EXCERPT from the last show of 2010 on the Real Estate on Radio Show! You gotta hear this info and how it can improve your financial situation...totally applicable to what you do through 2011!
Folks we welcome to the show, Mr. Sanford, or as we call him Sandy Botkin! He's an attorney and Certified Public Accountant. He is the Chief Executive Officer and principal lecturer of the Tax Reduction Institute based in the Washington DC area. Sandy has extensive financial and legal experience including five years as a legal specialist in the Office of Chief Counsel for the Internal Revenue Service.
In fact, Mr. Botkin was one of eight attorneys selected by the Internal Revenue Service to train all new attorneys to the Internal Revenue Services Corporate Tax Division. We welcome to the show, Mr. Sandy Botkin. How are you, sir?
Sandy Botkin (SB): It's my honor to be here!
Matt Sapaula (MS): We're talking about the end of the year tax tips. Ah,
what are some of the things we can do? As a homeowner, as a real estate
investor, before December 31"st?
SB: Well, you know, it's interesting. You can prepay some of those taxes
like state, like property taxes where you can pay it this year and you
get a deduction for this year even though it's paid in part for next
year. So you might want to prepay up to a year's worth of taxes this
year. Here's something that's really interesting I bet a lot of people
missed. Charitable contributions. Now if you make local charitable
contributions to your local church or synagogue or mosque or whatever it
is you do. How about doing it by credit card? This way you get
deduction. This year even though you don't make the payment on the
credit card. Till next year. Not to mention, the fact that you get some
One of the biggest things [also] are pensions and IRAs. There's a
special deal that came in this year . Where, if you convert your
IRA, 401k, pension, SEP.... to a Roth IRA, all of that money out of that
IRA is tax free for the rest of your life. You've got the government
off your back. Now there's a disadvantage. When you convert you've got
to pay taxes on the money and you might say, "Well why Sandy, why do I
want to pay all these taxes?" Well the answer is tax rates are going up.
And they're going way up with a $14 trillion dollar deficit. Taxes may
very well be on sale, so by converting you pay taxes now, but you avoid
paying taxes at the higher rates for the rest of your life. And that's
known as a Roth IRA Conversion. Now I do want to emphasize one
thing.There are some side effects here. Now it's not like drug companies
where they tell you side effects are blindness, or hearing or death,
that's my favorite side effect.
Here there is the side effect. And that, number one, some credits may
get eliminated because you're making a lot more money with the
conversion and you don't want to do this if you're going to be applying.
Think for [college] financial aid to your kids one thing you don't want
to show is large income during the year where your applying for
financial aid for college. So you wouldn't be counting on this, but it
may be a very good time to do this right now.
MS: Outstanding! We've definitely been preaching that and definitely on
the Roth IRA. I mean, as you said, if taxes are in sale, why wouldn't
you want to buy something that is on sale versus having to pay taxes at a
much higher rate, potentially down the road and, get smacked in taxes
at the time in your life when you need the money the most.
Here's another thought too. With the whole Obama issue and extension of
the Bush era tax cuts in a potentially rising tax environment, and how
those laws affect homeowners and real estate investors planning for
retirement, especially trying to head towards financial independence?
SB: Well you know with a 14 trillion dollar deficit. And that's what
were talking about here. You could be sure of one thing. Taxes are going
to go up. But then they change different things by eliminating
deductions. And tell you how they're reducing rates. You can be sure,
taxes are gonna go up. It's going to happen. So with that understanding
every deduction you get is worth more money. Let's face it if you're in
the 45 percent bracket. And you have a hundred dollars of deductions and
that's like getting a 45 dollar refund. Verses if you're in the 35
percent bracket. So with taxes going up. The deduction for that interest
the deduction for those for the business deductions become really
really beneficial so but there's but then there's always the question
and that raises uncertainty are they still gonna allow deduction for
interest on your home you might think oh sure.
MS: Absolutely, and you know lots of people today you know they're
starting their end of the year planning and planning for their new
year's resolution. And these times have really hit people hard and some
people think that they may need to find a second job or get their
stay-at-home spouse and to work.
SB: You know, I see it all the time, and I have absolutely no a clue as
to why people do that. People, the people want to work harder and harder
in order to get ahead, and they pay, and the companies just pay them,
as little as possible to keep them. Which I guess is fine because most
people just work hard enough to avoid being fired anyway. What I
recommend and this is something that I hope everyone takes to heart and
I'm gonna talk to you the way I talk to my own family.
Wow...you gotta listen to Sandy Botkin of the Tax Reduction Institute and the rest of this interview!!
If you are so inclined, be sure to sign up for a FREE 45-minute webinar
we are hosting with Sandy later this month. A 10-minute interview on
the radio is just not enough! I want us to get from the WOW...to the
HOW! You feel me?
Let's have a BREAKOUT 2011!! Happy New Year!!!
Tags: 401(k), Free Webinar, Home-Based Business, IRA, Real Estate Investing, Real Estate on Radio, Reducing Taxes, Rising Taxes, Roth IRA, Sandy Botkin, Tax Reduction Institute, What Rich People Do, WLS 890