Get Uncle Sam's Foot Off Your Neck: Unlocking Tax Secrets Episode Transcript
00:00 - Tariqah (Guest)
Oh my goodness, when I hear that LLC, I'm like listen now. Not everybody has to be an LLC, because immediately-.
00:07 - Damaris (Host)
I mean, that is a scam in itself. It's like everybody has an IG video about being an LLC. Wait what?
00:23 - Nachi (Host)
Welcome to another episode of I'm Not Yelling, I'm Dominican podcast hosted by Nachi and Damaris. Hey family, this is your girl, nachi, and I'm here with Damaris, the legendary sweet tart.
00:40 - Damaris (Host)
Yes, you know, I like to describe myself as sweet and tart sometimes, or maybe others describe me as that Great combination, great combination.
00:48
So, so, so. So Today we're here to discuss a very fascinating topic. This topic brings me back to a friend whose mother told him in life you only have to do two things, that's be black and pay taxes. I was like damn, she's not wrong. And today we're going to talk about the latter.
01:14
So we have the pleasure of talking with Tariqah Mills, CPA extraordinaire from none other than Harlem, NYC. Harlem stand up, New York, stand up, Thank you. She runs her own accounting firm, T3 Accounting Services, helping hundreds of individual and small business owners alike in planning for the best tax strategies. She's personally helped me and my husband for over seven years and I can attest to the fantastic work she's done for us and how she cares about delivering the best services. We love supporting homegrown businesses and, furthermore, we know that, while this may not seem like an exciting topic, it's an important one for small business owners and individual payers. We're going to get into information and tips that may help you for this year and beyond. Obviously, this goes without saying consult with your tax preparer to apply the information that best suits you. Don't add us with this. Didn't work for me, no talk to, but figure out what works best for you. So, without further ado, welcome, Tariqah, Thank you.
02:19 - Tariqah (Guest)
Wow, what a great intro. Thanks, maris, that is so nice. It's always nice to hear you know good things, and so then I appreciate that I'm like all smiles. Right now. I'm cheesing like from ear to ear literally Well deserved.
02:33 - Damaris (Host)
No, thank you. Well, you deserve it and you deserve your flowers, and it's always important to get it. You know real time?
02:39 - Tariqah (Guest)
Yeah, no for real and it's nice to have it kind of hearing it directly also, even in this environment.
02:44 - Damaris (Host)
More particularly, so I appreciate you, ladies, for inviting me down. Yes, no, we're so excited to talk through this and, before we get into the nitty gritty, can you share a little bit about your background and whatever else you'd like our listeners to know? Oh, absolutely.
03:00 - Tariqah (Guest)
And so then, immediately, let me just say it's Tariqah Mills, I'm a licensed CPA with the state of New York, so that's certified public accountant and, yes, been operating my own firm, started and founded about 10 years ago, born and raised in Harlem, and so then, one of the more important practical ideas of this concept of giving back to where you started and from a community that pretty much I could attest to also has roomed me to be where I'm at today, is that Harlem area, so, born and raised in Harlem, how important it is to come back and have some footing in giving back to the community.
03:44
And so, with that, t3 Accounting Services, a boutique accounting CPA licensed firm offering taxation services to individuals year-round, and boutique in a nature to say that you get the opportunity to work directly with myself as the licensed CPA.
04:01
And so, then, a bit different than working with a tax preparer CPA. And so, then, a bit different than working with a tax preparer, meaning you pretty much will see me each tax year that you come back. And this year, marking our 10th year of operations, and actually, I think what Damaris said in regards to taxes not always being the most favorable topic, however, definitely one that I like to say and from what I hear with a lot of our clients is making the information in layman terms understandable, but also to say, oh, you know what I could do that too. So managing your taxes or understanding your tax structure, what's your best tax situation and what things are most advantageous, doesn't yield itself for the high end wage earner or doesn't yield itself only to the you know the business owner that's earning, you know, six figures to a million bucks. You can be a low wage earner and still make sure you have the right tax strategies in place for your overall tax situation.
05:03 - Damaris (Host)
When we were talking through about how we wanted to discuss this topic, I think it was important that we level set what it is, how we're describing the different kind of tax paying entities right? So we're talking about small business owners, the individual taxpayers, and then even, I think, yeah, the individual business owners that are considered like sole proprietors, separate from small business owners. Um, so, for the purpose of this conversation, can you just like, in layman's terms, like you said before, you know at high level, definition of like what are those different type?
05:39 - Tariqah (Guest)
of taxpayers and I think that's important because sometimes you may have across those and you I think you named them very squarely across those three different tax entities and sorts could be a bit commingled. So the most easiest and I think for most of us individual taxpayers, we see ourselves maybe as the wage earner, right, yeah, we go to work, we know we're going to get what's called that W-2. We need to be cognizant of what that W-2, which is only, you know, distributed once a year and should be properly aligned with those pay stubs that you're looking at, each, you know, each week or every two, every, every if you're paid, every you know, every two weeks or twice a month. And ultimately that becomes the individual, you know, taxpayer relationship when it comes to filing taxes. And that's both at the federal level and or at the state level and for some of us, like in New York City, at the local level too, to be mindful.
06:41
And then you do have what I like to say is your small business owner, right?
06:48
So the small business owner, you know, offering some catering because they love to cook, and great, why not make you know a quick buck to and doing what I love and offering this service to both family and friends and those who are referred out, so that small business owner could very well be the sole proprietor.
07:20
You're operating as yourself, you're collecting the revenue or the sale for the service or good that you provided and when it comes time for tax reporting, your due diligence as the sole proprietor business owner is to make sure that you're reporting both what you received as far as revenue or sales or sales, and then ultimately, what's more important is what you expense, what you literally paid out in that same timeframe, which, again, usually is aligned with the tax year.
07:51
Don't want to leave out the small business owner that has, in my mind, elected to go a bit past the side business, and I don't want to say that you could be a sole proprietor and have a million dollar company Absolutely so. But generally, when you make that decision to what we kind of call legalizing your business operations, which is electing to incorporate what you're doing as a business, or if that's you electing to become a corporation and you're structuring your business as a corporation, or you're structuring your business as what most of us kind of hear on those social media platforms the LLC or the limited liability company. Because, oh my goodness, when I hear that LLC, I'm like, listen now. Not everybody has to be an LLC, because immediately-.
08:44 - Damaris (Host)
I mean, that is a scam in itself. It's like everybody has an IG video about being an LLC. Wait, what Do you know? That you then will have to do taxes for that LLC? Absolutely.
08:56 - Tariqah (Guest)
But, what we want you to know here at T3 is one of the most advantageous components of incorporating your business as an LLC, because there are a lot not just for tax purposes but primarily for the business owner to take what I kind of call.
09:12
that next step in solidifying and, more importantly, taking on the legal entity relationship is protecting your personal assets, and to me, that's that real difference between you know the small business owner saying, hey, you know what, I'm willing to take on some more risks, so I'm going to go and get that storefront right. I'm going to start hiring some people because I want to be able to generate more revenue and do more for those that I'm offering said service or selling goods to, and knowing that you can't do it all by yourself, you know that that's a reality check for the small business owner that wants to grow.
09:50 - Damaris (Host)
Um, so that that's so. That's interesting because I want to get into that about how can the different types of taxpayers that we're talking about what are those things that they need to keep in mind when they're managing throughout the business, throughout the year, because I feel like sometimes people won't real won't get to something to like November, december, and by then it might be too late, right. But if they had just done things throughout the year consistently, you know what are some of those things they should keep in mind and you know definitely highlight when they're appropriate for the different types of taxpayers, right, like if we're talking about small businesses et cetera, and that's good.
10:27 - Tariqah (Guest)
And for me, I think, just kind of going back to the individual taxpayer, because we don't want to leave you guys out, right, small business is huge in the concept and discussion of taxation and accountancy For the individual. You know, when we hear, oh, you should do a budget, you should make sure you're keeping track of not just what your recurring costs are for living, such as your rent or mortgage, paying your utility bills yes, that's part of your budget, your cash flow from your earnings. And are you doing appropriate, hopefully, pre-tax savings or sometimes after-tax savings, which I think we can, you know, dip and dabble to a little bit. You know further, but nevertheless, when it comes to putting those practices in place, yeah, it's probably the same things you always heard, right, why do you have to buy a cup of coffee every day from Starbucks? Maybe make that cup of coffee before you leave, and not everybody has the capacity to do it. But those are some of the things that we would be, you know, talking to our individual taxpayers just on managing your daily cashflow, like some things that you can do different Now for the small business owner, or even again, for that, you know, solo sole proprietor.
11:45
I called it the side hustle, but still operating a business on your own.
11:49
Now it's being more focused on not just your bank statement, right?
11:55
So I think for a lot of us it's you know, we're operating the business, we have some cash in the bank, whether it's a thousand bucks or a hundred dollars, and it's like we're good.
12:04
Some cash in the bank, whether it's a thousand bucks or a hundred dollars, and it's like we're good. But really your bank statement doesn't speak to your full accounting picture. And so then, if you took on a loan, that dollar amount that you took on is not necessarily tax deductible. However, if you took on a loan and you started utilizing those loan funds to build up your business whether that's buying extra supplies or buying more inventory or paying down some of the bills that were perhaps, maybe past due, whether it's subscription costs or, you know, the rent for your storefront then you're talking about looking at you know some tax deductions, but it's knowing how best to use those dollar amounts. That all just flow into the bank. Hence why you should be working with your accountant throughout the year to truly understand what your bank statements are talking to your business, and really what we talk about is financial health.
13:02 - Damaris (Host)
That's a good point, yeah, no, because. So one of the things, especially when I started working with you now I previously I worked with a different CPA it was my husband's CPA at the time and I just didn't think she really understood my world. And I was coming from church and I came, I was on one 16th and I saw your little, your little sign hanging out your office and I was like, let me check with this, with this accounting you know services about and it was great because you're a CPA and you helped me throughout the year so I can contact you and talk to you. You know, like, oh, I'm not sure about this, or what do you think I should do? And you'll advise me of? Like, okay, well, these are the implications if you don't do this. X, y, z Versus.
13:50
Before I ever worked witha CPA, it was doing tax preparation through TurboTax right, and there's nothing wrong with that or going to a tax preparer like H&R Block. But the difference is I can't talk to those people throughout the year to help me manage, you know, take advantage of certain strategies, because they're only there to prepare my taxes. So I think people also need to recognize the difference between having a CPA and working with a tax preparer or you know, preparation software. They have advantages, but to me I'd rather pay the little extra so that I have someone that I can trust and be able to talk to and that really understands my financial situation, and so yeah, I, I, because with my situation it's always.
14:39 - Nachi (Host)
I always say it's a little complicated because I am employed, I'm also, I do independent contract and have a business. So it's like I have all these little buckets and I need someone to help me figure out what's the best way to make sure, cause I I don't know about anybody else, but whenever taxis come around, I'm already stressed, but you know what you said, it where you said I have these buckets right.
15:07 - Tariqah (Guest)
We like to kind of say you know there's different moving pieces to your tax situation and what the taxing agencies don't care about is those moving pieces you know individually because, ideally, the taxing agencies, the IRS and the state taxing agencies are looking at those buckets combined.
15:29
And I say combined, and if you see my dot, you know my, my fingers are rising up is because your wage earnings, that's great. Your consultant income, I'm already tagging you as the sole proprietor, right. And then ultimately, like you said, any and other business activity that you may be engaged in that is generating revenue, and hopefully you're tracking your expenses aligned with that revenue. The combined dollar amount is what then becomes the taxable component. And so then, how best to manage that so that it is most advantageous for you as a taxpayer? And hence, with the marriage, say, you know, we were working with someone, and not to take anything away from that, and while we call, like the H&R Block, the Jackson Hewitts, they're in our community, they're right alongside my boutique accounting firm location. I kind of call those the big box and firm location. I kind of call those the big box.
16:26
That's like the BJ's and the Costco's to your you know premium market, where you know if you're going in there you're going to get the olives that you want, right, and you can choose the quantity that you like to have, versus having to buy three bottles of the same you know things of olives. And I only use that as an example, because those are the things that we like to say, especially in the boutique world of accountancy, is your goal is to build the relationship with your client and the accountant, to really establish what that financial blueprint looks like for you, the individual, the small business owner and, more importantly and especially, the sole proprietor in the sense where you're being taxed alongside your personal taxes and Damaris, I just I wanted to touch base because originally, when we were laying this groundwork of what's a small business owner like, how does the individual taxpayer, you know, fall into this conversation? And then you know, ultimately, what could be identified as the sole proprietor? I don't want to leave out the entrepreneur, because I think sometimes that entrepreneur word and the small business word are so commingled, but there's some differences, you know, just in respect to that concept of having taken on more of an entrepreneurial approach to your business, which usually allows for greater risk, meaning you're willing to do much more scaling as the entrepreneur. Your ideas are probably a bit more grand and big in the scope of how you're looking to generate the revenue and who you're looking to kind of impede upon on getting your service of offerings out there or even the selling of your goods.
18:15
And I was kind of thinking about that because I think most of us small business owners and even us wage earners, always have a little bit of entrepreneurial spirit, right, right, it's like, yeah, no, I could do that. I know how to braid hair, but do I want to braid hair for just my family and friends or do I want them to refer me out to other people and then start braiding hair on everybody? You know that kind of thing. But the entrepreneur is not looking to just braid hair family and friends. And then the referrals the entrepreneur is looking to you know, offer hair braiding classes to the masses and then saying here's how I do it and everybody else do it the same as me. Maybe establish, you know, something more broad scope of just offering the local services to their immediate community.
19:03
When it comes to taxation, the real deal is it still yields the same right. Managing not just your bank statement but understanding what those individual bank statement lines for every spend, for every receive, how am I going to best manage that? How can I get more of that cash flow out to me as the business owner without having such a heavy tax effect? You know, like those kinds of things, as we're establishing that good working relationship with your accountant year round and for some of us who are tax professionals and offer their services year round, they're out there too and they're very knowledgeable about the tax code, which is good. However, I think the coupled knowledge of the financial component and understanding a set of financial statements like an income statement, a balance sheet, a real statement of cash flows that's where we want to kind of make sure you know our business owners are key to be able to discuss their financial picture, not just like what their ending tax result is Right.
20:11 - Damaris (Host)
And I want to throw out there too that I know for some it may sound like a CPA. I can't afford that and I will just say to that is. I looked for and and the good Lord put in my pathway a small business CPA firm.
20:29 - Nachi (Host)
You know what?
20:29 - Damaris (Host)
I mean. And that made all the difference For me. It was important that okay, I love that this accounting services firm is located in Harlem, where I was living, right. So I'm like, okay, this is local business. And I went to your website. I'm like, okay, she looked legit, all right. Um, I'm like like real talk. I'm like, oh, tyrica, okay, okay, that's not horrible.
20:55 - Tariqah (Guest)
No, but we get this a lot and you know. Again, I'll be honest, I'm hearing you, I'm hearing you and when I get this feedback, these are all the boxes that I was looking to tick and check and I didn't mention it at the top, but I started my career in the corporate sector. That was where I went and listening. I was speaking to you, ladies, and listening to some of the past podcasts, all of those nuances and experiences I can say and attest to, having been a woman of color, a black woman, in the corporate sector, in the accounting realm of those corporate sectors.
21:40
And more importantly, in the financial services industry, literally in the stock market components only one, and so then it was important for me to say we we should be able to have a comfort level and talking to people who look like us, who can relate and that I could understand our background right.
22:01 - Damaris (Host)
Okay, these are maybe right right that can relate to. This is why I'm choosing to go about this way financially. There are certain things that are just like okay, that are more familiar with us, and so that was important for me, and so what I'm saying to our listeners out there is that you by no means charge anything exorbitant. It was to me fairly priced, and you'll find that when you support small businesses in your, in your communities, that you will get the best deal, and these are people that will actually put their heart and soul into it, because it is their reputation and their brand in the community. So, whereas you know, like the big box tax preparing companies, they have a slew of lawyers that can handle whatever, or PR agency, you guys don't, and that's what I love, and that's why we've been working together for over seven years and I'm going to be with you forever. I'm excited about that, Unless something happens Like right now.
22:59 - Tariqah (Guest)
we're good.
23:01 - Damaris (Host)
Right, we're good, you know it's a relationship and so I just had to bring that up because I think some people may be like well, I can only afford the tax preparation stuff. I mean, honestly, if I'm saying like a couple hundred dollars but you're saving yourself thousands, you should do the math right. So do the math if that works for you. But I just had to throw that out there because I really think it's important that understanding the difference and why, that paying the extra, what you get out of that and like. As for me, again, I'm not going with Ernest Young, right, I am doing this with a small business firm, but you have skin in the game too.
23:40 - Tariqah (Guest)
No, absolutely. And no, I can't go into midtown and hire a CPA, because they're going to be charging me $350 an hour, you know, or something like that. So for me, it was again so important because the need at least the 10-year mark that we're at was truly seeing my community, what I've been calling evolving.
24:01 - Damaris (Host)
I do want to get into, though, about while we talked about what businesses and individual taxpayers should keep in mind throughout the year, but what should they also avoid? Because I feel like there are a lot of pitfalls and people want to know that, or they need to know that yeah, no, and this is good.
24:17 - Tariqah (Guest)
So some of those pitfalls, what I feel like is and these are things to avoid is to make sure that when you're giving guidance, especially from what I consider to be and again this is talking small business, but this is also for the individual too so you're giving guidance from your tax professional, from your accountant, and let's say it's just during tax season and it's hey. You know, we discussed on how you could perhaps maybe have a lower tax bill or potentially have a higher refund. You know we talked about contributing to a New York 529 plan for your child. So in the next tax year when I see you, if I ask so, did you contribute to that New York 529 plan for your child? So in the next tax year, when I see you, if I ask so, did you contribute to that New York 529 plan so we could increase your state refund? And you'd be like, oh no, I didn't do it. It's like come on, you know I shared that with you. I gave you the link. You were sitting in my office.
25:08
We could have did the application. Here's the alley-oop.
25:11 - Damaris (Host)
Come.
25:11 - Tariqah (Guest)
Come on and so then I didn't wind up getting the assist if you didn't actually, you know, do your part. And so then I say that about like kind of practicing what's preached to you and kind of putting those things in place. And yes, we're all busy, you know, not everybody has enough time on their hand to do everything. I was just telling Damaris, I was just saying yesterday, man, there's not enough hours in a day, but however, and I mean I say but, however, what, what makes best use of the time that you have is to, you know, hopefully, benefit you, right, then, and then, obviously, for the longterm. And so then I wrote down a couple of things. Right, definitely, make sure.
25:48
I think everything I'm saying to avoid are things that you should just be doing, which is reviewing and educating yourself, especially as a small business owner, on your financial picture. Right, you should not wait until you're sitting down with your accountant to see how you really did for the year. Right, and I know some of us small business owners, because we're getting in enough just to be, you know, to pay the bills, we're thinking that we're good, right, but when I tell you about reviewing and educating yourself about your financial picture, is to take a moment and truly sit down and say how many clients did I land this month and did I set a goal last quarter to land two more clients? Did I do that or didn't I? And if I didn't, let me figure it out.
26:34 - Damaris (Host)
How often should one do that? No, that's great. How often should one do that? Monthly?
26:39 - Tariqah (Guest)
That's a good question, Honestly from our experience, we find that it is usually most feasible on the quarter end, and normally how we engage with our retainer clients is to present a set of financials, whether you really want to look at them or not, but we're popping them right in front of your face. It's been times you can ask my staff I'll show up at your location because you didn't have time to come see me and I'm like hey, remember that income statement I wanted to talk to you about. You see, this meals line right here. This meals line is too long, it's too, you know, it's too big. We only could deduct 50% of these meals, so no, that's she.
27:13 - Damaris (Host)
She does that to me every year. She's like okay, I got your, your, your meals. Um, she's like we're going to do 50% of that. All right, I'm just throwing it in there because you know what Uncle Sam can go kiss mom, whatever and I'm just like is there a way to you?
27:28 - Tariqah (Guest)
know, to benefit a little bit more and maybe get a bit more bang of the business cashflow out. To you sure, if you're taking a W-2 payroll relationship with your business, perhaps maybe we can reimburse you, you know, 100% of that meals. Let it be fully tax deductible for the business as a reimbursement to an employee and you still get the cash from the business for it 100% tax free. So you know, some of those things could also lend itself to become strategies, which is why it's important to really take notice of that and not kind of sit back and be like, well, I'm coasting my bank account, yeah my bank account is not on e, so I'm good.
28:05
But it's like, uh, how about if that bank account could be a little bit higher? You know, how about if that credit card uh statement could be a little bit lower? And then?
28:14 - Nachi (Host)
yeah, yeah, I do brought that up just to kind of, uh, yeah, piggyback on that. I'm the, I'm that person that will wait until like the very end. And my accountant, he gets okay me every time. He's like didn't we talk?
28:27 - Damaris (Host)
about this last. He's like, I just told you this last year come on.
28:31 - Nachi (Host)
How many times, yeah, I know, I know I need to get in that habit of looking at my quarterly. Oh which, I'm okay, I'll be honest it will be good for you.
28:44 - Damaris (Host)
I need to. She acknowledges that she needs to do that.
28:48 - Nachi (Host)
That's the first step number one.
28:50 - Damaris (Host)
Yeah, no one is half the battle, gi joe, you know it is but I'm trying to make sure I'm invested in myself as this, as the small business owner, to truly continue to develop, you know this, this financial blueprint and this good one-on-one working relationship with our clients and cpas, and you talked about a little bit, but there's so many changes that have been happening and you and I and that she's talked about it off off you know camera, whatever off the mic about the implications of what's been going on the last four years, and then on top of that, I feel like there are constantly changes with different tax policies, especially when we change presidents and stuff like that. They have different views on how to manage the IRS and tax policies. So what are some of the major tax changes that small business owners and individual preparers should be aware that could potentially impact, right?
30:00 - Tariqah (Guest)
I mean, I think right now, especially like we're in election year, right? Obviously we could do a whole podcast on this election year versus, you know, tax law changes or just law changes or things that could be better for us as individuals, us within the economy we're seeing so many different components of downturn in the market oh, the market flipped back up. So it's like what does that really mean for me? Should I really be going to check my 401k on that day and then the next, you know? Or something like that. But I think one of the most biggest component of tax law change was during Trump's administration, where there were huge changes, especially in my lifetime and, more importantly, of being an accountant working in and around taxation for over 20 plus years. It's seeing these more recurrent type of tax law that we were also very used to having changed. And now what's more important is these rules, which were deemed Tax Cuts and Jobs Act or you may have heard a lot of discussion, especially in most recent months called TCGA, and the expiration of those tax laws that were implemented back in really the 2018 tax year so pre-COVID and then really seeing a lot of the impact of those changes in and around our COVID years, which I say years 2021, 22,. And now the expiration of those laws that were new then and now coming to an end, or what they say, the sunset of 2025. So, as the accountant, especially as a tax accountant, I don't think it's too early to start talking about what does that mean for us as individual taxpayers and, more importantly, especially for the small business owner. So highlight just a couple of what we know are looking to expire. And again, this is at the end of 2025. So DOE won't have any true impact on our tax filings when we start them in early 2025 during that tax season. But again, like these are the implications to say, okay, so how does this change?
32:19
I think one of the biggest ones, especially talking to us New Yorkers in the New York area, is what was called the cap on state and local taxes. So, for us homeowners who pay a real estate tax, you are no longer allowed at least from 2018, through the end of 2025, to have no more than $10,000 of your real estate taxes capped. And so, then, I mentioned New Yorkers because, for a lot of us homeowners in New York, whether you're in the New York City area or out in the counties, your real estate taxes for the year are normally greater than $10,000. And that could be across many of different states. So it wasn't just New York that had this impact, where you were no longer able to take 100% of what you pay out in real estate taxes for a true tax deduction, which ultimately, the tax deduction, will lower your taxable income and therefore lower your tax bill, if any, or potentially have a you know means for a refund, which is what we would like to, you know look for, as our tax season kind of comes upon us.
33:28
And so then that tax rule expiring it's big for a lot of us because, granted that you know the administration that's in place allows it to expire. Great, because then we're going to get back some benefits that we once, oh, for the past six, seven years we haven't had, or five, six years sorry that we haven't had. And so then these are things to be looking forward to. But I say that to the extent of also strategizing on what you may do with some of that extra tax benefit. Right, not enough to just say, oh right, we're going to get a bigger refund. It's like, oh, ok, so what can we do to make that work for us, and those are the things that you could be looking forward to. And another big one again and these are for homeowners is there's a cap right now up to $750,000 on a home mortgage, that you're not allowed to take all of your mortgage interest if your home is above that. And I bring that up and that's not necessarily saying it, oh my goodness.
34:28
It's like come on and this could be when you have, you know, one home and then maybe a vacation home that has those mortgages. These are things that right now, us tax professionals, tax accountants, have to be very mindful of, to educate our clients to say, hey, like, if you're thinking about, you know, making that next purchase for another home, you may want to forego that until this tax law you know is expired, which, again, is that sunset of 2025. I don't know if you remember, because this is more relative to all of us, especially, you know, us workers, who may have those union dues or pay out of pocket for uniform costs or pay out of pocket for travel, things of that nature. Right now, the tax law is you're no longer able to take those what was called itemized deductions for unreimbursed employee expenses. And I still get those questions to this day where I'll have a client come in new and say, but can I deduct my union dues? Here are they, you know, here they are.
35:27
I'm like, oh no, unfortunately that tax law is not applicable right now, but that's another one that's looking to expire at the end of 2025. And so, again, these are things that you may have considered. You know, all right, they don't count anymore. So I'm not even going to worry about my charitable contributions, because I know I don't have enough. But now it's like, yeah, no, let's start tracking all of those things all over again and maybe give some incentive so that you are doing a little bit more charity. Because now I'm looking forward to taking 100% of my real estate taxes as a deduction, some of those unreimbursed employee expenses for union dues I mentioned, or some travel or dry cleaning oh, my goodness, I still get that question. But I dry clean all my suits. Oh, unfortunately you can't take that as a tax deduction right now.
36:15 - Damaris (Host)
Right, and this is the thing where they talk about squeezing the middle class. And this is exactly where it's just like you're coming to a place where you either have to be ultra rich or very poor, and it's like if you go above a threshold slightly above poverty then you no longer can get these tax deductions.
36:42 - Tariqah (Guest)
It's just like what is. So you don't want me to succeed, and hence and hence why we say you know, especially during election years, and not only at the presidential level. But here's why you know, thinking at your state and local level is important, right? Yes, you know, thinking at your state and local level is important, right? Yes, you really should understand what your state and local representatives have in mind for your community as taxpayers, or what's their real idea about economic policy. It's apparent in the US that there's no one excluded. If you ask me whether you're employed, self-employed, small business owner.
37:19
We all have some sort of tax impact and normally those decisions come from our policymakers. You know, if that's, you know, if we could all make our own tax laws, then we'll be a whole different environment of a country. But you know, but how about? I don't, and don't get me wrong, that's a whole, nother of a country but.
37:36
But you know, but how about? I don't know, don't get me wrong, that's. That's a whole another podcast topic too. You know. It's like, yeah, if I don't have a social security number, then I don't have to pay taxes.
37:45 - Damaris (Host)
Oh, that's another ig thing, don't get your birth certificate or social security number.
37:52 - Tariqah (Guest)
Good luck in living in this country oh no, they are however, like I said, I think that's a whole another topic.
38:01 - Damaris (Host)
You know of discussion that is um, and that's that's the whole point of why I I stress the idea of having an accountant that you work with throughout the year because of things like that.
38:13
Right, like, I'm not going to know that as a regular person, I'm not following the policies and oh, identifying, like, oh, that's a, that's a benefit that I could take, even though, as as a small business, as an S core, like oh, I could actually benefit the same way these big corporations do. But, um, as as we're like, this is all like a lot of good information and I and I think definitely a lot of nuggets people can walk away with. But before we close out, I'd love to hear you've already been talking about some of these things but what are some of those tax saving initiatives that people should really consider making before the year end and then beyond? And I say that because when we post this, it's going to be around September, so people are going to have a full on quarter to close out the year and do what they got to do, and so I love to hear about that.
39:03 - Tariqah (Guest)
You know something I love that you segwayed into that quarter. So most of us accountants talk to the quarter end. A lot of the self-employed, you know business owners. They understand quarterly taxes or sometimes they don't understand quarterly taxes and we're educating them about what. Does that really mean? Do you have to pay estimated quarterly taxes, um or not? Right, and, more importantly again, being knowledgeable about taking advantage of tax saving initiatives doesn't really happen always in the tax season. So implementing them throughout the year but, more importantly, taking advantage of what now could be hey, you know what, it's holiday time.
39:47
Here's some things that we could be doing, even in the form of GIF, and I kind of leave that with the New York. Well, the 529 plan right, and hence I was saying New York, so born and bred New Yorker, right. But I could speak specifically to our New York 529 plan and again, across different states, there may be some different rulings in regards to what could be your tax saving initiative. So what is the New York 529 plan? It's a college savings education platform. Yet most of the 529 plans have been shifted to allow you to also use those funds and savings for K-12.
40:23
So, if your child is in a Catholic school setting or a private school setting where there's a tuition base, you may contribute to this platform and also use those funds for tax-free withdrawals, which is strategy-based. I can attest to it. I have my middle guy who's in a Catholic school, has a tuition, and I've been utilizing the 529 plan where in New York, at the state level only, you may deduct up to $10,000 for your married, found and jointly couples or $5,000 for your single head of household. They do not have to be your children. You may open up a 529 plan for niece, nephew, goddaughter, godson, friend, and they do have to be a child, just as a head of household, and they do need a social.
41:17 - Nachi (Host)
My nephew is 45. You do need a social, because I usually usually get the question so what about my dog?
41:24 - Tariqah (Guest)
and I'm like, yeah, no, do they have a social security number? No, but I spent so much money on my dog, so can I, can I?
41:31 - Damaris (Host)
yeah, not for nothing. I have my cats and I'll be wondering.
41:34 - Tariqah (Guest)
I'm like I mean, don't, don't get me wrong, there are ways to deduct some costs for having a dog, but of course that has to be medically driven, you know. So we can have that conversation. If we understand it, we know it, but for the most part. It's like you know you can't contribute to a savings plan that's tax deductible for your dog. I'm sorry and I know I know most people you know love their pets. But again I'm saying that in and around this time of the year, Okay, that's great.
42:04
Instead of the gift of $50 and a card to your niece and nephew for Christmas, open up a 529 plan. You then get to deduct that at the state level.
42:13
And I bring up 50 bucks, but it could be 50 bucks a year. You know, 50 bucks a month, right, that really will start to tally up to $600 for the year. So why not? Why aren't I taking advantage of that? And then the beauty of it is reinvestment savings for your loved ones and you get the tax benefit and lowering your taxable income at the state level. So to me that's a big plus.
42:37
And generally, how you would check to see if your state is applicable for the tax savings, it's usually a quick search on, I would say, your state department or taxation site. A Google may yield you same, but definitely go directly to the source and, of course, just talk to your tax professional or tax accountant. I don't want to leave out and again this is for those individuals who most of us homeowners are like great, we own a home, great, we can deduct our mortgage interest. I told you right now, some of those deductions for homeowners have been limited in the past five to six years. So what are some other things that us individual taxpayers could do? If you're doing any home improvements that are solar or home energy saving base, those may actually be tax deductible. So definitely make sure you're keeping track of that. This is things like replacing windows, right, I had a client who did replacement of some windows in the basement and we just were talking about it.
43:36
I said, oh, but we asked you on our client info form if you did any home improvements. They were like yeah, but we only spent talking about it. I said, oh, but we asked you on our client info form if you did any home improvements. They were like yeah, but we only spent like a grand. I'm like wait what we can do up to a $300 credit, like for me, every dollar counts. That was just talking in her stance right.
43:50 - Nachi (Host)
It adds up.
43:51 - Tariqah (Guest)
But even presenting to the client the question did you do any? You know home energy savings, they didn't think that the windows was. But nowadays all windows are home energy savings. It's just the way that they're made. And I think the biggest one for most of us homeowners are the solar panels, which I say definitely are home energy savings for and at federal and state level. But definitely make sure you're having a conversation with your tax professionals so that you understand what's truly applicable to your tax situation for true savings.
44:24
And then, if most of us haven't but I think this is another big topic that has been coming down in the past year or two which is the electrical vehicle credit. So that's another one. Like your EV credit, if you're purchasing an electrical vehicle, there's actually huge tax savings incentives. But again, it's very specific. So it's the type of electric vehicle that you're purchasing and making sure that it has the right battery component usage. So the tax law is very specific. So again, that's another conversation. I would say, before the dealer, the car dealer, sells it to you, hop on a line with your accountant that hopefully you have that year-round relationship with, to make sure that it's truly applicable.
45:07 - Damaris (Host)
And then I'll go for it. And before you buy that EV, think about the batteries that are being mined in Africa. Look that up.
45:16 - Tariqah (Guest)
Even more importantly because I'm with you, Damaris the environmental impact. It definitely has to align with your personal preference too. There's some impacts on that. It's not always just about taxation. Your firm beliefs should be applicable and don't let it kind of sway you into doing something just because your accountant said Right, but I appreciate that Right, Because normally my brain is strictly thinking those numbers no, no but that's.
45:42 - Damaris (Host)
But that's good. Right, but that's how right and that's how Nachi and I are on the show, because it's like, think about everything in holistically, totality of it. Right, it's not always about saving. Yes, you want to save as much as you can and not give to the government because you know they're they're the biggest scammers. But the reality is what aligns with me morally? Because, with my financial advisor, there are certain things I refuse to invest in for my 401k, even though it is not beneficial for me to not invest in those types of companies.
46:14 - Tariqah (Guest)
But I won't because I need to sleep at night, Because I need to sleep at night. But again, those are the things that if you don't have that established relationship with your financial advisor, who's assisting and making some decisions on your financial portfolio, that in their mind the number side of things is to get the best thing for my client, Because I know for us we're always constantly thinking how do you get your best?
46:36 - Damaris (Host)
thing. It's a fiduciary responsibility, which it should be.
46:38 - Tariqah (Guest)
Yeah, I think some kind of ingrained in it too, thinking it's a fiduciary responsibility, which it should be. You know, grind in it too.
46:43
Um, you touched on yeah, you touched on something really good, because one of the things that having your accountant, having your financial planner and, definitely for the small business owners, having that business lawyer or even your lawyer as part of your team super, duper important. I don't want to leave out real quick, just making sure you're investing in your individual retirement accounts, especially for this quarter, even though you do have up until the tax filing due date of the next year. So you could easily also invest up to $7,000 into a traditional IRA and perhaps utilize that as a tax saving initiative, really depending upon what your total gross income is or adjusted gross income. So that's very specific and that's definitely something to make sure that you're having the conversation. Or, again, that could be a very quick search, whether it's directly where your IRAs are held, to say, oh okay, like I can invest up this much more and I have until this date to do so for tax year 2024. And don't forget to really utilize your employer relationship for those offerings that they do have.
47:49
If it's the health savings account, because you have the high deductible, that's a great pre-tax savings initiative. Or if it's the FSA, where you get to contribute for perhaps maybe childcare in a pre-tax means and again, these are some great tax haven initiatives that if you don't have them in place today. Yeah, this is the time to start researching, opening those accounts up before year end, utilizing quarter end to truly see if you can budget Again. I don't need to get that baby doll. I can gift them in a 529 and then look for the tax savings in the next year. Of course, get them the baby doll if they absolutely want it, but I'm telling you to do some, but balance it out.
48:35
Balance it out, I'm telling you to make sure you get you know again, to make sure that you're getting the benefit of what could possibly be great tax savings.
48:45 - Damaris (Host)
Awesome. No, that's a great list and I think that there's a lot that different types of people, depending on where they are in life or you know, they're a small business owner or a sole proprietor or individual taxpayer there are lots that they should consider and think about applying for this quarter and beyond, and, and and again, always connect with your tax professional, your, your accountant, to see what makes sense for your overall picture Definitely. That, yeah, but that I want to say, Terri, thank you so much. You know something.
49:21 - Tariqah (Guest)
You're welcome.
49:22 - Damaris (Host)
You'll be like you're welcome.
49:24 - Tariqah (Guest)
No, but this was good.
49:25
I was really looking forward to hanging out with you, ladies, after hearing the podcast a couple of times, or even you know one time, I think I was sitting on the porch and we were kind of like chatting business, but but right of being able to talk about what I love, which I do really love this stuff no, we can tell you are very passionate and full of information and that's why you know, like, yes, but that's what you want, like I'm confident, like, okay, I'm gonna be with you till I go to the grave.
50:00
Thank you, you know sometimes I was teasing because I said as much as I like to be like in the office, setting part of me shifting from corporate America is a mom of three. I'm a wife, I'm a sister, you know I'm a daughter. I'm all of these wonderful great things to my family, but never really having that time to enjoy the joy being you know great things to my family but never really having that time to enjoy being you know those great things to my family and now having this work-family life balance on my own accord.
50:34
It means a lot to be able to enjoy it and then look how great it is to be able to share it, especially with two beautiful ladies, two beautiful sisters. You know so. So for me, I appreciate you, ladies, for having me.
50:44 - Damaris (Host)
No, no, no yeah, this is.
50:49 - Nachi (Host)
I mean you gave a lot of information.
50:51 - Damaris (Host)
Okay, goody, that I wrote down so that I can take some don't let an accountant, don't let someone come in brand new to our firm that you're able to come on and share your, your knowledge and the passion behind it, and that is a beautiful thing, and I think I love to see our people do it and I love to see our community thriving and part of our show not even part of it. What we do, our main driver is we want us to thrive. Anybody that resonates with our message, this you're part of our community, so we're not surviving, we are thriving in this world and we're elevating our vibrations. Yeah, I love that. So you know, yes, and so, with that being said, I'm gonna close out the way we always close out, and I don't know how many of y'all get to the end of the show. I hope y'all do so.
51:42
This should be familiar to you, but there's a lot of noise out there, but our message is consistent Stop getting distracted by the smoke and mirrors, ie the elections, okay, whatever, I'm going to stay out of that. Tune out the noise and focus on your divine purpose in life, vibrate higher to elevate your frequency and always. Thank you for listening. So, that said, don't forget to subscribe to our channel and follow us on Instagram, tiktok and Twitter at I'm not yelling underscore and we look forward to talking next time. Bye.