REFS NEED LOVE TOO
An honest perspective from the 3rd team on the pitch... the referees. Through humor, analysis and education, we are slowly changing how people view referees and officials in all sports. We care and have a love for the game as much as any player or coach. Sometimes even more. Youth soccer (proper football) is a multi-billion $ industry in the US. Tremendous money is spent on players, competitions, travel etc., but almost nothing spent on developing the next generation of referees. I hope that this Podcast inspires, educates and humanizes the next generation of referees for their own development and appreciation from the players, coaches and spectators they need to work alongside.
REFS NEED LOVE TOO
Business and Tax Considerations for Sports Officials with Special Guest Robin Ruegg
IMPORTANT DISCLAIMER: This podcast is not intended or should be taken as tax advice. Consult with a tax professional to help you with your own specific tax situation.
Robin Ruegg, a USA Brevet rating gymnastics judge with over 40 years of experience, joins us to unravel the fascinating world of gymnastics officiating. Robin shares her journey from a gymnast at the University of Minnesota to a respected judge, offering insights into the crucial yet frequently overlooked financial responsibilities that come with being a sports official.
We tackle the nitty-gritty of tax responsibilities and deductions tailored for referees, judges, and officials. Uncover how to navigate the maze of tax-deductible expenses such as professional membership fees, training costs, and the specificities around officiating. Our conversation dives into the importance of differentiating between deductions and credits, with practical examples, including whether your iPad might help trim your tax bill.
Finally, we focus on financial strategies for sole proprietors, like referees and coaches, emphasizing meticulous income reporting—even those amounts under $600, which often slip under the radar. Robin offers valuable advice on securing your financial future through pension plans like SEP IRAs or Roth IRAs. With personal anecdotes, we highlight the power of consistent contributions to retirement savings and demystify the tax implications of different retirement account types, ensuring you're better equipped for a stable financial future.
Hello and welcome to the Ref Sneed Love podcast, a show that gives you a real, raw and behind the scenes view of one of the hardest jobs on the pitch the referee. I'm your host, david Gerson, a grassroots referee with over 10 years of experience and over 1300 matches under my belt. You can find me at refsneedlove2.com, on Instagram, tiktok and YouTube. A friendly reminder that during the season of Thanksgiving and joy, remember to treat yourself to some referee goodies. Maybe it's a new whistle, new scorecards or simply some killer. Refs need love to swag, such as the new may the laws be with you t-shirt. If you don't want to buy it yourself, send a link to my website to your family and tell them to hook you up. All right, guys, I am telling you this is the most anticipated podcast I think I've ever done.
Speaker 1:We've got Robin Ruegg, who is a USA Brevet rating gymnastics judge. It's the highest rating one can earn domestically. And I know you're probably saying, guys, okay, I'm not that interested necessarily in gymnastics, just hang on to your seats. She has officiated gymnastics for over four decades at the age group and ncaa levels. She's got local, state, regional, national meets. She served as an auxiliary official at the championships of the usa, the world championships, a link for trials in the 1996 olympics. Okay, she is very smart. Let me tell you I am not going to be the most intelligent one in this conversation. She's got a bachelor's degree in civil engineering, a master's degree in business, both from the University of Minnesota, go Gophers. She retired from a career at the IRS as an engineer and senior manager specifically working on audits for large and mid-sized businesses. She serves as the finance director for the National Association of Women's Gymnastics Judges on a volunteer basis.
Speaker 1:And, guys, we are going to be talking taxes today. Taxes. I know no one wants to talk about taxes, but we need to talk about taxes because if you're a referee, you're an independent contractor and you have a business and you could be claiming some deductions potentially. I want to just say, before we get into this, that Robin's comments are not intended as tax advice. My comments are not intended as tax advice. I was an anthropology major in college. I do marketing Okay. Go find a tax professional with the initial CPA after their name for tax advice, okay. But we're going to have fun today because it's an important topic. Robin, welcome to the podcast.
Speaker 2:Thanks so much, Dave. It's good to see you again.
Speaker 1:Oh my gosh. Yes, robin and I got to connect. So I was a speaker at the National Women's Gymnastics Judges Symposium a while back and I got to sit in on a session that literally was the most refreshing and eye-opening and I know no one would possibly think about this as refreshing, but man, no one talks about it and her session was called Running a Gymnastics Judging Business and I was like absolutely enraptured and I envisioned this day in my future, that one day we would talk. I'm just so glad we're talking about this, robin, seriously.
Speaker 2:I had similar issues and concerns, frankly, with our gymnastics judges and that was what led to putting that session on was judges just don't know. What do we do? What am I supposed to do? Am I supposed to claim this? Am I supposed to deduct that? What am I supposed to do?
Speaker 1:Not anywhere, like for us in US soccer, and I'm sure not for national for gymnastic judging certification. It's not like you go on there and all of a sudden they're like hey, you're running a business, now you need to be thinking about your expenses for this, you need to be tracking your mileage for that, you need to be thinking about your meals for this. No one does that, and so it's amazing that no one does it, and I'd say it's like shocking. But that's not what the gymnastics organization or US soccer is thinking about. They're thinking about laws of the game for you, obviously, the rules of the competition and judging and how to keep score. But it's a really big deal and I'm sure your fellow colleagues must be just so dying to have those conversations with you. I'm so glad we're here today.
Speaker 2:Anyhow, thanks for inviting me.
Speaker 1:Oh, those conversations with you. I'm so glad we're here today Anyhow, thanks, but thanks for inviting me. Oh my gosh, yeah. So let's talk a little bit of gymnastics judging first. So again, I read it in the intro so 40 years you've been doing this. How did you get into being a gymnastics judge?
Speaker 2:I was a gymnast at the University of Minnesota and one day our coaches sat us down and said we really need some judges and you guys would be great at it. Go down and take the test. So that was on a Tuesday. So I went down and took the beginning test on Saturday without studying nothing. I was doing gymnastics under the rule, squeaked by, passed and all of a sudden I was a judge.
Speaker 1:Oh, that's amazing. That's so cool. So what is it? So you've done it for 40 years. Obviously, there must be something that you enjoy about it or like about it. What keeps you in the sport?
Speaker 2:I think there's a couple things. First of all, obviously, the love of the sport. You got to love gymnastics and gymnasts and hanging around gyms, so that's fun. But I think also the challenge Judging gymnastics. There's just so many rules and now we're judging I was counting up, I think, 20 different levels. I've been judging times, four events, like 80 different sets of rules I've had to somehow conquer and, trust me, I haven't always conquered it. We use sheets and we have references to help us handle it, so I think it's really good for your brain. And then, really I love hanging out with the other judges because you find your people and they're just as much geeks about gymnastics as I am and we can sit around and talk gymnastics all day long.
Speaker 1:Let me tell you, I went to the national symposium for all my listeners out there. This was a party with a gymnastics conference going on. I showed up at the and I say this in the right words like I showed up at a banquet on the first night, and they're all dancing, singing. It was just a very welcoming, like fun group of people, whatnot. But oh my gosh, the rules of gymnastics. And you talk about having to be outrageously detail oriented to things that are happening at outrageously high speeds. And more and more your events are being televised, certainly at the national level, but even at the collegiate level. Everything's being analyzed with a fine tooth comb. It is very difficult work you do, but it's fun, it's still fun.
Speaker 2:If it's not fun, why bother?
Speaker 1:I think it's amazing. I love that you've done it for 40 years. I hope I'm a rep for 40 years because, just like you said, I feel like it's a one of these things that's very mentally stimulating. It's it is really cathartic when you're in the zone and dialed in. I think it's really stimulating. So let's talk a little bit about the big topic of the day. The one thing I really want to get into, and I think it's so important, is the fact that and I just want to open this up so you did a presentation at the conference I went to and you called it running your business as a, or running your gymnastics judging business. And obviously I'm in the world of soccer, but it could be running your soccer referee business or running your football officiating business. Why do you call it a business?
Speaker 2:I think that's a starting point. We were really part of the gig economy right Sideline. Not too many of us are making a living doing this refereeing or judging or whatever you might be as a sports official. So it's a gig but it's a sideline. If you call it a hobby, then you still have to count all that income but you don't get to take all the expenses.
Speaker 2:And also I think it's important for us as officials to be businesslike and to run ourselves like a business. We fill out, we sign contracts and we figure out what we're going to do and who's going to do what, and we're covered by insurance if we sign these contracts and whatnot. So the more businesslike we are, I think, the more businesslike the people who are hiring us will treat us. And that's been boy, that's been a thing for me for many years.
Speaker 2:And also in gymnastics we're primarily women that are officiating. We have some wonderful guys that officiate with us, but most of us are women and that's just been interesting to watch over the years how that's developed and how. I just think we need to be businesslike in what we're doing. I've spent my professional career as an engineer and manager, so I worked primarily with men and then I come over to the gymnastics side and it's primarily working with women. It's been an interesting contrast, let's say, and just helping our officials to understand no, you are an independent contractor, you are running your own little gig or sideline business, and so if you run that professionally, you're also going to be treated professionally, and I think that's important.
Speaker 1:I could not agree more. I tell you, robin, I'm sitting here getting chills, not because I'm ill with a virus, but because I've never heard someone describe it like that before and it makes so much sense. I'm talking a lot of times in my videos about being professional when you show up to the field. Be really helpful if we do encourage referees to start making that mindset shift switch. Hey, it's not a hobby. You're not going to just run around for play sake. You're getting paid for this. You've signed a contract for this. There's insurance, there's safety issues. It's a business, and that is so fascinating to talk about that. So let me ask you this next question on this, not to get too technical here, but can you have a quote, unquote business without forming an LLC, like a C-corp or an S-corp? Can you have a business and claim like business expenses?
Speaker 2:Yes, it's actually pretty simple and I'm an advocate of the KISS principle keep it simple, stupid, right. And the really the easiest thing to do is to be a sole proprietor, independent contractor, and you just fill out a form, a Schedule C, when you file your taxes. That's all it takes. There's no big. You don't need a lawyer, you don't need this, that and the other things. There may be some things at state level.
Speaker 2:I wouldn't be aware of any other state besides Minnesota, where I live, but it's just really simple. You just do it, and I think a lot of people get worried about that. Oh my gosh, how do I do this? You just take out a. I use TurboTax when I file my taxes and I do my own taxes. Anybody that's worked for the IRS. We got some pride Plus gosh. When I worked for the IRS, my taxes were audited every year, so I knew I had to do it right and I had to really check it. But that's really as simple as it is and the keep it simple, stupid approach. You can go further and I know we have some gymnastics judges that have said, oh, I'm going to be an LLC because it gives me some protection. Could I be that Sure you can do that if you want to. Could I be that? Sure you can do that if you want to. I don't know how many of us are making that much money.
Speaker 1:That really makes a lot of sense, spend a lot of money on lawyers and whatnot to set all that up. So to me I just keep it simple. I can tell you what I do and I just put it on a Schedule C, which is just a form. You're filing your taxes. Yeah, again, I just want to go over that one more time because I know you said it quickly.
Speaker 1:But for everyone out there, there is something called a sole proprietor and that means that you're running a business as an individual. It's not the same as an LLC, but sole proprietor. So I know in the state of Georgia that I did file a form with the state of Georgia to be a state proprietor in Georgia just to register our business name. And so I actually, when I get paid and I sign up with the different assigners that I work for, they actually pay Gerson Adventures as our business. It's a little silly name. So now we so I originally was a sole proprietor and then, as this business grew for me with Ref Seed Love 2, I did actually create an LLC. But yes, my wife and I both started because she's got a pet sitting business as sole proprietors or a business and then we got taxes as individuals, but it's very easy to get started and then you can start making deductions as a sole proprietor right.
Speaker 1:Yeah, it's. I tell you that right there. That little bit of nugget of info that you just shared, Robin, so key. I would bet 90% of referees and officials out there have no idea again that they're running a business and anyone can form it for like literally almost no money at all. I think in my state they might've charged me like 30 bucks, but we're talking a nominal fee to be able to file that and just move forward with the government. Great, Awesome, Cool. Thank you so much for that, Okay. So the next thing I want to get into. We've said, okay, if you're an independent contractor, you can be a sole proprietor. No LLC, no S corp, none of that stuff, C corp, any of that stuff, just as sole proprietor, Okay. So the next question is what are some common tax deductible expenses that referees should be tracking throughout the year? So I'm just going to let's just start at the high level and then we can break down. But what are some of the things that officials and judges and referees should be thinking about from an extent standpoint?
Speaker 2:I think I don't know about you guys, but I have to join USA Gymnastics. I have to pay a fee to belong, and also to the Judges Association, so obviously those kinds of fees that you have to take. I have to go through training and I have to pay for some of that, so I would keep track of that. So I have to go through safety certification and I don't know if I pay for that or not. Anymore I can't remember. It seems like I have to have all these different certifications to even step on the floor to officiate a meet, so those kinds of things. Uniforms we wear a uniform I know you guys do and a uniform as long as it's something that you wouldn't wear just on day-to-day things. I don't know if you, if you have a uniform that has some kind of patch or something on it, that's fine. You can deduct those kinds of things. Those would be typical things. I'm looking at your list of things that you asked me. Office supplies.
Speaker 1:Yeah, I actually I want to go through all of these individual, if you don't mind, but I actually I feel like I need to take a step back. One second, robin. One thing just dumped into my head, because there are a number of people who listen to this podcast, or just a lot of referees, like in my world and I'm not sure so much in gymnastics, but I definitely in baseball and basketball and soccer we actually have referees that start with us at 13, but they could be 20. I reffed with a gentleman today it was first time at first year reffing and he was in his fifties, which is so cool.
Speaker 1:But there are some people who might be listening to this and I know this is going to sound really elementary, but what is a deduction and what does it mean from a tax standpoint? Can, can, can we talk about that? Let's just throw out a random number and say that let's say someone earned an amazing amount of money as a referee $10,000 a year but they earned $10,000 and they had a tax deductible expense of, say, $500 of uniforms. What would happen when someone has a $10,000 income? And this is all simple terms, guys, please come on Again. We're not CPAs, we're just trying to give an example, but what is the effect of a deduction on someone's earned income?
Speaker 2:effect of a deduction on someone's earned income. Okay, so normally, if you brought in $10,000, you would be responsible to pay taxes on $10,000, but you have a $500 deduction and so now you only have to pay taxes on $9,500. Your taxes are lowered.
Speaker 1:Yeah, that's the best simple explanation. If your tax rate was say, now you're just getting taxed 20% on 9,500 instead of $10,000, but it's not the full amount of $500 of uniforms there, but you're getting I don't know, it could be 150 or more dollars that are that now you're not paying in taxes because you have that deduction. Again, those are round crazy numbers there, but that's an example. It's not the same as a credit. A lot of people hear the word credit but that might be literally, if it was $500 off your taxes, something like that. It's a deduction, so it reduces the amount of taxable income, if you will. So, if I've explained that correctly, okay, cool, I just want to talk about that. Okay, so cool.
Speaker 1:So we talked to uniforms and equipment, and this is an interesting one. You said uniforms, such as like things that would have a logo on it, right, like you can't just go out and say, hey, I'm buying a blue shirt Cause I like it and it's good, or something like that. It's got to literally say USA gymnastics, or whatever that might be for us, us soccer. So for us guys and gals out there, I'm talking about our uniforms, all five colors of the uniforms that we wear short sleeve, long sleeve, shorts For uniforms all five colors of the uniforms that we wear short sleeves, long sleeves, shorts, socks. One thing that's interesting, robin, and I'm curious do you guys have specific footwear that you have to wear as a judge?
Speaker 2:No, not anymore. At one time we were wearing high heels and prancing around and putting holes in the mats, and that we don't do that, and personally, I wear tennis shoes now.
Speaker 1:Sounds good, Sounds good, Sounds good. So I will say for my soccer peeps out there, black sneakers. It's a gray zone because a lot of people wear running shoes on the pitch. Are they really referee shoes, turf shoes or cleats or something? It's very clear. Just be careful, guys. You need to make sure that whatever it is specifically for your use as a referee is very important there on that one. Okay. So equipment that's interesting. Do you guys have like equipment that you need to get as what would that be for a gymnastics judge? What are the things you need to bring?
Speaker 2:Yeah, and actually we, a lot of us, are starting to use iPads to do our judging on.
Speaker 1:Oh okay, so technology, so like an iPad that you're bringing for that would that be something that you would expense?
Speaker 2:Yes, to the extent that you're using it for your judging or your officiating. Sometimes people have an. Some people literally buy one iPad and use it for judging, and then they have a personal one. That makes it really clean but expensive. Otherwise, you would have to figure out a logical way to split the cost up. Okay, right, I'm spending 25 percent of my time using this for officiating, and here's how I figured that out.
Speaker 1:Um so, I think, again, the thing I want to stress to my friends out there is be careful, don't just say, oh, I've got an ipad and I'm going to use it for soccer and take my notes on soccer. If 99% of the time you're using it for personal use and you got all sorts of personal stuff on there, that would not be a smart thing. To start expense and try and be crystal clear this is for refereeing, it's not. So I would just quickly guys for equipment for us. Obviously, we've got coins, we've got scorecards, we've got whistles, we've got a ball pump, we've got our bags that we put everything in. There's all sorts of equipment that go in our referee bag. So I would just like for my refs out there, whatever you're putting in your referee bag that you're bringing to games, those are things that could be tax deductible pieces of equipment. If it's specifically for soccer or basketball or baseball or whatever that may, or gymnastics, all right. The next thing is about travel expenses. So what would be some common travel expenses that someone might have?
Speaker 2:Okay, and this gets tricky. So this is where you're going to want to talk to your tax professional.
Speaker 1:Yes.
Speaker 2:But for sure, if you leave town, any travel expenses when you leave town, if you get on a plane and you go to a hotel and part of your meals and whatnot would be deductible for sure. It gets a little tricky if you stay in town and I don't know if you want to get this tricky, but I'll be a little tricky and you can cut it out.
Speaker 1:No, but I think this is common. This weekend I had an hour drive back and forth, but it's in town, I live in the suburbs and so I went to a match, and so I think that's much more common for what we call grassroots officials, as opposed to the referees who do the MLS matches. Let's talk about it.
Speaker 2:Yeah, and that's, of course, most of us spend most of our time locally and if you're just commuting in your local commuting area then that's not deductible generally your mileage. However, there's a way around it and this is where sometimes the tax professionals get a little scared. I'm not scared of it, but that's because I've spent time working for the IRS. If you have an office at home, then you can deduct your mileage from your home to wherever you go and that's how you can get your commuting mileage, what I personally do. I used to live in a house where you're sitting in my office here. I used to have an office literally in my house that was just gymnastics. We downsized a little bit. This office is used for you can see my piano over there. That's not a professional thing for sure, so I can't take the deduction for the whole office, but I basically take. I've got a desk really right here where I'm sitting and it's two foot by five foot and that is my gymnastics judging, and the IRS made a simplified way of doing that at $5 a square foot. So I take a deduction of $50 a year office. I have friends that have literally set up a card table and said, okay, that's my gymnastics judging office and as long as it gets a little tricky. But the reason I like to have an office in the home is so that I can deduct all that mileage, because I drive all over the metro area here Sometimes. Just this weekend I was at the other end of town, which can be 30, 40 miles for me, but it's still within the metro area. So, anyhow, that's the kind of tricky thing. So you can take a deduction for mileage if you have an office at home.
Speaker 2:And it does get tricky. I use the IRS rate. The current rate is 67 cents a mile. We as gymnastics judges are paid that much. So what I have to do is I take that in as income and then I subtract it as an expense. So anyhow, so travel. And then the other one that gets a little tricky is again the meals and entertainment. We talked about that. If you're traveling overnight, no problem If you're in town, but if you meet with somebody and you're doing something that's related to your business, then you can potentially deduct 50% of the cost of that meal that you bought for somebody else. So it gets tricky. Your tax professional can help you, and tax professionals do range between how aggressive they want to be and how scared they are of putting those kinds of deductions out there. But certainly you can track it all. That would make sense and then you can sort it out at the end of the year.
Speaker 1:Yeah, let's talk about specifically. Let's say, you're going to a gymnastics meet or me I'm going to the soccer field for four or five hours, like I've done the last couple of days, and I'm going to buy food that I'm bringing with me. So I'm bringing sports drinks, I'm bringing snacks, or maybe I'm bringing a lunch with me and I'm consuming it on site. Would that be something that I can track and have as a deductible expense?
Speaker 2:That would fall into that questionable area, because if you were commuting to your regular job, you would just provide your own lunch on a regular basis. And I don't know, here at gymnastics we are provided with food. They just give us food. So I don't know. We get fat and happy. What can I say? We sit, we don't run around like you guys.
Speaker 1:We are in the soccer world, we're happy if they have a porta potty at the field. Let me tell you, there's a little different life where we're. That's nice. I would love it if they gave us some food. That would be wonderful. Okay, so let's talk about the next session here. So I wrote down and this is I had no idea. I was just like jotting things down. This is not something that I do in my business or my life, but what about things like referees, particularly for us? We're running around or out, whether it's a soccer official, basketball, official, baseball. You're out in the hot sun for a long time, or whatnot, or on your feet a lot football. What about if you needed physical therapy or massages to deal with injuries or stay in shape?
Speaker 2:This is where we're getting into that questionable area, and that was also. You also had asked me about gym memberships.
Speaker 1:Yeah.
Speaker 2:And there is a publication from the IRS about small businesses that says no, specifically memberships to like gyms and whatnot are not deductible expenses. I would again talk to a professional in taxes about that because there could be some court cases out there where there's been some referees that have been allowed to take those kinds of expenses. But as a former IRS person I wanted to get this in here. We always, when we're auditing, we'd look for what we called LUQ items large, unusual or questionable items. So as I looked at your list I said, oh, this kind of falls in the questionable range just something an IRS agent might look at.
Speaker 1:Good to know, I had no idea. Okay, so the next one on my list. We talked about those training and certification costs.
Speaker 2:So what could be a deductible for that, your costs that you pay for your travel to it? What else do I pay for? I don't know Around those kind of costs, yeah. Okay, cool, because you're required to be certified to do what we're doing to run your business right.
Speaker 1:Yeah, absolutely. I think it. Again, just for my peeps out there, our annual licensing fee for US soccer if you're doing high school, it's another certification as well. Any fees that we're paying to get certified as a referee would be things that could be tax deductible, so good to keep a track on that. I would say that the big thing I want to say is like we list to go through. This stuff is important to, or actually, let me ask you, robin, you're the expert how should people be tracking this stuff? What do they need to be doing to be able to have this? They need to have a receipt for everything. Is that required? What do people need to do to track uniforms, travel certifications, meals, things like that?
Speaker 2:Receipts are always appropriate, absolutely. There is some leeway on receipts. Sometimes you don't have to have a receipt if the expense was less than $75. But I personally run a separate checking account. I have a separate bank it's actually a credit union for my gymnastics judging and I run everything through there. If I take something out, personally, I just personal and I note it there. I'm a little old fashioned because I still have a checkbook, but I do save the receipts Absolutely. Just throw them in a folder for the year. And yeah, if you're tracking things, you can do it many different ways. You can use a notebook. You could just write everything out, that's fine. You can use a spreadsheet. You can use I use a free accounting system. It's called oh what. It's called Wave. It's called oh, there's not really a. This is the way you have to do it. It's just that you need to be able to back up what were your expenses and, yes, receipts are always key.
Speaker 1:Yeah, you mentioned something. I just want to talk about this one more time. So do you have a separate checking account for all of the payments you're receiving as a judge?
Speaker 2:Yes, it's through my credit union and I highly recommend again. I'm a kiss person but I'm also keep it simple, stupid, but I'm also cheap. I don't want to. If you're a business, you're trying to maximize your profit right and one of the ways you maximize your profit is to keep your expenses low. I don't like to pay fees for a checking account. I have an online account that's no fee and I'll we're, and I don't know about you guys, but when we're being paid, I'm being paid more and more with electronic funds and I have them put it in that account and then I write out or use my electronic payments, whatever through that account. So I keep that separate from my personal stuff and that's really. I think that's really important. I have one friend, long-term judge been judging at least as long as I have, and that's really I think that's really important. I have one friend, long-term judge been judging at least as long as I have, and after she sat through this presentation, she came up to me a couple weeks later and said I finally did it. I opened a separate account.
Speaker 2:I heard you and just one more thought about that when I went to work for the IRS. It was a second career for me. We all were audited and they wanted to put us through that so that we would feel what it's like when we're auditing somebody. What does that feel like? And it doesn't feel good, let me tell you. And they looked at my gymnastics judging and I pulled out my checkbook and this was years ago, so it wasn't as much online as it is today and the auditor just went down, looked, check, check, and I walked out of there with nothing, no, no adjustments, nothing. And it was having a separate check-in account. That really seemed to make a difference.
Speaker 1:I will tell you. I have a separate checking account and we have a separate business credit card. So every time I pay for something that is specifically referee oriented for my business, it all goes on this credit card that's connected to that business account and we. So we use QuickBooks to keep up with our expenses, whatnot, and at the end of the year we can give that to our tax professional with everything in one place and I've got everything itemized. But it's coming from one account, getting paid with one account, we're paying for everything with one credit card, and it just really simplifies things. If you're mixing it up between your personal account and personal credit card, it can start getting a little bit difficult to tell the difference between the two things, right there?
Speaker 2:Dave, I was impressed when I met you and now I'm really impressed. You're very smart, you're doing a good job.
Speaker 1:Hey, come on, I don't want to. I don't want to pass one by. I'm not that smart, I just I I, like you, have gotten to the point where it, man, it need to keep it organized. Right, it need to keep it organized is so important, because it's been. It was painful when we had it all mixed together and we couldn't figure it out. And it was just you get to tax time and you're freaking out and you're like, is this right? Should I be doing this, Going trying to go back through the year to find all of those expenses? Oh my gosh, yeah, that was. That was crazy. So it's a really good there. So I've got another question for you here, as we kind of start bringing this towards the tail end here, and this is one.
Speaker 1:So you worked at the IRS. Again, you had one acronym before, which was the large, unusual things, but what would be some red flags to auditors? Honestly, we're talking about small businesses here that are probably making less than $5,000, $6,000, $10,000 a year. These are small businesses, sole proprietors or potentially LLCs. If they're really doing a lot of refereeing out there or judging. What would be red flags for auditors for these types of folks?
Speaker 2:The number one thing is your income. I know a lot of people think, oh, what about my expenses? And we know that you're going to track and you're going to have receipts and you're going to track your expenses pretty well, right, but the number one thing an auditor of a small business is looking for is unclaimed income. In other words, you didn't claim the income that you should have. And I know one of the things that a lot of people think and I don't know I'm assuming you get 1099s from some organizations if you earn more than $600 a year from them, and if you earned less than $600 a year, you won't be getting a 1099 generally. So people think, oh, free reign, I don't have to report that.
Speaker 2:Guess what guys? It is reportable income and the way most judges or officials get caught is that whoever it is that's hired you in our cases we have clubs that hire us. They get audited and they look at they're running these tournaments and whatnot, and they look at it and they go wait a minute, you paid these people, okay, let's go. Did you it? All snowballs on down to us. So that's so. The number one thing is unreported income.
Speaker 1:That's fascinating, I got to tell you. I'm curious how it is in the gymnastics world. To be honest, in the soccer world right now, I could work for 10, 12 different organizations in a year. Easily. There might be a tournament that I work that pays through a different system that I normally use just as a one-off, and it might be $500, like right under that six. And I'm not saying I did that this year. Tax people listening to this, please don't come after me but I know that's a thing and so I'm giving that as an example. So you're saying so, even if it's under $600 and you don't get a 1099 from an organization, that's still reportable income. That must go on your income test.
Speaker 2:Yes, absolutely Wow.
Speaker 1:That's probably one of those big.
Speaker 2:There's a lot of people that I run into that think don't pay me $599. I don't want a 1099. It doesn't matter, it's still income. And that's another reason you want to be tracking, and to me that's another reason to keep a separate checking account. You can track everything that's come in that way on online, usually these days.
Speaker 1:And it's a much cleaner way to keep track of that. Yeah, no, I, the last two years I've done everything. I've gone to every single one of the assigning platforms I use and every time I'm signing up to be at, I signed up to be a. I'm a mentor now, and so when I signed up to be a mentor, I made sure it was under Gerson adventures and paying to that business checking account just for that purpose.
Speaker 2:But now I'm like so just hearing you say that, oh my gosh, I'm so thankful I had no idea, something to be aware of for sure, for, I think, for all of us, and we too, in the gymnastics world, work for a lot of different people. I get 1099s from multiple clubs, and then I'm also working at the NCAA level, and the colleges are really tough on this because they have been audited in the past and so they're like oh, send you a 1099, whether you should get one or not.
Speaker 1:Wow, oh, that's. It's so good to hear. Thank you so much. You know, robin, so I was going through your presentation and I saw there's a slide in here. So I'm curious about this one. It's specifically you titled it Another Sweet Benefit of Running a Business About Pension Plans. So can we talk about this here? Talk to me about what type of pension plan or savings plan or retirement plan can someone do if they're a sole proprietor?
Speaker 2:Typically an IRA, an individual retirement account, would be what you would do, and there's many different kinds of those. There's a Roth IRA, there's a regular IRA, there's a simple IRA. There's all these different kinds, and that's again something you would want to check with. Or, if you just go, it doesn't have to be that complicated, you can just start one on your own. But to me, that's really one of the most wonderful benefits of this money coming in is that you can turn it around and put it aside for retirement. And I'll just share.
Speaker 2:I've always been very open about this. I've put a what is it called? It's called a SEP IRA, whatever. It's one of the IRAs and I've done that, I think 25, 30 years, something like that, and TurboTax calculates how much I'm allowed to put into that every year, and I don't think I've ever put more than $1,000 in a year in there. It's usually been $500 or something. Anyhow, over 25, 30 years. I now have about $80,000 in that IRA, which is I just go whoa, that's just a side lot thing that I've done and just put a little money away every year and wow, now I'm. Now I am retirement age and I can start taking that off out if I want to. But I'm still working, so I'm still putting money in there.
Speaker 1:So let's talk about that for a second, just to make sure everyone understands. So why would you do that Like? Why would you set up a SEP, which is the simple retirement plan for your small business? What's the benefit of doing that?
Speaker 2:There's an immediate tax deduction when you do that and again, my TurboTax will calculate what there is. There is another tax savings there If you do a Roth IRA. Those have been big in the news, I think, lately. Then you pay your taxes now, but then you don't pay anything when they come out. And personally I wish I would have put more in a Roth IRA now that I'm retirement age, because it's oh rum, I have to pay taxes when I take the money out. But it's something to be thinking about.
Speaker 2:I know with my kids and I know you've talked about you have young referees and we have some young ones in gymnastics too. With my own children, when they started working at about age 16, I told them if you earn at least $500, mom will put a $500 into an IRA for you. And so I did that from the time they were 16 until they graduated from college, and then they were on their own. I was going to ask one of my sons how much they had there, but anyhow, it's just some money set aside and someday they'll go. Oh, that's right, mom put that money aside for me.
Speaker 1:I think that's amazing. I honestly I just I swear like totally mind blown right here. What an amazing thing for a young referee or young judge or young official to actually start getting in the habit of taking a portion of their income and putting it into a retirement savings account. I was so lucky. My first job out of college, I had a mentor who literally I'm not kidding reached across the table at lunch and grabbed me by the shirt, shook me and he said you need to max out your 401k immediately. I'm telling you, man, I am, I'm 50 years old now and I am so thankful for that conversation 27 years ago, whatever it was and it was, it's life-changing for what it's done for me. But what an amazing thing If you've got a young referee at 16, 17, 15, whatever 20 years old, even it before they're graduating college and getting out of school, they start that process of having that IRA and start that little bit of investing and taking, you know, 10% or 20% of the income. I think it's amazing. Wow, that's so powerful.
Speaker 2:And I'm laughing, dave, because I had somebody do the same to me when I was first out of college. They didn't grab me. It was an older male engineer. They didn't grab me, they swore at me. You're a damn fool if you don't do this yeah, okay, yes, sir, yes sir, yes sir oh my gosh I thank those guys. Every day I'm telling you man yes, no, I I remember.
Speaker 1:I literally I remember the diner we were in. I remember the exact scenario and it. For so many things you hear that doesn doesn't really get you, but this one, he looked at me like it was a life and death situation. He's you will do this and, oh my gosh, wow, I cannot even. So Robin and I are sitting here today, guys, and we are telling you, we are telling you it's not too late to start. Okay, it's not too early to start. Definitely save for your retirement earlier than later. The benefits are outrageous, robin, I think that is fantastic advice. Oh my gosh. Thank you so much for sharing that. Are there any other little tips or tricks or things that you think people need to be thinking about as a business, running a business, as a sole proprietor or as a judge or official referee?
Speaker 2:It's a little bit in paying your taxes. One of the things that takes people by surprise is that because you're your own business, you have to pay basically double Social Security and Medicare than if you were employed. So that sometimes catches people oh bummer. But on the other hand again, I'm retirement age, I'm receiving Social Security, I'm receiving Medicare. Thank you, I'm glad that I paid in and I think that's.
Speaker 2:Taxes are always painful. None of us really want to pay them, but that is a piece of being a sole proprietor or your own business. That hurts a little bit because you're like crap, but you have to pay both your portion of Social Security and your employer's portion of Social Security. So that's something that catches people. And the other issue can be you may have to pay quarterly taxes and it depends. Every situation is different. If you're working somewhere, you can have I always had them take enough taxes out, so the small amount that I made officiating didn't really matter. It was covered by the taxes they took out at my work. But that's another thing to be aware of that you will have to pay some taxes on this money that you earn.
Speaker 1:Yes. So I just want to say and again, I'm not a tax professional, but I did experience this my first year as setting this up as a business is I was not aware of the significant more taxes actually that comes out when you're running as a sole proprietor because, like through my full-time job, they're taking out, like and they're taking out social security tax and I don't even think about it. It just automatically comes out. When you're running your own business, you need to be thinking about taxes and being saving, potentially saving money for those taxes or, if you make enough money, actually paying quarterly installments as well. So there's a lot that goes into it. So I'm just going to bring to the close here just real quick.
Speaker 1:Again, robin has been so generous with her time to share this information with us, but again, she is not your personal tax professional. I am interested in this topic and I've got a tax professional who I had everything to and they certify everything and sign off on it. I'm not a tax professional who I had everything to and they certify everything and sign off on it. I'm not a tax professional. We both encourage you to definitely start thinking of your judging or refereeing or officiating as a business, because there are some benefits to it, without a doubt, but you need to consult a tax professional. Robin, thank you so much for your time. This has been so eye-opening and enlightening for me.
Speaker 2:It's been really fun again, Dave. Hope we get to talk again soon sometime.
Speaker 1:I know Symposium's only two years away for the next one. Can't wait for that one. I hope I get invited back. But yes, but guys, everyone out there. Thank you Everyone who's listening to this podcast. I hope you really enjoyed it. It's so important Most refs have no idea again. Podcast. I hope you really enjoyed it. It's so important Most refs have no idea again that when they become a referee, they're also starting their first business and there are tax implications. The more you can save and reduce the cost of being official. If you like my show and my content, please consider supporting me by purchasing some merch from RustyLove2.com, the pod website. Everything else I do has a cost beyond just my time. Purchases from the store help me cover the cost of doing this. I wish you the best of luck and I hope your next match is red card free. We'll see you next time.