All Forum Posts by: Steven Hamilton II
Steven Hamilton II has started 25 posts and replied 5110 times.
Post: IRA strategy - checkbook control, flips, then 72t?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
72T is not terrible; however, there are requirement to be met. In addition to that you have to look at the possibility of UBIT if you continue to flip. You cannot do anything to benefit your IRA personally nor can it benefit you either. So you must be very careful or you could be running even higher rates.
Now, I'm not familiar with your situation; however, I think that 45% might be rather off if your personal income includes wages to get you to the 30% area. Possibly between Fed and State; however, you are probably capped at the Social Security Max. Keep in mind the QBI deduction would give you 10% assuming you qualify.
Post: Section 179 vehicle write off
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Rick Barbato:
@Ashish Acharya
Ahh! I think I get it. Is this why a lot of people claim 9 dependents regardless of how many they actually have?
Sounds like it’s better to owe.
It is pay me now or pay me later. A Tax return is a reconciliation of what you were required to pay.
I would recommend speaking to an accountant for them to spend some time teaching you about tax deductions vs credits.
It will help you learn the value of expenses and deductions versus credits that may benefit you.
Post: Accounting, Tax, Business help
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Jason E. Smith:
Hey Brandon
First of all congratulations on getting your first property! And even more so on having if fully rented! Setting up a corporation can be a great way to get tax breaks, so that's one question to ask any experts you talk about. I looked into purchasing H&R Block locations at one point and took their intense tax class. That class taught me enough that I can easily add a duplex financials onto my schedule E at the end of the year with the year end financial data my property manager would send me. Even if you don't want to do your own, I still recommend the class to learn a lot about taxes, it's very much worth the investment and I still use that knowledge today. There are two folks I would recommend talking to. Reach out to @Brandon Hall who specializes in taxes for real estate investors and he's here in NC. And you can also try Diane Gardner https://www.taxcoach4you.com . I haven't personally used either but I've heard great things about both. Have fun!
You NEVER want to hold real estate in a corporation. There are exceptions to this but they are VERY rare.
Post: Going to BPCON 2019? Let's Meet Up and talk "Self Directed" Stuff
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
I've thought about attending. If I would have known they were hosting one I'd have volunteered to speak.
Post: How do you know if you are paying too much for a CPA?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @John Woodrich:
Another CPA opinion here - it is impossible to say what something should cost until seeing it. I have clients like @Bill B. who are likely very organized, preparing 10-20 rentals is simply a data entry game and dealing with any changes. I also have clients who don't do a very good job on accounting for anything and they are a complete disaster that cost more. At the same time, with certain clients, the more time we spend on them, the more it costs but they save more money.... I have a few people who are executives who were getting their returns prepared for free at EY who now pay to work with us because of the tax savings on their RE transactions. Simple things like cost segs were missed, they were paying net investment income tax, etc. Was easy to save thousands. @Yonah Weiss helped with one last year on a client of mine down south.
You will also find different rates based on where you are paying for services. In California you are going to pay a lot more per hour for tax services than if you decided to find a firm in the south or the Midwest. Cost of living changes things up quite a bit, a CA CPA may charge $300-$400 per hour while you may pay $200-$300 in MN. Most firms leverage staff at lower rates for prep however figure it may cost 25% more in a certain area. It will also cost more if you have many state returns to file but that shouldn't be significant.
If you are looking to save money and stay with your CPA you may want to find someone else to complete the bookkeeping as I am guessing in CA the rate at the CPA firm is probably $125 or more per hour for bookkeeping services. Hiring a bookkeeper or a bookkeeping service may save money unless the CPA does it all in their down time. Most CPAs will give you a rough quote if you send a copy of your returns. Doesn't hurt to get a couple opinions.I agree to some of that. There is far more due diligence that you need to do with self prepared financials.
Post: How do you handle your books when a PM manages your portfolio?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
You should maintain a set of books that incorporates the statements that are provided to you. Speak with your accountant for guidance.
Post: Maximizing Tax Benefits of an LLC
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Natalie Kolodij:
Great news!
There are literally 0 tax benefits of an LLC.
Not a one.
You get to deduct the annual LLC cost- but aside from that you get the same deductions you're entitled to if it's in your personal name.
It's really there for legal protection purposes, or structuring. But tax wise it doesn't generate any benefits.
There are a handful of pros and cons of the LLC is taxed as a partnership; however, tax savings is not one.
Post: How do you know if you are paying too much for a CPA?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
I have an old post of questions to ask an accountant be when interviewing then. Some charge for consultations others don't.
*typing from my mobile phone*
Post: How do you know if you are paying too much for a CPA?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Juliette Lerner:
@Steven Hamilton II Thank you for your reply and that helpful link! Is that $2,200 total per year for the returns on the 6 properties (an estimate of course)? Or $2,000 per tax return? It's difficult to find good information for average real estate tax return costs. I am trying to learn as much about the process as possible to make sure I understand what I am paying for.
For federal and first state typically given the few items mentioned. Step one is to understand how many returns are needed and the scope of said returns. Aiming they are all disregarded entities, my number would be an idea for the listed situation. Just as a rough situation. I posted a link to a free survey from 2016.
Post: Maximizing Tax Benefits of an LLC
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Natalie is exactly correct.
An S Corp would be malpractice to advise. I've recommend clients look into suing prior accountants and attorneys for that year advice.