Planning for Taxes with Kyle Beltle - 191

This week on the Money Talk podcast, we’re facing the big, scary monster named taxes! But don’t worry, I brought in CPA Kyle Beltle to help make it all feel a little less overwhelming. We bust the myth that getting a raise means you’ll end up with less money, break down what a marginal tax bracket really means, and look at strategies for avoiding taxes legally! Kyle shares real stories and solid advice about lifetime tax planning and why a giant tax refund might not be as great as it feels. If taxes have ever felt confusing or frustrating (and let’s be honest, they always are), this episode is for you.

💰 This Week’s Money Talking Points

1. How can we avoid taxes?
2. Should I avoid making more money to avoid paying more taxes?
3. How can taxes be simpler?

⏱️ Key Timestamps

[05:00] ➤ Kyle explains why getting a raise won’t hurt your finances due to the progressive tax system.

[10:00] ➤ Using raises and bonuses to reduce your tax bill via strategic contributions (401(k), HSA, etc.)

[17:00] ➤ A personal story about how emotional relief and partnership influenced paying off student loans.

[26:50] ➤ Why you should be thinking about taxes on January 1st—not just during tax season.

[33:00] ➤ Breaking down why a $100,000 tax refund is actually a problem.

🔗 Resources & Mentions

Connect with Kyle Beltle: https://proactivecpa.co

Find a Certified Tax Coach: https://certifiedtaxcoach.org

IRS Withholding Estimator: https://www.irs.gov/individuals/tax-withholding-estimator

Book Mentioned: The Psychology of Money by Morgan Housel

Submit your question for my upcoming AMA in Episode 200! Text me or use the link at the top of the show notes.

Transcript

Skyler: 0:00

Welcome Money Buddies to this week's episode of Money Talk. This week we're talking about taxes, getting a raise and gigantic tax refunds. I'm your host, Skyler Fleming, and let's get talking. This week we're gonna talk about the big scary monster that is taxes. I'll try to stay off my soapbox about tax filing companies and why we even have to file taxes, but no promises. It's a topic that can really get me chatting, but today. We are in for a great one. I have a great guest lined up for today's Money Talk, and we're gonna be able to hear about what you should be thinking about with taxes, should you be thinking about'em year round instead of in just April each year. There's a lot more that can go into proper tax planning if you just get a little bit of a head start. I know that for a lot of you listening, taxes can be a very, very daunting topic and something that can scare a lot of people away from even trying. But I've set up today's conversation to help you pick some of the low hanging fruit that you can grab onto and make work in your personal finances. Today we're gonna be addressing the age old myth about paying more taxes. When you get a raise, we're gonna talk about bonuses and why they always seem so small, which I'll just tell you right now. It's because those tend to get withheld at the highest tax rate for some reason, because. I think it's'cause your employer's a little too lazy to do the math, but they're worried it's gonna push you over into other tax brackets. So they just withhold a lot of taxes and it leads to you having a refund. So that's why bonuses always seem so small. It's not because the government's actually taking more money. You're gonna get it back and you refund. But it's just the way that employers process it Now, when should we be thinking about taxes? That's gonna come up in today's conversation and There's so many things in the tax world that a little bit of planning can help you out with. But in today's Skyler's story time here at the beginning, I wanna talk to you about refinancing student loans. We refinanced most of my wife's student loans. We're finally away from now net, except one small loan, which I can just leave on autopay and not have to worry about calling ne net about loan payments, misapplying to wrong loans. I'm so glad to be done with that headache. But the math on this refinance saved us thousands of dollars, actually thousands of dollars in the long run. And now that's money that we'll maybe never see come into our account, but it's money that we won't see leave our account, and that's kind of the tricky place to be in when you're considering saving money on refinancing. It is not necessarily money that you're gonna just see deposited into your checking account or deposited into your savings, but it's money that's not gonna leave the account. And that's real money and real opportunity cost. So if you wanna talk about an opportunity around refinancing, schedule a time for us to chat using the link in the show notes, and I would love to talk with you more and work you through the math of what a student loan refinance or any sort of loan refinance could do for you. one more thing before we get into introducing today's money buddy. Remember the episode 200 is coming up very soon and I wanna do an a MA style episode, so I need your questions, send a text using the link in the top of the show notes. Email me however you want to get me your questions. I need some more. I would love to hear each and every one of your questions, so please send them my way and I will make sure to answer them on episode 200, which is coming up very soon in just a few weeks. But today's money Buddy is Kyle Betel. Kyle is a CPA who specializes in helping small business owners uncover large tax savings while reducing the time associated with taxes. His clients say that they enjoy working with him because he keeps things simple and efficient, which is what we're all about on this podcast. Simple and Efficient. Kyle has helped clients identify tens of thousands of dollars in tax savings, and today he's gonna help us identify the reason. Why we need to be thinking about taxes more than just once a year. and the money talking points for this week are, how can we avoid taxes? And two, should I avoid making more money to avoid paying more taxes? And three, how can taxes be simpler with those money talking points in mind? Let's get talking and welcome Kyle to the show.

Kyle Beltle: 3:58

Yeah. Thank you so much for having me.

Skyler: 4:00

This will be a fun conversation. We're talking a little bit more about taxes. There's a common myth that I'm excited to bust It's gonna be fun to narrow this down and help people figure out some opportunities and maybe some of the common misconceptions around taxes. I know this is an area that can be. Especially intimidating, and I want to kick us off with one of the common myths Will someone end up making less money when they get a raise because their taxes are gonna suddenly balloon.

Kyle Beltle: 4:25

that is a great question. a very common misconception. I ju, I mean, just on Monday was meeting with some clients for the very first time. it was a doctor and his wife. first question out of the gate, she's like, I'm really concerned about my husband. on additional shifts'cause it's gonna push us into a different tax bracket And what I was able to walk through with them was how we have a progressive tax system, And basically what that means is that you only will end up paying higher taxes on the portion of your income kicks you into that next bracket

Skyler: 5:01

Hmm.

Kyle Beltle: 5:01

So as an example. take a couple. They're making$97,000 right now. 97,000 is right at the edge of the 12% tax bracket. if one of them gets a raise of$3,000, suddenly they're making a hundred thousand a year. that puts them into the

Skyler: 5:22

Mm-hmm.

Kyle Beltle: 5:23

bracket. They're not suddenly paying 22% on all 100,000 of their income. They're only paying it on that extra$3,000 that pushes them from the, from the 12, uh, into the, into the 22. it's not gonna disproportionately, affect your taxes,

Skyler: 5:44

Mm-hmm.

Kyle Beltle: 5:45

there.

Skyler: 5:46

Yeah, wouldn't that, it would be silly if it would like just change your entire tax rate across the board, and then suddenly your after tax is less than it was before Then there would be a case to not get raises which would be so silly.

Kyle Beltle: 5:57

right, one of the concepts that may be new to some people is the difference between a marginal tax bracket and an effective tax bracket. The marginal bracket is. The bracket that your last dollar of

Skyler: 6:13

Yes.

Kyle Beltle: 6:13

into. So the couple we were just talking about because they have a hundred K of income, their marginal bracket is 22%. However, the real thing you want to take a look at is what's my effective rate the effective rate is when you take your tax bill and you divide that into your income.

Skyler: 6:31

Mm-hmm.

Kyle Beltle: 6:32

can see those different tax brackets at work because for someone who earns a flat hundred thousand dollars, their effective rate is only 12%. So you gotta keep in mind effective versus marginal brackets.

Skyler: 6:45

Yeah. And one thing that I really never want anyone to do is say, no, I don't want that raise because it's gonna make me pay more taxes. it's such a bad approach. And in my eyes, it's like if you're making money, that's a good thing. Like if you have to pay taxes, it's obviously not great, but it's kind of a sign that you're doing well if your taxes are increasing But should people, with this idea of marginal and effective, should we always just be looking to make more money? Is that a good idea to have?

Kyle Beltle: 7:10

I, I, I definitely think so. Skyler and I, and I'll you two reasons why, the, the first one is I really try to. communicate with my clients. It's not about how much tax you're gonna pay this year, about how much tax you're gonna pay over your entire lifetime. don't just get focused on minimizing taxes today. Take the big picture and think about taxes over your entire lifetime.

Skyler: 7:40

Mm-hmm.

Kyle Beltle: 7:41

to be in a season of life. Perhaps they're a high earning W2, they're not eligible for all of the deductions and credits that are out there as a W2 employee, but that extra income that they're earning, it's gonna give them cash to put aside that maybe they can see

Skyler: 8:00

Mm-hmm.

Kyle Beltle: 8:01

own business, maybe they can get into real estate. There where once they're a business owner, once they're owning real estate, that's gonna open up a whole new world of deductions and credits

Skyler: 8:13

Mm-hmm.

Kyle Beltle: 8:13

be eligible for. when you're playing the long game there, I think that's the perspective to take. the first reason that I always say earn as much as you can play the long game. But the second reason, I'd rather have a little of something than, zilch of nothing.

Skyler: 8:30

and have to pay a little bit of taxes on it.

Kyle Beltle: 8:32

Yeah. I mean, even in a worst case scenario, let's say we have someone who's in, the state of California and I'm picking on California just'cause they tend to have some of the highest, state taxes

Skyler: 8:41

Mm-hmm.

Kyle Beltle: 8:42

the country. the highest earners in California are getting very close to paying 50% in taxes, there. And I get it. I mean, that stinks.

Skyler: 8:50

Yeah.

Kyle Beltle: 8:51

To have instantly half of what you, just earned, vanish, But even if someone is not taking advantage of any tax strategies, they're in a high tax state and losing 50%, I'd still rather have 50% of a lot than 0% of

Skyler: 9:09

Yep. That's a great way to put it. Would you rather be making nothing or very little just for the sake of paying less taxes? No. that's not where we wanna be.

Kyle Beltle: 9:19

and I said, Hey, I got a 50 cent piece here. You know, those John F. Kennedy coins, you can have as many as you want.

Skyler: 9:26

Mm-hmm.

Kyle Beltle: 9:26

would you take?

Skyler: 9:27

All of them.

Kyle Beltle: 9:28

Yeah.

Skyler: 9:28

not gonna stop me.

Kyle Beltle: 9:29

Exactly.

Skyler: 9:30

Yeah, that's a great way to put it. I love that. don't stop making money just out of the fear of taxes. they're not something to be feared. anyone can learn the ropes, some basic guidelines and some ways to reduce their taxes. And let's say someone does get that big raise and they say, wow, that did push me up into the next tax bracket. How can people use a raise at their workplace to potentially lower their taxes?

Kyle Beltle: 9:52

Yeah, that's a great, question. And, for people who are earning more than, they need, there are a lot of great options out there. certainly, giving, utilizing things such as a donor advised fund, to be more strategic with your giving, is a great way to put some of that to use. retirement accounts, I can't say things about tax advantage retirement accounts. particularly the 401k, huge fan of just because of the amount of money. it allows, people to contribute to the Roth IRA, again, no tax savings today, but if we're taking the long approach, paying the least over our lifetime, the Roth IRA is incredibly powerful. HSAs, are another great, tool. if you're not familiar with an HSA, that stands for Health Savings

Skyler: 10:45

Mm-hmm.

Kyle Beltle: 10:46

And if your employer offers health insurance that has a high deductible plan, you, are eligible to put money into this special savings account called a health savings account. Now very important. don't pick an HSA just'cause of the tax benefits. Make sure that it fits in with your

Skyler: 11:07

Yeah, there's more to it.

Kyle Beltle: 11:08

if it does, it's incredibly powerful because it is the trifecta,

Skyler: 11:13

Yep.

Kyle Beltle: 11:13

The money goes into it tax free. The money earns interest in the account tax free.

Skyler: 11:20

Mm-hmm.

Kyle Beltle: 11:21

pull the money out for health related expenses, it comes out tax free. It's one of the only,

Skyler: 11:27

I've,

Kyle Beltle: 11:27

there.

Skyler: 11:28

yeah, I have talked the HSA up on this show a lot. It's something my wife and I use

Kyle Beltle: 11:32

I'm preaching to the choir

Skyler: 11:34

And I tell everyone that my wife and I, haven't invested ours is at Fidelity. Right.

Kyle Beltle: 11:38

Yes. Yeah,

Skyler: 11:39

it's grown and it's grown and grown and grown over the last couple years to the point where my wife gets massages, right? and she's gotten a letter to make that, qualified medical expense, but it's grown enough that she gets these monthly massages for free because we just pull out the growth and it continues to grow. It's all tax free. the government has never touched that money and they never will. you can get some real fun, awesome strategies around it.

Kyle Beltle: 12:03

Yeah. Yeah. and Skyler, the beauty is even in some wild scenario where. someone has perfect health,

Skyler: 12:11

Mm-hmm.

Kyle Beltle: 12:12

Once you reach retirement age,

Skyler: 12:14

Mm-hmm.

Kyle Beltle: 12:15

take money out for non-medical expenses and you just have to pay your normal income tax rate. Well, that's just a backdoor IRA

Skyler: 12:25

Mm-hmm.

Kyle Beltle: 12:25

point.

Skyler: 12:26

are there other areas in people's finances that making more money and getting that larger job, especially like say it's your first job outta college, you've been living on loans for the last few years and you're finally starting to make money. What other areas besides retirement accounts or lowering taxes, could this increase in money impact?

Kyle Beltle: 12:46

Yeah, that's a great question, Skyler, You know, I've been talking a lot so far about lowering taxes, but at the same time, People should be enjoying their lives, and making sure that, you know, they're going on vacations, they're, they're buying some fun things,

Skyler: 13:03

Mm-hmm.

Kyle Beltle: 13:04

spending time with family members and loved ones there's so many great things you can do with excess cash and it's, really, about finding a balance

Skyler: 13:11

Mm-hmm.

Kyle Beltle: 13:12

there between, you know, enjoying your life and minimizing your taxes. In my book, the absolute best thing you can do with any excess cash you have is to pay off debt.

Skyler: 13:24

Hmm.

Kyle Beltle: 13:25

him or hate him. I think Dave Ramsey hits the nail on the head, when he encourages you to be debt free, because in my book, debt free is really the linchpin that

Skyler: 13:35

Mm-hmm.

Kyle Beltle: 13:35

you to succeed financially in life, over the long term. Paying off debt, is huge. and secondly, you need to find a great CFP, to work with who's gonna help you clarify what those goals are, over your lifetime.

Skyler: 13:52

Mm.

Kyle Beltle: 13:53

you looking to fund education? are you saving for some life events Are you looking to be more charitable to organizations that you're passionate about? and so great CFP is gonna help you clarify those goals and point you in the right direction of the investments.

Skyler: 14:10

Mm-hmm.

Kyle Beltle: 14:10

myself is gonna be working in tandem,

Skyler: 14:13

Mm-hmm.

Kyle Beltle: 14:14

to say, how can we also make sure that we're being as taxed advantage, as

Skyler: 14:19

Yeah.

Kyle Beltle: 14:19

so many great things you can do with excess cash.

Skyler: 14:22

Yeah. And the thing that's fun with working with professionals, you and I are in the money realm so if we work with a professional on, building a house or lawn maintenance or things like that, working with a professional provides you their knowledge base. it provides us with the knowledge base that we frankly don't need to. bother ourselves with because there's other people that know it. And that's the fun thing you get to do when you start working with a professional, you get access to this wealth of different things you could do, and you're gonna hear so many that you've never heard of. So I think that's when you start making more money, you don't realize, maybe you've never heard of an HSA, but you listen to this episode and you hear us talking about them, like they're just a common everyday occurrence because they can be and they can be easy.

Kyle Beltle: 15:01

Yeah.

Skyler: 15:01

there's a lot that a professional can bring into your life, but I do wanna talk about that debt thing you mentioned and how people can think through it. for me, my brain is very math focused. I'm a huge money nerd, and I want the spreadsheet to work out. I am much more on the side of the arbitrage, of interest rates and things like that. How do you suggest people, like maybe someone's listening and they're like, why would I pay off all my debt? And then you have other people saying, get rid of it. How do you strike that balance?

Kyle Beltle: 15:27

Yeah, that's, that's a really good question there. outta curiosity, have you read the, the Psychology of Money?

Skyler: 15:34

I don't believe so. I think I've heard of it. Maybe I have.

Kyle Beltle: 15:37

would encourage, all the listeners out there to, to listen to that book or, or excuse me, to read that book. I listen to it as an audio book but I think it's a fantastic book.

Skyler: 15:46

Mm-hmm.

Kyle Beltle: 15:47

the reason I bring that up is that he has, what I consider to be a really great chapter on,

Skyler: 15:53

Mm-hmm.

Kyle Beltle: 15:54

Is it a

Skyler: 15:54

Hmm.

Kyle Beltle: 15:55

or is it this snare? in our financials. I believe what he argues convincingly is a lot of that comes down to your personal risk tolerance he even goes into talking about how the author says, you know, I paid off my house early. Why did I do that when I had, a

Skyler: 16:17

Mm-hmm.

Kyle Beltle: 16:18

And again, the arbitrage was in my favor, he said, because me and my wife. It just felt right.

Skyler: 16:26

Yeah, sometimes that's the answer.

Kyle Beltle: 16:27

sometimes that's the answer, right? Because, you know, if your greatest moneymaking asset your ability to run a business, and the value you're bringing through that business, you need to have undivided attention on that.

Skyler: 16:43

Hmm

Kyle Beltle: 16:44

you know, in the back of your mind about, Hey, I've got this debt on my car or my house and

Skyler: 16:50

Or something goes wrong with it and it's just weighing you down.

Kyle Beltle: 16:52

Yeah. It's distracting you.

Skyler: 16:54

mm.

Kyle Beltle: 16:55

because of, where your risk tolerance is, in my opinion, you're gonna do better financially by

Skyler: 17:02

Mm-hmm.

Kyle Beltle: 17:03

that debt to bed and focusing a hundred percent on where you can bring the most value there.

Skyler: 17:08

Yeah, it's been a minute since I've shared this story, so I feel I'll bring it up again with my wife's student loans I am this math brain. I can build a spreadsheet and show us the optimal way to, put it in a CD that's making a little bit more, we got the loans a while ago, so it wouldn't have been that hard to put the math in our favor. I'm sitting here saying, let's make the minimum payments. We'll invest the difference, Most people don't actually do that, but we were set up to give that a shot and put the other money away, I turned to my wife and she is almost in tears. I'm like, what did I say? I didn't say anything. I gave us a good math problem and it allowed me to recognize, and she spoke this as well, that the loans to her represented the requirement to keep working. maybe she wanted to take some sort of, sabbatical or a month off or something, or

Kyle Beltle: 17:51

Right.

Skyler: 17:52

but just not feel like she was forced to because of these loans. So I'm saying, oh, well the, the answer became obvious at that point. It wasn't the minimum payment we needed to find a balance between paying off in six months or something and just throwing all of our possible money at'em, which would've probably not been the best solution because we need the money elsewhere, We were able to find that balance and we've stuck to that plan ever since and we're able to invest more beyond that like you said, it's about finding that balance and it can be tricky, but it's possible.

Kyle Beltle: 18:20

Ed, you bring up a really great point there, Skyler, in, that's if you are married or in a serious relationship, you can't just be making these decisions in a vacuum.

Skyler: 18:29

Yeah.

Kyle Beltle: 18:30

that with your significant other, there because yeah. Happy wife, happy life.

Skyler: 18:35

Yeah. That's a good thing to go by. if you're the man in the relationship managing the money, your math is probably not as important and that might be a tough pill to swallow. Awesome. Well, let's transition to talking again about taxes and taxes Planning. Tax planning is a, a fascinating area in my mind. I think it has a whole lot of potential and that if people did it in their mind they could. Manage their taxes a lot better. Like for my wife and I, we last year did some capital gains harvesting because we were in the 0% long-term capital gains bracket, actually. So we took some of that at a tax free rate and reinvested it just to raise our basis, making it easier. Yeah, it was a cool thing to do because I'd heard about it for years and I'm like, okay, I'm gonna give it a shot. So I read up on it, tried it, and it worked. There, there's some planning opportunities that people can do throughout the year if you're just paying attention to it. one of them could be an itemized deduction. It could be saving up your charitable contributions and doing'em in a bigger lump sum. Let's maybe just paint the picture out the gate. One of the things that everyone has to choose from, and they probably just go with the standard deduction'cause it's easiest, but what is the difference between this magic standard or itemized deductions?

Kyle Beltle: 19:39

Yeah, absolutely. So, if you're thinking to yourself, what is a standard deduction basically it is a free. Deduction that the government gives to all individual taxpayers

Skyler: 19:50

Hmm.

Kyle Beltle: 19:51

For those of you filing single for 2025, the standard deduction is now$15,750. And if you're married, it's$31,500 you get this free deduction. Now the government says you can do that, or if you, have. that are item sizeable. those would be things like medical expenses, taxes paid to your state or local governments,

Skyler: 20:21

Mm-hmm.

Kyle Beltle: 20:22

interest expense, on a home, or charitable contributions, Those things, qualify as deductions and if you add those up and they're more than the standard deduction. you can take those itemized, deductions instead

Skyler: 20:38

How does that deduction apply to your taxes? what does it actually do on the backend, does it give you$30,000 back as a tax refund?

Kyle Beltle: 20:47

Yeah. that's a great question let's go back to that illustration I started with about the couple making, a hundred thousand in that illustration, I was keeping it simple and they, they were just paying tax on that a hundred k. But in reality, if we were to follow that a hundred thousand through the tax return, before we calculate the tax, we would actually be deducting either their itemized deductions or their standard deduction it's 31,500 this year. So. Instead of paying tax on a hundred K, they only have to pay tax on 68,500

Skyler: 21:26

Mm-hmm.

Kyle Beltle: 21:27

there.

Skyler: 21:27

Yeah. And that can be a big deal because then you're not worried about that mythical my taxes on everything is gonna go upright. Now you actually realize you're still in the lower bracket. That average or effective rate comes down again because of this. And that could potentially give you even more room. Like I just mentioned, that strategy of capital gain harvesting, like maybe that

Kyle Beltle: 21:46

Yeah.

Skyler: 21:47

you down into that 0% bracket and you can say, our investments are up big time over the last few years. We could take that 0% rate a whole lot more. the 0% is for married filing jointly, I believe is. Right around 96,000. So now it knocks you back down to about 60, 70,000. Maybe there's some wiggle room there that you could take some more money tax free potentially.

Kyle Beltle: 22:08

Yeah.

Skyler: 22:09

of opportunities that we're just, obviously your specific situation's different. So there's always that heavy disclaimer looming over our conversation here, but there's so much, potential that you could still do if you start talking to professionals or just talking with other people to say, Hey, does this make sense? And this is where it leads into my next question of. What's kind of the difference of filing taxes on your own? Should everyone just do it on their own? Should everyone pay for someone? Like where can we strike that balance of getting help versus doing this on our own?

Kyle Beltle: 22:36

that is a great question And, man, I wish I could distill that down into a perfect formula,

Skyler: 22:42

Yeah.

Kyle Beltle: 22:43

but,

Skyler: 22:43

when your income's at a certain rate or something.

Kyle Beltle: 22:45

I have to give the classic, it depends, right?

Skyler: 22:48

Yeah.

Kyle Beltle: 22:48

but some basic rules of thumb. If the only income you have is from a W2, you're probably gonna be okay filing by yourself.

Skyler: 22:59

Hmm.

Kyle Beltle: 22:59

if you have a side hustle or a small business that you run where you're getting 10 90 nines. And that income is being reported on a Schedule C as a

Skyler: 23:10

Mm-hmm.

Kyle Beltle: 23:12

if you're making less than 150 k, again, you're, you, you'll probably be okay.

Skyler: 23:18

tax software's pretty good to figure out some of that stuff for you.

Kyle Beltle: 23:21

and there's not a lot of opportunities at, those levels that you could miss,

Skyler: 23:26

Mm-hmm.

Kyle Beltle: 23:26

that, tax software is not gonna hit on for you.

Skyler: 23:31

Yeah.

Kyle Beltle: 23:31

I would say once you get north of 150 K of income, they're from non W2 sources.

Skyler: 23:42

Mm-hmm.

Kyle Beltle: 23:42

a good time to start interviewing some task professionals.

Skyler: 23:46

Yeah.

Kyle Beltle: 23:46

rental properties,

Skyler: 23:49

Yeah, that's a big one. That can be a headache.

Kyle Beltle: 23:51

I just started working with a client, his name's Ivan He filed his own taxes in 2023 using over the counter box software, nothing wrong with that per se. he had just done it himself. He was a di

Skyler: 24:05

Yeah.

Kyle Beltle: 24:06

Iyer came to me and said, I filed 23. I haven't been audited, but I got this feeling. I didn't do it right. I helped him with 24, and then we went back and we took a look at 23 and, and sure enough, he hadn't put the data into the software

Skyler: 24:26

Hmm.

Kyle Beltle: 24:27

for his new rental house garbage in, garbage out.

Skyler: 24:30

Yeah.

Kyle Beltle: 24:31

he ended up missing some pretty key deductions,

Skyler: 24:34

Hmm.

Kyle Beltle: 24:35

the depreciation, of his rental property. And so I was able to go back, help him amend 23, get those additional deductions there, and actually the amount of taxes that I saved him twice what, the fees that I was charging him,

Skyler: 24:54

Easy decision there.

Kyle Beltle: 24:55

I know it can often feel, expensive, when you're paying for professional help. But, you know, timing, and I've seen how a lot of times it actually costs you more and you don't even realize it,

Skyler: 25:08

Yeah.'cause you just don't know.

Kyle Beltle: 25:09

it.

Skyler: 25:10

you don't know there. Yeah. There's a lot of potential gaps. And I think if there's one thing that I know, I don't think the IRS is gonna go back through returns and say, oh, you messed up, we actually owe you more money, so let's, let's audit you and give you more money. I don't think that's gonna happen. So you need to be careful about making sure you're actually taking care of what you should and what you rightfully are owed and get back. So that's a great story. I like that.

Kyle Beltle: 25:30

if you're on the fence about whether you should do your own taxes interview some tax professionals there to get their opinion because. good quality task professional is going to be honest with you.

Skyler: 25:45

They don't wanna work with the work that's not worth it because you can do it on your own.

Kyle Beltle: 25:48

we already have too much work as it is We don't want to take on a quote unquote simple return.

Skyler: 25:55

a$70,000 W2 is below what you're working on. Mm-hmm.

Kyle Beltle: 25:59

one of the things I would recommend here. the American Institute of Certified Tax Professionals. If you just go to certified tax coach.org, there you can find, A CTP in your area. this is an organization I've been involved with and, they are full disclaimer, but, just met so many incredible task professionals through that there, and it's a great place to start if you're looking for someone who. can help you specifically with savings

Skyler: 26:26

Mm-hmm.

Kyle Beltle: 26:27

but also it's gonna give you an honest opinion about

Skyler: 26:30

Yeah.

Kyle Beltle: 26:30

be working with a pro

Skyler: 26:31

Yeah. and that can be valuable because they could say, you can do this on your own. the software can help you. And you're like, oh, maybe it instills some confidence in you

Kyle Beltle: 26:38

Yeah.

Skyler: 26:39

hey, I can do this on my own, but are taxes something that we should be thinking of year round? Or is it something that we just need to wait till February through April to deal with? What are some opportunities for us to be thinking throughout the year about it?

Kyle Beltle: 26:52

Well, in my opinion, the best time to start planning for taxes is on January 1st.

Skyler: 26:59

Yeah.

Kyle Beltle: 26:59

because there are things happening throughout the year that you wanna make sure that you capitalize on,

Skyler: 27:06

Mm-hmm.

Kyle Beltle: 27:07

with your tax pro. very much like a choose your own adventure story, there's gonna be paths that you come to. Early in the calendar year that you need to choose left or right getting that guidance ahead of time is key so that when you get to April 15th, you can look back and see success. here's a great story around that. Skyler, I am, currently working with, two guys. Adam and Jack. they own a consulting business. Adam had started the business and. Kind of came across, Jack realized that they've really clicked, and he said, I wanna bring you on as my partner And so they came to me saying, Hey, this is what we're gonna do, for 2025. as I began asking them questions, and as I began unpacking some of the implications around the taxes, around the cash flow with distributions there. They began to realize it may be actually better for us, better for the business if we went in until 2026

Skyler: 28:11

Hmm.

Kyle Beltle: 28:11

to formalize this partnership. Conversely, three or four years ago, I had a client come to me in March and said, oh, by the way, we, uh,

Skyler: 28:24

Mm-hmm.

Kyle Beltle: 28:26

We gave 10% equity to one of our hotshot employees. unfortunately they didn't do it,

Skyler: 28:34

Mm-hmm.

Kyle Beltle: 28:36

and I had to go back to this employee, young twenties, newly married,

Skyler: 28:41

excited about the opportunity.

Kyle Beltle: 28:43

Excited about the opportunity, excited for what's ahead, trying to get their financial feet under them, so to speak, and say, you owe$30,000 in taxes of how this was

Skyler: 28:53

Mm-hmm.

Kyle Beltle: 28:54

there

Skyler: 28:54

And they don't have$30,000

Kyle Beltle: 28:56

right. Yeah, exactly. And actually that's why I kind of say tongue in cheek. January 1st is the

Skyler: 29:01

Mm-hmm.

Kyle Beltle: 29:01

because really you wanna be making decisions with your task professionals. So when you get to that April 15th, you can look back with confidence.

Skyler: 29:10

Yeah. And if there's one thing to be proactive about and not reactive about it's taxes, if you can think about what are the taxes, implications of this decision? Before I make it, then you can compare'em because maybe there's a better tax optimized way to go. especially if you're getting into business stuff, like if you're depreciating things or trying to take certain deductions or credits or whatever, what have you, right? If you're thinking about it beforehand, there's opportunities just like any other investing decision or purchase decision you don't go into a car purchase and say, I'm just gonna buy this car, and then a year later say. what do I do about my car purchase? Which one should I buy? you're already saddled with the big one or whatever, right? people look at taxes in such a weird way

Kyle Beltle: 29:47

Well, can I tell you another story, another benefit of working with a professional is that we're up to date. On what's going on with the law and the changes to the law. a great example of that is I was working with a guy, he owned a manufacturing company and he needed to buy equipment. it wasn't about the taxes so much as he genuinely needed to buy it. it was December and he said, how is this gonna impact my taxes? I said, let me ask you something. Are you able to wait four weeks until we're in January?

Skyler: 30:18

Mm-hmm.

Kyle Beltle: 30:19

I don't need it right away. And the reason I proposed that to him, so I'm in Pennsylvania, he also was in Pennsylvania. Pennsylvania was about to change the rules

Skyler: 30:32

Hmm.

Kyle Beltle: 30:33

deductions for section 1 79, and it went from 25,000 to a million dollars.

Skyler: 30:39

Wow.

Kyle Beltle: 30:40

by just waiting on the timing there, he was able to have no cap on his equipment purchases. So again, not making those decisions in a vacuum oftentimes will pay dividends over the,

Skyler: 30:53

Mm-hmm.

Kyle Beltle: 30:54

of your business and over the lifetime of your personal finances.

Skyler: 30:58

Yeah. I'm sure you've, seen something similar or other, tax professionals have where. They don't consult you first. They make that purchase and you say, well, if you would've waited two weeks, here's, like, you show'em the different math, make'em feel bad, right? No.

Kyle Beltle: 31:09

Yeah.

Skyler: 31:10

it can be that big of a difference. And, I want us to close out here with another, tax myth that we can bust and that is your tax refund. you file those forms and tell your employer how much to withhold. Should we just have'em withhold at all? So we get that giant tax refund. Can we break down the refund?

Kyle Beltle: 31:27

Heck no. No, no. I get it. Skyler, a massive task refund feels great

Skyler: 31:32

looks cool.

Kyle Beltle: 31:33

Essentially, you have overpaid the entire year, and now the IRS is, giving you back your own money.

Skyler: 31:40

Yeah.

Kyle Beltle: 31:41

With zero interest. You know, you've just, played bank to the IRS for,

Skyler: 31:45

Yeah. Start thinking about inflation with that money too.

Kyle Beltle: 31:48

Yeah. think about what you could be doing with that extra money. You can be investing it and earning interest. You can pay down debt and get rid of interest expenses.

Skyler: 31:57

You could enjoy it.

Kyle Beltle: 31:58

Yeah, you can enjoy, you can take a vacation there. I was working with a woman by the name of Jane. she owned a retail business

Skyler: 32:05

Mm-hmm.

Kyle Beltle: 32:07

She, had been working with, an accountant who was not proactive. they were reactive And as a business owner, what accountants have done historically is when we prepare the taxes, we give them estimated tax

Skyler: 32:23

Yep. Mm-hmm.

Kyle Beltle: 32:24

upcoming year. They never followed back up with her and she made the payments that she had been told to and her business, declined this year. She had less profit to pay taxes on and so she ended up getting a refund of a hundred thousand dollars that

Skyler: 32:45

looks cool, like that's crazy.

Kyle Beltle: 32:47

it looks cool, but then you think about as a retailer. With a physical location, what kind of staff would that have allowed her to

Skyler: 32:54

Mm-hmm.

Kyle Beltle: 32:55

of inventory deals maybe she could have taken advantage of?

Skyler: 32:58

Yep.

Kyle Beltle: 32:59

have taken during the year

Skyler: 33:00

Pay off the debt on the building or something like that.

Kyle Beltle: 33:02

there?

Skyler: 33:03

Yeah.

Kyle Beltle: 33:04

if I could offer just two tips, to your listeners. first, if your primary source of income. Is from your W2. Just go Google IRS withholding estimator.

Skyler: 33:17

Mm-hmm.

Kyle Beltle: 33:18

the IRS has this great calculator on their website. It's gonna ask you a very comprehensive list of questions. It'll take data in from your latest pay stub there, and it will actually give you a W four that you can print out and hand to your payroll

Skyler: 33:34

Hmm.

Kyle Beltle: 33:35

so that you can try to change your withholdings for the remainder of the year so that. you come out to, as close to zero refund tax owed as possible

Skyler: 33:46

That's a good tool.

Kyle Beltle: 33:47

Yeah. And the second tip I would offer certainly nothing new, but if your primary source of income is from your business, you're operating a pass through entity an escorp, a partnership you better be working with a CPA or an ea. Who is giving you updated estimated payments at least one other time throughout the year. if not, reviewing that quarterly

Skyler: 34:12

Mm-hmm.

Kyle Beltle: 34:12

that you're constantly fine tuning those estimates to again, make sure you're not a huge tax bill and you're not getting a huge refund.

Skyler: 34:22

Yeah, and I think the IRS should send out a medal if you get that zero refund. Like if you come in perfectly, you should get a big trophy or something in the mail saying, I did it, or something like that, because

Kyle Beltle: 34:32

Would it be awesome if that became a status symbol?

Skyler: 34:35

yeah.

Kyle Beltle: 34:35

part of the zero refund club.

Skyler: 34:37

Yeah, if you, you'd see CPAs, that's like their biggest trophy in their lobby is the zero refund club. That's hilarious. Awesome. Well, this has been a fun conversation. I enjoy talking about taxes. I hope we made it digestible for the audience because it can be a topic that can make your eyes glaze over a little bit when you start diving into it. Kyle, thank you for coming on. I got two final questions here as we wrap up. first one how can people connect with you? And then the second one, to give you a second to think about it, is, what's one thing you wish you would've known about taxes and planning your taxes in your early twenties? But first, how can people find you or connect with you, if they have questions?

Kyle Beltle: 35:10

So the best place to connect with me would be my website, proactive cpa.co. That's proactive cpa.co. I have a blog there. I also have links to all my socials. I'm big on LinkedIn, would love to connect with, any listeners on LinkedIn So that's really the best way to connect with

Skyler: 35:30

Awesome. Now, what do you wish you would've known in your twenties about tax planning?

Kyle Beltle: 35:34

yeah, so I think the thing I wish I had known when I was younger is that premium advice is gonna cost less than premium mistakes.

Skyler: 35:42

Hmm,

Kyle Beltle: 35:42

told younger Kyle, don't be afraid to invest in coaches and advisors. gonna help you succeed over the long term.

Skyler: 35:51

That's a mic drop moment to leave it on. Make sure you're willing to commit to a professional or commit to a coach, or commit to someone who's gonna help.

Kyle Beltle: 35:58

Yeah.

Skyler: 35:58

Guide you in the right direction. Who knows the landscape that you're about to go into? Who knows what you're trying to do, and they can help guide you in the right direction because we're gonna all make mistakes, but if we try to learn from other people, they can help us avoid a lot of them. But Kyle, this has been fantastic. Thank you so much for coming on the show.

Kyle Beltle: 36:13

Thank you so much for having me. It's been a blast.

Speaker: 36:24

Thank you so much to Kyle for coming on the podcast. That was a great conversation around taxes and I hope you enjoyed it as much as we surely did. Because I know we love talking about money and taxes can tend to be, like I mentioned, a topic that makes your eyes glaze over. It's made my eyes glaze over plenty of times I really hope that was a good way for you to start thinking about taxes. But let's get into the money talking points. The first money talking point is how can we avoid taxes? And there is nothing wrong with avoiding taxes as long as you do it legally. If you just don't pay your taxes or just flat out don't file your taxes, then you're probably gonna have problems with the IRS. But there's ways to legally avoid taxes. One of them is to contribute to retirement accounts. You have a traditional and Roth 401k or IRAA traditional, we've talked about it before on the show, but a traditional is money that goes in pre-tax grows, tax deferred, and then you pay taxes on the entire withdrawals when you do take money out of the account. Now Roth goes in after you've paid taxes, and that money grows completely tax free. So it's kind of the difference between do you want to avoid the tax you're paying now or do you want to avoid the tax you're paying in the future? And Roth is pretty much always the better option. If you're young, take that with a grain of salt and do your own research of course. But if you have a long time for your money to grow, think about the fact of it growing without having to pay any taxes on it. If your money's gonna double 2, 3, 4 times because you have such a long time horizon while you're investing. That money being tax free is a huge benefit. Like I'm understating it. When I say huge, I need to think of a better word. Gigantic, enormous, massive. Think of the biggest word in your mind, and that's how big of a benefit the Roth can be when it comes to avoiding those taxes on your money as it grows over time. Now, let's also not forget about the gold standard, the HSA, the account I love the most. The HSA is tax free in a lot of ways. If you're paying through your payroll, it's tax free from fica. The money goes in without being taxed. The money grows tax deferred, but also it comes out tax free. So there's really a whole bunch of ways to save on a whole bunch of tax and make it so the government never touches the money. Now, the key caveat here is that you have to make sure that it's being used for qualified medical expenses. Because if it's not being used for qualified medical expenses, there can be a pretty steep penalty and then you owe taxes on the money. So that's something to be very aware of. But I do wanna mention the key strategy here with the HSA is that if you pay your medical expenses out of pocket with cash, you can reimburse yourself at any point. With the HSA, and I've mentioned it a lot of times that my wife and I are not paying for medical expenses on our own. We're paying for'em with the growth. In the future, and even now, it's grown a good amount. So if we do need to reimburse ourselves, we're using that growth still to reimburse ourselves. But we're using some cash that we have right now to pay for medical expenses, and then in the future we'll reimburse ourselves once our investments have grown and grown and grown, and then we won't be using our principle, we'll just be using the growth from our investment accounts to pay for that medical expense. It's really a neat trick and can be hugely beneficial for people. Now. Also, another way to avoid taxes is giving donating money, itemizing your deductions. Let's say you donate to charity regularly. You may want to save up your charitable deductions and then make them all in the same year so that you can get over that standard deduction amount, and then you can take a larger itemized deduction instead of always just chugging away at those charitable contributions and then always having to take the standard deduction anyways'cause your charitable contributions weren't enough. The one thing you don't wanna avoid to try to avoid taxes is making more money. You shouldn't avoid making more money. We'll talk about that more in the next money talking point, but you should always be striving to make more money. Don't worry about taxes when it comes to getting a raise, but the last thing here that I want to talk about avoiding taxes is capital gain harvesting in 2025. If you have taxable income below these following brackets for a single or married filing separately, it's$48,350. Head of household, it's$64,750 and married filing jointly it's$96,700. If your taxable income is beneath that and now your taxable income is your a GI minus the standard deduction or itemized deductions plus QBI. I'm throwing out a lot of numbers and acronyms right there. So if you have questions, please let me know, but just know that you take your a GI your adjusted gross income and then you minus even more money from it, which allows your. Thresholds and those income brackets to potentially be even bigger, you are gonna be in a 0% capital gains bracket. That means money that's invested in a regular old taxable brokerage account that doesn't have any sort of stipulations or retirement dates on it. Growth in that account that you sell during the year is gonna be taxed at 0%. And what's everyone's favorite tax rate? 0%. Now think about that. If you're within that bracket, you may actually want to sell more investments to not pay tax on them, and allow you to raise the basis by reinvesting that money. My wife and I did this thing exactly last year, and it was awesome to see it work out. Now, our basis in the money is technically higher, which means that there's gonna be less growth as the money continues to grow. That means we're gonna be able to fit that smaller amount of growth into that 0% capital gains bracket in the future, should we find ourselves under that threshold. And it's just gonna be this amazing domino of contributing money with 0% taxes, raising our basis, saving money on taxes. That's a fun strategy to employ, and I'm getting all excited talking about it. So if you're thinking that just sounds like a headache, please talk to me. I'd love to help you set up a financial plan. Around 0% capital gain harvesting, because I think, frankly, especially for my audience, being mostly young adults or maybe early professionals or young professionals, there's a lot of opportunity in your first couple years of your career where you're maybe not making a ton of money, that you could be using this strategy to pay no tax on your capital gains. But let's move on to the second money talking point here. The second money talking point is, should I avoid making more money to avoid paying more taxes? No. The simple answer is no. You should make more money even if it means paying more taxes. Now, we could get into a discussion about only wanting to make money just for the sake of making money, but that's a different topic for a different show. So just know when I say. You should always want to make more money. It's not necessarily in a like ethical or a moral compass kind of way. It's just saying you should always want to make more money when you're thinking about taxes.'cause if you have to pay more taxes, that's a sign you're doing the right thing. But it also gives you more opportunity to potentially reduce your taxes with saving through retirement accounts, HSAs, or everything we just mentioned in the last money talking point. But when you're thinking about taxes, there's not a reason to avoid making more money. That does it for the second money talking point. Let's move on to the third one. How can taxes be simpler? Well, like everything else, take it one step at a time. Don't try to figure it all out at once. I wanna mention the tool that Kyle mentioned is that W four tool that'll allow you to get some help with figuring out your withholding so that you're doing it right, and then it'll give you a W four. That you can take straight to your employer. I didn't know about that, but now I'm gonna recommend everyone use it when they ask questions about getting a new job and how annoying filing tax stuff is. Use the IRS's tools and it'll make it a whole lot easier because guess what? You don't want a massive tax refund. I truly do wish the IRS would give out a trophy or a medal for the Zero Refund Club because that would be. Pretty awesome to be a part of, but you don't want a massive tax refund, like Kyle mentioned. That's just you being a bank to the IRS with a free loan. And again, if anyone could take a loan and the interest rate was 0%, they would do it day in and day out. So maybe that's even part of a reason why the IRS doesn't strive to make the tax code easier or simpler or not have to file taxes because you're just giving money to the government if you're getting a massive tax refund that you're not making sure to take care of through your proper withholdings at your work. Now, let's think about everything else that you could do with the money. If you weren't to get a massive tax refund, let's say, oh, you get a tax refund of$2,000, okay? Where could$2,000 go to help you with paying off debt, paying off a mortgage, saving for a vacation that you never feel like you get to take? Maybe you could have done more around the house in terms of renovation or hiring someone to help you around the house. Maybe you could pay for college. And like Kyle's example, maybe you're a business owner and your refunds are even bigger, and you could have hired an amazing vice president or something of sales or some amazing financial person to help run your money and your accounting. Or you could have hired an excellent retail staff. You could have hired some tip top nice employees that could have helped your business grow even more. The list is endless because you could do literally anything else than just donate the money to the IRS. Sure, you're gonna get it back. So it's not really a donation. But instead of just giving money to the IRS with the caveat of saying, oh, I'll get it back when I file my taxes, you could do anything else with that money, but make sure you take it one step at a time to keep your taxes a whole lot simpler if it's getting complicated. Remember that paying for advice is better than paying for a mistake. But that does it for this episode all about taxes. Thank you for listening to this one through to the end. If you have any questions for me or Kyle, send them my way. And links of course are in the show notes. We talked about a lot today from Busting Tax Miss, to helping you figure out how to lower your tax bill. Don't forget about the power of capital gains harvesting. I could go on another rant about how amazing they are, but just rewind this episode and give it another listen. If you need help or coaching on how to do it as we near the end of the year, please reach out to me. I would love to show you how you can do this. And help you figure out how to make some money in the best way tax free. And a quick reminder that my 200th episode is coming up very soon and I need your questions for the A MA style episode I'm looking to do. Please send them in so that I can answer your questions on the show, money related or not. But thank you for listening to today's episode. The best way to stay up to date and connected with all Things Money Talk is to subscribe to my email list and subscribe to the podcast. Head over to Money Talk Show and submit your name and email right there on the homepage and you'll be sign up for my email list. You can also use the contact page on my website to send me any questions that you have if you're looking to get started with budgeting, I've partnered with my budget coach, which just recently launched a brand new app, so there's some great things going on over there, and it's a platform that connects your budget directly to me. You're a financial coach and I'd love to work with you over there. The link is in the show notes. And remember, the best way to learn from today's episode is to go and have a money talk about today's topic with a fellow money buddy. And thank you for listening to this week's episode of Money Talk. I'm your host, Skyler Fleming. Have a great week.