(Ep. 259) Tax Loopholes That Could Save You Five Figures

Hello and welcome to another episode of the Steel Womb Planner Podcast. I am your fearless podcast host, Travis, and today I've got a very special guest joining us. We have our very own Becca Baldoff. Becca is a CPA. She used to work in banking, and Becca, you and I share the same frustration of our past lives, which is you eventually decided that speaking in human, in English, was fun, and corporate America kind of makes that a little difficult. Would you agree? A hundred percent. It is definitely its own dialect, for sure. Yeah. I mean, so I just remember, you know, if I had a dime for every time I heard the phrase to piggyback off of that, or the synergies from this are, or the whatever, like weird. We should circle back on that, Travis. Oh my gosh. Oh, I'm just going to get up and walk out of this room right now. I mean, so one of the things I think that we do pretty good at SLP is we find these, you know, people that miss speaking in human, and we, like, unleash their creative potential and their powers and their skills to help, you know, thousands or tens of thousands of student loan borrowers grow wealth. So I'm really excited today to introduce you as the head of SLP Wealth Tax. This is really exciting. You know, I guess maybe I should just start to say, just can you share a Yeah. So to be honest with you, I got into this because of, you know, my own journey with student loans. And the CPA licensure was really, you know, the foray into a different certification that I have to work with people throughout the lifecycle of paying for college. So whether that's saving for college, or, you know, oh, crap, we didn't save for college. And now we're applying. What do we do? How do we actually pay for this? And then also the student loan side of it. But the student loan side of it is definitely where my passion lies and the tax strategy associated with it. You know, I'm a product of this product, as people like to say. So I got caught up in, not being able to get past mental blocks for myself as far as, you know, when can I afford to have a wedding? When can I buy a house? When can I afford to have a kid? And the tax strategy was really the key to unlocking all of that. So I definitely want to help people. I get like super jazzed about, you know, walking people through this process and helping them realize that they do not have to be a slave to these loans. So I've got 20 plus tax strategies that we could talk about in today's episode. I don't know if we'll have enough time for all of them, but I think maybe we could just jump right into them. I think that the one thing I want to say before we jump into that is, Becca, you are the leader, but you're part of our tax team. So we've got a couple other consultants that are also former consultants. So most of the people on our tax team are former SLP consultants that just decided to do that move over to the tax team. And we did that intentionally because we wanted people like you, Becca, that had that student loan knowledge that was really deep, that are capable of doing student loan consults so that you can take that knowledge and have it, you know, be imported into the tax strategies and planning that we're doing for people. Now, for some of these strategies, so I think we can just go into, you know, these strategies. And at the end of today's pod, after covering some of these strategies, we're going to talk about what would it look like to actually work with you and the tax team at SLP Wealth. So there's a strategy. The first one that we'll talk about is effectively doing a thing where you alternate between using the standard deduction and itemizing charitable contributions. So like, what does that even mean? And how could that affect, you know, and by the way, too, before I say this, I should have said, these are going to be like things that could affect anybody, including people with W-2 income. And then we're going to cover some strategies that specifically for like 1099 and business owners. And then we're going to talk about some student loan specific tax strategies. So that's how we're going to break up today's podcast. I should have said that first, but this charitable bunching strategy, can you explain quickly what that is? Yeah. So relative to donations, you know, historically with COVID, there was actually an opportunity for people to make charitable contributions, like up to $300 per person. And that you didn't necessarily have to itemize your deductions. And so for folks that may not understand, you know, even this like standard deduction versus itemized deduction, that, like what we're talking about is, you know, you get to your adjusted gross income, which is, you know, more critical for student loan purposes. That's what they determine discretionary income off of. But then after that, that's how your taxable income is determined. So, and you have two options, standard deduction, that's like $12,500 for single filers, about $25,000 for married filing jointly. So you either get that amount or you do itemized. And basically the goal with itemized is to get above that, you know, that hurdle, the $12,500 or the $25,000, like that is the number that you have to overcome with itemized or like individual expenses. And charitable contributions being one of those types of expenses that you can itemize. And I think it's even closer to 14 for an individual now with the inflation adjustments and like 28 for joint, but that might be for 2024. But yeah, so like the, so basically like the idea would be if I could do, you know, maybe I'm giving, I don't know, five or $10,000 a year to charity and I've got all these other things going on, right? So instead of like taking the itemized deduction every year, maybe I don't qualify for it every year just because I'm like right below that threshold of like $28,000 of deductible expenses as a couple. And so, you know, so basically the idea is if you're giving like more modest amount, you could take all your charitable contributions and bunch them into one year to, to be able to itemize, to make all those charitable contributions deductible versus having perhaps none of them being deductible or part of them being deductible. Right. My, my CPA suggested I do this and that was a helpful suggestion, but it was like not as relevant because we're pretty comfortably hitting the itemized world. I don't want to, you know, I don't want to give away too much information here, but, you know, you know, yeah. But anyways, the other thing we want to talk about number two is itemizing mortgage interest. So back in the day when interest rates were, you know, 2.7%, you know, people might've had a harder time doing this, but with interest rates being much higher talk to us about itemizing mortgage interest. Yeah. So that's another one of those types of itemized expenses that can be utilized for the itemized deduction. Also it goes on a schedule A for your 1040, your individual tax return. So with the mortgage interest, I actually found out something kind of interesting too through my own journey. So we're in the process of building a house right now. And so you can actually deduct the interest associated with a construction loan up to two years prior to actually being in that house. I didn't know that. Yeah. So that's huge. So that's, what's going into the Baldoff family tax planning this year for Q4. That's pretty awesome. Yeah. Well, like, so a lot of people to miss out on opportunities, like with professional and doctor mortgages. So for example, you know, you can itemize up to seven 50 K a mortgage principal and you know, a lot of people will think I need to put down my 20% down, but a lot of times what you could do is do zero or 10% down and take out a bigger mortgage and itemize that. So you're getting deductible 7% or whatever it is right now. And then take that money and put it down more aggressively on your non-tax deductible debt, like your student loans that you might have to pay off at 6.5% or something like that. Right. So there's a lot of opportunities there. It's super interesting too. So with the tax cuts and jobs act, there was like the HELOC loophole. I can't remember if you've talked about that on the podcast before, but that's actually, you know, people haven't been able to do that through like 2025, but that is, you know, if payoff is something that is projected for you and the idea of refinancing at any point makes you on a cringe just based on what interest rates are right now. You know, after 2025, that is a way that you could deduct all of your student loan interest. Yeah. That's such a good point. Yeah. Yeah. Not just part of it. Yeah. I mean, I'm just so excitable with this tax stuff. I apologize in advance for interrupting, but you know, I'm, I'm, I'm, you know, I'm not super old, but I'm old enough to remember the good old days, Becca, where that was part of a strategy that we would suggest sometimes like people like 2016 consults that I would do. And those were solo consults because it was just me, but I remember one case where it was a, you know, woman in her forties or fifties, like she had like two, 300,000 of home equity and she had maybe like a hundred thousand of student loans. And so the thought process was, well, at the time, you know, home equity interest was still deductible and for, for non real estate purposes, I think. And so, yeah, like, so she, we just suggested taking that loan out and paying off the loans. And you know, it was terrible advice because I didn't know there was going to be 0% interest between 2020 and 2024 or whatever, but you know, it was the right advice at the time. And I think your point is interesting too, because for the listeners that shows that this is like an ongoing thing, right? Like, this is not something that is like a one-time thing where, you know, you can just sort of get your tax strategy going and then you'd never have to think about it again. It's something that like, I mean, for people that don't know the tax cuts and jobs act passed, I think December, 2017, you know, was passed. I think when Paul Ryan was speaker of the house, he's a lot more of a sort of traditional, you know, low taxes, you know, pro-business type of, of candidate or speaker, right. And then president Trump was president at the time and that all expires in December of 2025. So depending on what iteration of, you know, Congress in the white house, we have taxes will very likely look absolutely completely different. You know, starting in tax year 2026, which is not that far away. So that's a great point. Some of these we're not going to get through half of these if I don't stop talking so much. But so capital loss, right? The $3,000 write-off against active income with tax loss harvesting. So if somebody's working with their financial advisor, they got capital losses more than 3000 from tax loss harvesting that $3,000 you're able to write it off against active income. Why does that save the money on taxes? Well, so, you know, that is like an above the line. So it helps come to the adjusted gross income subtotal on your tax return. So it does help from a student loan perspective too. If you have a $3,000 capital loss, but so it reduces your AGI, it reduces your taxable income. And then if, you know, you do have more than $3,000, you can kind of, you can carry forward those losses and just take $3,000 year over year, which is, you know, really helpful as far as planning. If you have like one year with like a super big bonus, or if you're a dentist that does high production in one year and you want something to kind of offset that relative to student loans or just taxes in general, it is really helpful. So the other thing with the capital loss, I can't remember if we were planning to talk about this, but relative to real estate, there are actually loopholes for real estate specifically that you can utilize to offset your active income beyond $3,000. And that's, you know, super fun with depreciation. Are you talking about professional real estate investor status or the short-term Airbnb loophole or which one of those? There's a lot of them. Yeah. So primarily the real estate professional status is, you know, what's super critical with that. The other thing, you know, with side hustles and capital loss considerations specifically is, you know, if you do have like a side hustle or something, a Schedule C business, sole proprietorship, it's really important that you, you know, it's all well and good to say, have the capital loss. However, from an IRS perspective, you do need to be profitable on paper for three out of the last five consecutive years, or you're going to get yourself in trouble. That's the safe harbor rule that they have for that. So in English, sole proprietor means you get money from something that's not a W-2 like job where you're employed officially somewhere, right? Yeah. So it could be that you're a 1099 somewhere. It could also just be that like you started this thing on like Etsy or something, and you're really big into like cry cuts or crickets. I don't know how you pronounce it. One of my friends has a wildly successful like play kit thing on Etsy that like she sells to parents. And like, I mean, that's just like, if I had to do stuff like that, I'd go out of business. I mean, so, so there's a couple of other ones here. There's the Augusta rule. So the Augusta rule is named after the golf course, I think. Can you explain what that is? Yeah. So the Augusta rule is renting your home to your business for up to 14 days out of the year. There is some pretty like stringent things that go along with that as far as like, you can't just like say that, oh yeah, I'm going to rent my house for like what my mortgage is for the entire year or whatever. It has to be, you have to have reasonable comparables. So there's a process and a strategy for that. And you know, like anything else with related to accounting, which is, this is funny to me that like, you know, we started this off saying speaking in English and now I'm like doing all accounting speak. I know. Well, so, so for the, so there's two, is there two different ways that people can use the Augusta rule? Isn't it like that you could rent it, you know, from your business? Like, and so it's, it's kind of tax free both ways. Cause it's deductible on the business that return and you don't have to report it on your individual return, which is like the maximum turned up ability for this. Right. So, so I was told to do this, but my CPA to like use my house to rent my house for like quarterly shareholder meetings. And I can't go like too crazy with this because like I own like most of the companies outright. So it's sort of like, am I talking to myself for the whole day? Like, you know, it seems a little sketchy, you know, but like that, so they, there's a process for coming up with what's a reasonable rental rate and you know, that kind of thing that you do need to follow to make it legitimate. But I think it's, is it true as well that you can do the Augusta rule? I was just trying to Google this. Can you do the Augusta rule as a W2 employee, like on Airbnb or what's the rule on that? Do we know that? I mean, you might not know that, but that's okay if you don't. Yeah. I don't know that. We double check that. So some, you know, obviously the tax code is something you have to double check, but I think that is, I think it is, I mean, I should put this disclaimer right here. This is not personalized tax advice, right? You can work with Becca to get it, but don't, but don't don't take this as personal tax advice. So I think that it might be possible because I think one of my buddies rents out his house specifically for Duke like events. Like, so whenever like Duke university, I'm in the triangle area. So whenever Duke university has like commencement or like Duke V UNC, right? Like the, the rates, like, cause we were looking at like staying at like a local place for our anniversary and like, and literally the rates like without something related to Duke or UNC is like 200 a night. And then when there's something happening with Duke UNC, it's like 800 a night or something like that. So his approach is literally move out for a week, go on a trip, rent the whole house and get a boatload of money and like key times a year that are not like holiday specific. So that might be a possibility, but let's talk about maximizing retirement accounts. So like a lot of people kind of don't take advantage of what they could take advantage of, right? So like there's 457s, which is like an extra 401k basically that some people have access to. There's spousal IRAs, there's fully deductible IRAs if you don't have a retirement plan at work, right? And there's also just putting money into your 401k and maxing out. Does that generally cover that? Are there other ones you can think of? 403Bs. So simple IRAs, traditional IRAs. That's like a big one. I think the traditional IRAs that for folks that don't actually have access to an employer sponsored account, you can still contribute to the retirement and you still get a similar benefit from that above the line, quote unquote, as far as the line being the adjusted gross income on your tax return, which is super helpful. So I'll speed through these last two just because they're not going to apply to everybody. So donation of appreciated securities. So there's some limitations on this, but it's fairly straightforward to donate the stock investments. Generally, usually it's stock investments or mutual fund ETF investments that have the largest gains to your donor advised fund instead of cash, because then you can take that donation, write that off on a gain, and then write the check to charity and you get the deduction for the charitable contribution and the gain deduction instead of just writing cash. And then the cash part you can take and go invest in literally the same stuff you just donated, but at a much higher basis so that if you ever want to use the money on something for yourself, you don't have to have that big gain taxed. So this is something, Becca, that I'm ashamed to admit that I've not been paying attention to very much. It kind of shows a big benefit of working with the financial professionals, frankly, accountability. I am a member of a online Beachbody on-demand service that's like a workout class thing. It's like Insanity. It's like the name of the... Maybe some people know about it. P90X, Insanity, right? Guess how many times in the past year that I've logged into it and done it. You can know stuff, right? You can know stuff and still really benefit from accountability from actually going to the thing and doing the thing. And I mean, physical therapy too. I've got a bad knee from an injury when I was in college. And when I go into physical therapy, it's amazing. I have the accountability. I have the defined time. I have to show up and I have to do it. I don't have an option to not do it. And my knee gets way stronger. I reduce my pain. And then I leave and my dad mode kicks in. And I'm just like sleep deprived and thinking of everything besides working out that I'd like to do. And then suddenly in six months, I've got knee pain again. I go see a physical therapist again. So that's a confession about me not doing the donation of appreciated securities, but I really should. And then the last one is tracking carry forward losses. So there's a really interesting case where I think I had a CPA change that I made when I moved states once. And I had something like 30,000 of carry forward losses, which is pretty big. And a CPA software like didn't pull it through and a CPA didn't check. And literally we had to file a 1040X because she just missed the carry forward loss. And that's probably worth about $12,000 in taxes in the future. So that's a pretty big thing to kind of, I mean, the reality too about tax people, right, is there's no such thing as a mistake-free tax person. And the other thing I'll tell you is I paid a lot of different prices for CPAs, everything from a low amount to a very, very high amount. And in general, there's correlation, but you'd be surprised at how even a very expensive CPA can still make really terrible mistakes. So, and it's all about being able to just have a good head on your shoulders and how do you fix something when you make a mistake? That's the good news, right? Is like most cases, if you make a tax mistake, it's correctable, it's survivable. Is that correct? A hundred percent. Yeah. A hundred percent. It's definitely correctable. Even if you get yourself into hot water, you can always negotiate with the IRS to get on a payment plan. Obviously you want to avoid that for sure. And there are resolution options as well. But there's abatement programs that you can do once every three years. If you have a big penalty, there's some reasonable responses that you have to file. I mean, I remember one year, I think this is like just being fully transparent with people, just bearing all my problems. I reported, this is kind of a fun, this is a funny one because I can pick on First Republic Bank because they're like bankrupt, right? So they can't sue me. But First Republic Bank issued a bunch of like money to our business under my personal social security number instead of my business EIN. And I reported it all under my business instead of my personal social security number. And so I got this penalty letter from the IRS that was like, you're going to jail for the rest of your life. That's how I felt. It's not what the letter said. But anytime you see something from the IRS, it's always terrifying. Yeah. The funny thing, I remember I got like 10 letters from the IRS the other day and I was just freaking out. And I opened them up and literally they were for all five of our LLCs. And one of them was like a forwarded confirmation of address change from the old place. And the new one was like the new confirmation of mailing address change to the new place. I'm like, dadgummit, IRS, can you not just put like this big happy smiley face envelope that's like, you're not in trouble, you're not going to jail, we changed your address, now you need to open this mail. Like literally send a postcard, but I don't know. So I got to get back on the tax savings train here. I just having some fun. So for business owners, there's been some changes to section 179 for like bonus depreciation, but the simple way to explain this one is I was a young or new parent and needed a minivan because I'm just that kind of a person mentally. And I went out and bought a minivan, but then I found out I could have bought like an F-250 and deducted the whole thing. So can you just like and explain at a high level how I messed up because my vehicle was under 6,000 pounds? Yeah, that's funny. My husband and I were actually looking into this recently because we do have, you know, while our house is being built, we have a rental property. And so we also are looking for a truck so that we can get snow removed from the house. So I'm based in like Western New York area in Buffalo. Go Bills. And yeah, so, you know, it just offers a really decent opportunity to expense a vehicle specifically. It allows, you know, more so being able to pull forward depreciation for that expense, you know, that you would normally do over like a five-year, 15-year time frame. And, you know, taking a higher percentage of that early on and depending on, you know, what business it's associated with and whether it's, you know, passive or active participation and material participation, that's where it becomes, you know, more critical as to how the loss or even though depreciation is not a real expense per se, being able to offset, you know, active income that you earn. So my plan is to, in part or in full, deduct a cyber truck when I get out of my minivan phase that I'm in right now. And I told my wife this and she said that I didn't have to worry about the tax deduction because she would leave me and the divorce would cost way more than the savings and the taxes because cyber trucks, she said, are only driven by, you know, weirdos that live in their basement that play video games until 3 a.m. in the morning. I was like, who do you think you're married to, Christine, you know? You are wearing a headset. I know, yeah. So if the slipper fits. So there's a bunch of other ones. We actually just recently did a webinar on small business owner tax strategies. So there's, maybe just looking at a couple of these, like, so there's meals and entertainment. So that's what, what is that 50% deductible? Can you explain how that one works for business owners? Yeah, so normally it is 50%. Interestingly enough, over the last couple of years, you're actually allowed to deduct up to 100% for the meals specifically. And, you know, yes. So, you know, with meals and entertainment, like obviously running a business, there's, there's some schmoozing involved, regardless of what line of business that you're in, you know, just networking in general and making those connections with people and Travis has definitely treated his team to a few team dinners. So thank you for that. Oh, yeah. We like to have fun here. Yeah. I mean, and I mean, and there's some opportunities here, right? Like if you go out to eat with, you know, a prospective client or somebody that could be a client and you talk business, it's perfectly reasonable to deduct that as a business expense. So there's a lot of opportunities there as people could write off a lot of things they don't realize. So maybe we could talk about just like schedule C and S-corps and setting a reasonable wage and QBI. Let's just like lump all those in together. So sort of like at a high level, somebody's making some money on 1099, you know, why would they set up an S-corp? What are, you know, some of the benefits? Yeah. So one of the biggest benefits with setting up an S-corp is that you can, so normally with a schedule C, I should say, you have to pay your, you know, employment taxes and then from an employer perspective, but also from an employee perspective. So you're basically getting, you know, hit from both sides. Whereas with the S-corp, you do have some significant savings on the self-employment taxes as far as, you know, your expenses associated with that. There are other requirements that come along with it though. So we mentioned the reasonable wage and reasonable compensation. So if you make yourself an employee of your S-corp, that compensation would be issued via W-2. And, you know, you'd have to pay the self-employment taxes and then you could also take owner's distributions, but they want to make sure that you're not, you know, gaming the system in the sense that you're totally, you know, tanking your W-2 income so that you can take more owner's distributions and not have to pay that self-employment tax. Yeah. I mean, so there's like, there's a lot of different ways to do this, right? Like I think people don't understand too that when you do an S-corp, you got to file an entirely separate tax return, right? Like it's a corporate tax return. I think it, what is it called? 1120? Yes. Yeah. And you've got to file that and it's like, you're filing it as if it's a separate entity. And so you're essentially paying yourself wages in that S-corp and you're taking the rest of it as a profit distribution called the K-1, right? And so you get the K-1 and that is reported on your individual return and then everything else goes through that 1120S. And, you know, what, what does this mean for business owners? I think in general, right, if you're making probably more than like 70, 80,000 in profit from a business, like consistently, it's probably worth it. And in terms of the costs, like the cost range, probably anywhere from a couple thousand dollars to many thousands of dollars, or even five figures, if it's like a very complicated S-corp with multiple partners and employees and stuff like that. So we are offering this service for SLP wealth tax, but it's more of a, we're being careful in terms of which ones we accept because there are S-corps out there that like, you know, they're just very complicated and very like involved. And we just want to make sure that we're taking like the creative with 100,000 of income that needs to set up an S-corp, which is very straightforward, right. Or the veterinary animal three, you know, employees that like is a solo single member LLC that like, you know, everything's very again, straightforward. So that is like a little bit more expensive than doing the individual return thing. So what we kind of look at it, right, is just, does that make sense from a ROI perspective? Like is somebody getting way more in tax savings than they're getting from their cost of doing the S-corp because that's, you do have to, you know, have a tax person that's doing this a lot more detailed reporting and filing and stuff, right. Is that generally right? Yeah. And I think the, you know, the critical component as far as, you know, which S-corps and businesses were accepting, it goes back to the fact that, you know, this was all started with student loans in mind. And as far as what has the most direct impact on your student loans, it is your individual return. And we want to make sure that we're staying grounded in that mission, right? Yeah, definitely. And I think that what we're kind of telling people is if we can't take on the S-corp, we want to do that because we want to help you, we want to make it convenient, we want to make it easy. And if we think there's some sort of reason why we need to not take the S-corp on, like maybe you have like a, let's say we have a dental practice owner that's multiple partners with 10 employees, right? We might want to tell that person, hey, work with another firm on the business return, and then we'll take the personal return, which is where your student loan impact is going to come from. And then hopefully Becca will be able to take that dental practice with multiple partners return to one day very soon. But we just, we don't want to be, you know, we don't want to take on anything that we don't think we're going to be the best in the world at this moment, you know? Yeah. Should we circle back to our corporate speak, biting off more than we can chew, drinking from a fire hose? Oh no, oh no. Well, next couple tips. So there is something called QBI, qualified business income, right? And this is where you can deduct up to 20% of profits subject to a 50% wage limitation. So this is also a way that people can save with S-corps. You can save, I think, up to, I think it's like one, I don't know what the exact number, it's 180 and 360 as a married couple. I might have those numbers wrong. Cause I'm saying them off the top of my head, but is that about right? Yeah. What's interesting too, is like, I'm just looking at the IRS website for this and it also includes REITs apparently, real estate investment trust, which I did not know. That's interesting. Yeah, it is interesting, especially from like an investment perspective. But the, yeah, go ahead. I was just going to say, that's definitely something to consider as far as, you know, tax planning and things to make sure that you're keeping an eye out for. Like the, yeah, the QBI deductions going away as of now in tax year 2025. And, you know, if you think about writing off 20% of your profits, you know, that could be an enormous thing. Now, if you're a professional, you have limitations where you can't write off QBI once you're above a certain income threshold. So once you're above like a fairly generous, but not crazy generous income number, you then get subjected to a test of like, what kind of business are you in? And if you're in a, and most of our people are going to be in businesses doing something that their education is required for them to do it. And in that case, you won't be able to do QBI if you make too much money. But the flip side to that is if you can do retirement plans and set up stuff to lower your AGI below a certain level, you might be able to get a lot of that benefit. So that's kind of cool. And then there's one more weird benefit of S-corps where at least according to my CPA, certain states have built up ways to bypass the state and local tax limitation on deducting those expenses, where you essentially have your S-corp pay for your like state tax liability. And then you're able to deduct that on your personal return. I was like, this feels super sketchy, but, and maybe it, maybe it is, you know, it's definitely a workaround, but it seems like a lot of states are doing this right now. And that can be a big amount of money, right? Like if you're liable for, you know, say, say this, I don't know if this is liable in New York off the top of my head, but say it was, and you have, you know, your 8% income tax in New York, you make 500,000 a year. That could be like 40 grand that could be fully deductible if you're able to pay it through your S-corp and deduct it on your personal return, which is probably saving you like 15 grand or something like that in taxes. I mean, it could be really significant, right? Yeah. I think that's called the pass-through entity elective tax. And, you know, it's interesting. I was actually just looking into that for a client of ours in California. Yeah. And it's, it's, it's, it's super interesting. It's super like questionable because Congress, Congress clearly intended to not allow that to happen, at least the 2017 iteration of Congress. But like we know there's loopholes on loopholes on loopholes. That's why, you know, it's probably why SLP exists because of loopholes. Oops. So now we're going to bring it back to the student loan world. So we want to talk about a couple different things for student loan borrowers to know extension strategy where I'm going to cover maybe like maybe just four for now. So the extension strategy is we think you could potentially file for a strategic extension, especially in advance of a big income increase, and get to claim an additional year of lower AGI for IDR purposes. That could be massive, right? Can you talk about that, Becca? Yeah. So if you have an IDR anniversary that falls between April and October, that's really when you would want to consider this strategy or when it would become more critical. The other thing is that you could actually reset your IDR anniversary date by, you know, recertifying your income. So especially for people this year that have, you know, maybe they are married, they filed jointly last year because they weren't sure what was going to happen with student loans if the pause was still going to be extended and they wanted to capitalize on that married filing jointly scenario. You know, if they're doing their 2023 taxes in 2024 as married filing separately, that's when they can kind of initiate this strategy moving forward to do married filing separately in April and then, you know, have the extension through October 15th in subsequent years so that they can ride out the lower income, assuming that, you know, you're getting regular raises from your job or making more income, etc. Yeah. So that's really, you know, the strategy is that you can ride that out and, you know, strategically recertify your income in that way. The biggest thing with that is that you still have to make sure that you pay your tax liability by April 15th every year. Otherwise, there's a penalty, right? Yep. Yep. So the crazy, amazing implication of this is you are a physician finishing your fellowship, you made, you know, $70,000 last year and your recertification dates in July every year. So if you just file on time, which most people are going to do, you're going to have to recertify based on that April return. Whereas if you file for an extension, you delay it till August, for example, you're filing, which is before October, but after July, then you might be able to use that extra, that 70k, you know, fellow income for an additional year. So if we're comparing, you know, a fellow, let's say an urology that's making, you know, whatever, 70,000 and their urology fellowship to let's say 400,000 for their attending job, that can make the difference if you're doing PSLF of saving something like $3,000 a month. So that could be like a five-figure, mid-five-figure savings for high-income people. Even if you're just like a recent grad, you know, you're a student, you know, that finishes, you know, PT school and you're making 80,000 a year and you use this extension strategy and you're going for 20-year forgiveness or PSLF for that matter, you could maybe save 500 a month using the strategy for that year that you have the higher income switch. So that's like a really big deal. And most people I think are not going to want to do the strategy alone because of that caveat about needing to pay any estimated tax on time, which means you have to already have the return done, but then also not file it. So that's very like, not something that most people are going to want to do. And that's going to be something that make most people nauseous thinking about. Yeah, 100%. The other thing that's interesting about like the new grads with that is that, you know, they have the save plan available to them right now. So their balance isn't growing while they have those really low payments. And, you know, I'm assuming with new undergrads, especially, you know, you probably didn't have loans from before 2014. So you have the opportunity to do the five years of save and then switch to the 20-year plan after that for new IBR. Yeah, I mean, amazing opportunities, really. Let's do a little easier one. People with children, one person's a student loan borrower, one person's not. What do we think the IRS is going to do in terms of calculating family size based on tax returns? Yeah, my guess is that if you have approved studentaid.gov, if you've authorized them to retrieve your federal tax information, they're just going to go straight off of your tax return. And so in a situation where it's a single-debt household for, you know, a married couple and they do have dependents, what I'm recommending right now, especially, you know, if they have itemized deductions that they would normally take if they're like married filing jointly, is having the spouse with the debt take the dependents and then take a standard deduction probably, and then have the other spouse take itemized deductions. Yeah, I mean, it's a really huge opportunity just to make sure you're being aware about what person claims what dependent, really. What about for community property states? Filing the 8958 form to split the income evenly, how could that save people money? Yeah, so we've talked about this a lot. The 8958 and splitting the income for community property states is, you know, they split the income 50-50. So in a situation where, you know, there is a single-debt household, the couple that's married, you know, there's the breadwinner loophole where, you know, the person that makes more money can, you know, allocate like 50 percent of their income to the other spouse, which is really helpful in reducing their income for IRS purposes and, you know, linking to studentaid.gov for IDR recertification. And then also, you know, in the opposite situation, if the spouse is, that has, you know, the lower income or, you know, even if like you want to be a stay-at-home parent or something, you know, that's something to consider from a married filing separate situation as well for community property. They can actually utilize either like their W-2 or, you know, whatever income statement they have, something proving that they have, you know, less income as alternative documentation when they go to recertify their income for student loan purposes. I remember one consult I did for an orthodontist in California, and she had a husband who's a stay-at-home dad, and she was working five days a week, and she was miserable because she had three kids. And she was just like, all I want to do is like hang out more with my family, and like my loan payments are so big, and like housing is so expensive, and I feel like there's no way I can do that. And like we showed her that form 8958 split where she's able to like report basically on half of the income instead of all of it, and then, you know, cut her payments by like 60, 70 percent, and she was so excited, and she's like, she's like, now I can afford, and we showed her like their marginal tax rate too and how high it was, and just like a couple tweaks around like expenses, and she was able to cut her hours a lot without losing that much money. And then, you know, so she went from five days a week to three days a week, and she was just ecstatic. So I mean, I think some of this stuff is like amazing stuff that you can unleash from a tax saving strategy. The last like big student loan thing I want to talk about is married filing separate versus joint. There's a bunch of like, I don't know what you'd call this, but like electrified third rails that you can hurt yourself with for this, right? Like there's like the Roth IRAs that you lose if you do separate, and you have to recharacterize if you did a direct contribution if you need to file separate. There's like ACA premium subsidies, right? Like Medicare subsidies. There's some real estate deductions. There's, you know, way big extra taxes if one person makes way more than the other. Why is, you know, getting that married filing separate decision so important now that we have, you know, the save plan and these new IDR rules? Yeah, so the biggest influencer for married filing separate that I'll mention, especially specific to student loans and education specifically, is the student loan interest deduction. You automatically forfeit that, which that is an above the line deduction to get you to AGI. Now depending on what your income's at, you may not qualify for that anyway, so it could just be a wash for some people, but it is really dependent on your specific situation. The other thing is also the dependent care credit. Not to be confused with the child tax credit, but if you do have kids or anticipating on having kids, the dependent care credit, that's something that is forfeited with married filing separately as well. The big thing with that, to be honest, it's really not that beneficial of a tax, the deduct, or yeah, credit for people that do have kids and that send their kids to daycare or something. It's like you can claim up to three thousand dollars of expenses per kid, only up to six thousand dollars, and you only get like twenty percent of that back. And so, you know, from a big picture perspective, if you're saving more than fifteen hundred dollars per year on the difference in your student loan payment, it doesn't really matter. And you can also have like a flexible spending account if your employer offers that up to five thousand dollars to pay for daycare expenses. Anyway, I have to mention something else. So like, you know, all these benefit programs like my wife has access to because she works at a hospital system, like even for me, it's confusing. It's confusing for me sometimes. I know it's confusing for like people listening, you know, like some people are hyper organized, really, you know, on the ball with stuff. But gosh, like I remember one time, our two year old got lice from like some like little kids play thing that she was at that, you know, and then like the whole house had to be like, you know, fumigated. And we went to some sort of like, you know, de-licing, like, you know, I don't know, like luxury clinic where, you know, you get like a mocktail while you're getting your head like detoxified or so. I don't know. I'm joking a little bit. But and then I realized, oh, I'm supposed to use my FSA money on this or something like that. But then I got to shuffle through my, you know, dad gum, like wallet and go find the debit card with the right thing that I'm supposed to use, like it or take a picture of the receipt or something. And it's just, you know, so sometimes it's helpful to talk to your tax person and just say, like, will this be life changing or not? Like, is this going to make a big difference? Like, is this something that I should really fool with? Or is this something that I can just chalk up to just it's not, you know, it's just the juice ain't worth the squeeze to use a Florida panhandle phrase from my childhood. But so let's just talk now about, you know, like, why SLP wealth tax, like, what does it look like to work with us? Right. So I mean, I think, like, so at a high level, we want to provide tons of value. And we also want to make sure that we're not biting off more than we can chew. And so the way that we approached this was, you've got to be an SLP wealth financial planning client to work with our tax team and SLP wealth tax. Becca, in terms of like, integrating tax planning with like, knowing that you're filling out the back to Roth form correctly, and like you're doing the, you know, the tax stuff with retirement correctly, and all these different things, you know, can you maybe talk about like, at a high level, why are we doing it this way versus just, you know, here's the money to do my tax return? Yeah, so I'm gonna be honest with you. I think there are a lot of situations where, you know, people say, go ask your CPA, even like some calls with clients that I've had more recently. You know, they're like, Oh, can you help me with this, you know, investment account, retirement, blah, blah, blah, and help figure this out. And I'm the first person to say I'm not a CFP. Like, that piece of the financial puzzle is critical. Like I, you know, and it's great that we have both in house so that we can stay in lockstep. I think probably the biggest pain point and, you know, friction area that's going to be removed for a lot of our clients is that they don't have to, you know, have their student loan plan and then go communicate with a different accountant that may not actually be on board. It takes the one, the communication barrier away. As far as, you know, them understanding it and being able to communicate it in a way that their specific accountant or CPA is going to understand it. But also, like, it just removes all of the barriers between these. Like, we can do all the conversations, have all the conversations, but like in SLP Wealth from your student loan plan, from student loan planner side, which I think is, you know, another piece to mention is that that is, you know, a prerequisite as well. Get your student loan plan done. We want to make sure that we can help you in that way. And then, you know, become the SLP Wealth client and then get the taxes so that, you know, you have this team and they're all on the same page, which is a huge advantage. So let's talk about some deadlines. So the, this is coming out November 14th, at least hopefully. And that's a Tuesday. And then the following day is November 15th. And so what the way this service is priced, right, is the first question is, are you a student loan planner client or not? Yes or no. So if someone's listening to this and they are not a student loan planner client, if you have a significant student loan balance, that you first need to go sign up the student loan planner console, which you can do at studentloanplanner.com book, and you can get that scheduled. Okay. And once that's scheduled, then now I'm going to go to step two, which step two, people that are already student loan planner clients can just skip straight to step two. And this also, if you're an SLP Wealth client listening to this, that hasn't signed up for tax yet, you can also skip to this step two. So step two is slpwealth.com slash tax. That's where you want to go to sign up for the tax services. Now let me explain a little bit about that, Becca. So like, let's say somebody is listening to this. So just so people know, if you sign up for our tax services after November 15th of 2023, it's a five, basically a $500 sign up fee. If you sign up before it's a $0 sign up fee. So that means today and tomorrow, you can sign up for the service with no sign up fee. And what is the cost of the service? So we package everything together. So it's financial planning for $99 a month for anybody listening to the podcast, plus tax planning and prep federal state and local for personal returns at also 99 a month. So combined, that's 198 a month. So the way I would describe this to people is if you go look for profession specific fiduciary financial planning, you're going to pay at least double that probably at least double that. And you're also going to get half the service because you're not getting any tax advice. You're not getting any tax planning really, in most cases, that's going to be, Oh, go talk to your CPA. And then your CPA and your financial planner are going to have a meeting. And probably it'll be a little awkward because the CPA is trying to figure out what can they share because it's a separate entity. And then like the CPA might have a wealth planning business and they're worried about the financial planner, like, you know, I don't know, you know, you know, we're working with the financial planner instead of them. And, and they're, but neither of them are going to do anything about student loans. So the, the big people we would really want to do this would be anybody that's a married couple that's got married, falling separate questions people in community property States where, you know, we talked about that before people with they just want all of it in one place, all of their tax people and their financial planning people being besties and talking smack about NFL stuff while also talking smack about tax strategies to save money. It is an enormous benefit. And it's why we created this to be maximized for the experience versus just trying to claim that we have the cheapest cost. You know, Becca, if somebody charges $200 for a tax return and they make a $20,000 tax mistake, what's that net ROI look like? Not great. Yeah. Yeah. It's very negative. Right. So that's, so that's like the key thing, right. Is, is as a, as a person buying any service, right. It's like, what's the value? What is the value? Not the cost. Cause the value is what is the benefit minus the expense versus the cost is just like, what's the cheapest thing. And you know, sometimes something's a commodity in which case, sure. Get out the cheapest costs, like steel and refinancing, total commodity. Right. So seek the lowest interest rate, but tax planning is, you know, is absolutely not a commodity because somebody can, anybody can fill out your return. The question is, is any of it right? And are they talking about ways you can save money for the future? Right. So all the strategies, Becca, that we talked about today, it wouldn't be fair to say that those could save people four or five figures in taxes, potentially annually. Easily. Yeah. Yeah. I mean, so, so that's, that's what we're really trying to pitch here is if you like it, great. If you don't like it, no problem at all. And so again, that's that's slpwealth.com slash tax. And that's how people that are student loan planner clients or SLP wealth clients can go ahead and sign up for that service. And if you're not yet a a student loan planner client or an SLP wealth client, then you just go to studentloanplanner.com slash book. You'll schedule your student loan consult and then go schedule your like financial planning onboarding. It can be after November 15th, right? You can go schedule it for, you know, after Thanksgiving or whatever. And then make sure you've also signed that tax agreement. So when you fill out the onboarding form for SLP wealth, there'll be a question that says, do you want to add tax? If you're not already an SLP wealth client, you'll just answer yes to that. And it'll take you to that tax engagement letter to sign. So we're really excited about this service. We think that hundreds of people are going to sign up, which is, I think Becca, is that fair to say it's a little scary? It is. It's a little overwhelming, but we're ready for the challenge. We want to help as many people as we can. Yeah. We've already had an enormous amount of people sign up and I will say that we've reserved the right to kind of pause enrollments at any time if we kind of feel like we've got more than we've got competent tax team people for. Resources, yeah. Yeah. So that's one thing we're a little concerned about. That's why, why are we, why are we charging this $500 enrollment fee if you don't sign up today or tomorrow? It's because we know that people procrastinate and they're going to come in January with all these tax questions and we might have to go hire away a tax person at a premium rate from another firm just to be able to take that person's business if, if people wait. And so that's, and so that, that, that $500 signup fee actually becomes $1,000 signup fee if you wait until February because we know that, you know, people that are coming to you, somebody last second in February are probably also not going to be as organized with their information as people that are, you know, trying to get the good deal that we're offering today to sign up ahead of time. So any last kind of tips for people or thoughts about getting tax help from SLP Wealth, Becca? I'm really excited to, you know, help everybody here. You know, there are different strategies too that we're looking forward to from like a long-term perspective for student loan stuff. And I can't wait to talk more about that and appreciate you, you know, introing me and having me here and bring me on the team. It's been awesome. Yeah. I mean, we're really excited for you and the other team members as well that we brought on. We want to provide a ton of service in this area. And we are just being very intentional about rolling this out carefully so that we do an excellent job. And I think that our team is going to do that and more. So if you want all in one place, no more confusing conversations with your accountant, no more back and forth emails, no more explain this married filing separately thing again for me, no more having to figure out how to do the backdoor Roth IRA by yourself and recharacterize your stuff by yourself. And again, if you value your time, if you are wanting to maximize the net savings on your taxes, and if you just would rather spend your time doing other stuff besides worrying about student loans and taxes, we would love to worry about them for you. So for a very reasonable price, by the way, go ahead and comparison shop. And I think you'll be very surprised at what firms that know anywhere close to what we know are charging. And then obviously, a lot of those firms do not have any of the student loan knowledge, which is a burden that you carry as a person to explain that to them. And then you got to go check their work to make sure that, yeah, they did file separately. They did put the dependence on my return. They did file form 8958 correctly. They did file the 8606 backdoor Roth form correctly. So if you want one-stop shop, we're the spot for it, I think. So again, studentloanplanner.com book. If you're not a student loan planner client yet, and then if you are a SLP client or you're an SLP wealth client, or you've already, you know, took action on that step one and booked your consult for any time in 2023, then skip to that step two, which is slpwealth.com tax. And you can schedule your onboarding meeting. You'll be matched. If you're not already an SLP wealth client, you'll be matched with a profession-specific financial planner, which is really cool. And then you'll just sign that tax engagement letter. And then we send that first invoice after your first meeting. And if you hate it, we actually have a money-back guarantee on the first month. It will reduce, press the refund button because it's just easier than disappointing people. So that means that there's all upside and no downside, really. And I guess the last bit I probably should say, Becca, to just in case the, um, you know, you know, my IRS fears, right? So SLP wealth is a, uh, uh, as the SLP wealth is a, as you see registered investment advisor with headquarters in Durham, North Carolina, uh, and all investments, uh, come with a risk of loss and none of the following that we talked about should be constituted as a personal tax advice. Uh, unless you're our clients, in which case it could be, if we talked to you one-on-one. So slpwealth.com slash tax. Thanks so much for being on the show, Becca. Thanks Travis.