get into some things that you can do before the end of the year.
Speaker 2:
I want to talk quickly about a couple of different strategies, and these are strategies that we've used hundreds of times with different clients, and some of them, honestly, can save you $15,000 to $20,000 in tax, depending on your tax situation. So the first one I want to look at is something called bonus depreciation and, like most things on the tax code, they make it sound a lot more complicated and overwhelming than it really is. If you go buy any asset a computer, a vehicle, whatever typically what happens is that asset will depreciate over time, meaning there's wear and tear, and on that wear and tear the IRS reflects that in your tax position. You may not even be aware of that happening behind the scenes, because it's not an expense that you incur, but you get to take a deduction Cheers, you get to take a deduction for that amount of wear and tear that's happened throughout the years. There's certain tables with a bunch of fancy words that don't really apply, but if you started looking up depreciation if you were to just Google the main concept of depreciation it'll give you a pretty good idea of what depreciation is and what the benefit of it is for you. Basically, it's an expense that you get to take that you haven't actually pulled out of your pocket to pay. It's a book to tax difference is what we call it and it's tremendously powerful when you utilize it in the correct manner.
Speaker 2:
So typically, what the IRS wants you to do is you'll go by an asset let's say it's $100,000 vehicles and it's going to have a useful life of five years, meaning there's certain assets that are listed with what their useful life is and what that means is that's the amount of years that the IRS divides the total cost by in order to see what your eligible to claim and depreciation expense. So all things else like help to the side. If you just think about the $100,000 vehicle you bought, most people don't go spend $100,000 and buy the vehicle outright. What typically happens is they will sign a finance agreement and put a down payment sometimes 10, $15,000 down.
Speaker 2:
What most people wind up doing, because they don't know any better, is they'll just take the deduction for whatever the down payment was, and then a lot of them actually don't even get the depreciation expense because there's certain forms you have to fill out in order to get it in the first place. So if you've purchased any asset that's going to last you three or more years in 2023, you're going to want to get a list of all of those and give it to your accountant and tell them hey, I've purchased these assets. I want to be sure that I get the depreciation benefit for that on my tax return, because, unless you mention it, they don't know. Many CPAs are very good at what they do, but they're not my readers. So this is a way to generate an extra deduction.
Speaker 2:
Cheers without having to take money out of your pocket to do it. Now, one of the cool things about bonus depreciation is it allows you to fast forward those annual deductions that you would otherwise have gotten over five years or seven years or 10 years. So the idea is that if you go finance a $100,000 vehicle and let's say you put $10,000 down, you can generate $100,000 worth of deductions when you only took $10,000 out of your pocket. So from a cash flow perspective and from a tax perspective, it's tremendously powerful, and a lot of people just don't know that that deduction exists. So there's something called depreciation recaptured that you want to be aware of. If you sell your asset before that useful life has expired, then you'll have to recoup some of that depreciation. So just keep that in mind.
Speaker 2:
Now, in terms of some other strategies, a lot of people here have children.
Speaker 2:
Hiring your child can give you a tremendous amount of tax benefits as well. Being able to shift income to a lower tax bracket is really the most attractive part of that strategy, and not only does it equip your child with entrepreneurial skills and life skills and learning how to manage money and wealth early on in their lives, but it allows you an avenue in which you can reduce your taxable income by whatever their payroll is, and bonus if your child's under 18. They don't have Social Security and Medicare tax, so you can literally just move money into an account that they're on as a cosine that you're cosigner on and then use that money that they're receiving from their paychecks from your company, which is generating tax deductions, and then use that on the things you have to buy for them anyway. Most people that have children are very aware that it's extremely expensive, so why not at least get a deduction for some of the things you're going to pay for anyway? This is when we start looking at creating site hustles or single member, llc is those types of things.
Speaker 2:
And then I know that we're running out on time. So the last thing I'll leave you with is make sure you get everything organized, know what to expect before December 31. That's the biggest mistake I see taxpayers make is they wait until the last minute when taxes are actually do and then, once they're due, they go to their accountant and then get a shock and a surprise based on the tax bill and that by that time it's already too late to do anything. So my suggestion to you, if you take anything from this, is make sure you know what to expect in April, before December 31. Because if you know what to expect and it's not ideal you can take steps still before the end of the year in order to minimize that tax expense. So I hope this is helpful and that it helps you all make next tax season a little less painful and hopefully you can generate some refunds and doing so absolutely incredible, and let me just say that last year was the first year I had a tax refund in over 20 years, thanks to Vanessa.
Speaker 1:
So so helping us strategize telling me, telling me that I actually needed an LLC 20 years ago. So call Vanessa, she can give you all your guidance. Thank you so much. Really appreciate you having having you on. Take a quick little break. Go grab your water after drinking all of those sips, after hearing the word deduction, and we'll be back in just a minute.