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Talking Tax with Redfish's Own Henry Nguyen CPA

Updated: Aug 16, 2022

Welcome to the Redfish, Healthy, Wealthy, and Wise podcast. Our focus is to deliver information that helps you become healthy, wealthy, and wise. This podcast is sponsored by Redfish Capital Management, the views and opinions expressed here and do not necessarily represent the views and opinions of SCF securities, Inc, or any SCF related entity. This material is for general information only and is not intended [00:00:30] to provide specific advice or recommendations for any individual securities offer through SCF securities, Inc. Member FINRA, S I P C investment advisory services offered through SCF investment advisories Inc office at 1 55 east Shaw in Fresno, California, SCF securities, Inc, and Redfish Capital Management are independently owned and operated. SCF is not associated with other podcasts. And the messages contained within. Brad [00:01:00] Murrill and Redfish Capital does not offer legal or tax advice. This material is not intended to replace the advice of a qualified tax advisor or attorney please consult legal or tax professionals for specific information regarding your individual situation now for your host, Brad Murrill.

Hello everybody. And welcome back to the Redfish healthy, wealthy and wise podcast. This is Brad Murrill with Redfish Capital, and I'm so excited about today's podcast. So I'm finally back to having a guest. We haven't had a guest, I don't think in a little over two months now it's just been me hammering it. Y'all but I'm finally, in fact, the guests that we have today, I'm looking at you now, Henry, this we've been trying to get this together now for a couple of years, but it's, this guy works as hard as any human being I've ever met in my life. The hours you keep are insane. My friend, they're absolutely a and saying who I've got with us today is someone who's very important to what we do here at Redfish Capital, because he is deeply involved with what we do here at Redfish Capital.

It's our CPA Henry Nguyen. Good to have you buddy. Thanks. Good to here. So people always want to know the, the personal stuff and all that stuff first. So I'm just kind of want to you, how in, why in the world would a human being ever want become a CPA? I still can't process that and figure it out. Well, it's, there's a lot of factors involved, you know, first of all, going through a school, I'll give you a little bit history of where I grew up and everything. Yeah. What, what you grew you're you're from you Spring Branch area, right? Yeah. Spring Branch. So, you know, my parents moved here when I was 11 months old and they were in Lincoln, Nebraska. That's where I was born Lincoln. Yep. Wow. Lincoln Nebraska, right in the middle of the US. Made sure I was, how did they get to Lincoln?

So my parents, my mom came over here with her with her family and their sponsor was in Lincoln, Nebraska. And my dad came over here with his family and they weren't married yet.

Wait their sponsor.

So back in the seventies, you had to have a sponsor when you came over here from Vietnam. Okay. Okay. You staying in a refugee camp until you got a sponsor. Once you got a sponsor, they, you have to go and live by your sponsor.

All right. So your mom was sponsored. So she was in a refugee camp for a while. Yep.

Where it was around Pennsylvania. And

How long was she in a refugee camp? I don't know exactly, but maybe a couple months or so.

Okay. And then, so she got a sponsor who was in Lincoln, Nebraska. And so by the federal rules, you had to go live within a certain radius right. Of your sponsor. So that took her to Lincoln, Nebraska. So going from Vietnam to Lincoln, Nebraska, there's a change. Yep.

Big change. Huge change. So yeah. So my dad, oh man. Yeah. So my dad ran into my mom in the refugee camp. Okay. And he knew her from being in Vietnam. So he was like, Hey, okay. I want to keep in touch with her because you know, moving to country, you know? Yeah. It's not like you can just go out to a club and they had a connection

From, from

Back home. Right. So he decided to stay in touch and, and pursue her. And so he was his family was sponsored, I think, somewhere in New York. Okay. And he then decided to move down to Lincoln, Nebraska and work down there. And that was fine because his sponsor, when they sponsored their sponsor, like a whole family. Right. And so like, my dad was able to move and it was, it was, it was fine. Okay. And so he moved to Lincoln, Nebraska and pursued my mom and and they got married, small little church down there. We actually went back to that church back in 2016. No kidding. How awesome is that? Yeah. And the crazy thing was that town where they got married is only, I believe it was like, the population was like 300. And so they remembered my parents when we no way there were people in there at the church and they were like, are you so and so, so because, you know, we're the only Asian people that went to that church.

And there was that church that only had like 20 or 30 people in the church. So yeah. They remember. Yeah. And they, they, you know, they took a picture of us and they put us in their local paper and everything like that SOS so awesome. Yeah. Yeah. It was, it was great. Cuz you know, my parents were able take us back to show us where they got married and, and my kids, you know? Yeah, yeah. And where, you know, I was born and you know, where they lived and you kind of, kind of just gave us a little history on, on, you know, where we came from.

And so then your parents moved from Lincoln, Nebraska to Houston, Texas

Houston. Yeah. When I was 11

Months old, 11 months old. And what business were your parents in? So my

Parents were in the convenience store business. Okay. They he got a call. My dad got a call from his brother, his older brother and said, Hey, there's a lot, a lot of opportunity down here. I think you need to come Houston. And the first thing he got into was the convenience store being, you know, a clerk in the convenience store business. And

So it was, was this your uncle's store? No,

This was just like a seven 11.

Okay. Okay. So it was a retail. Yeah. A retail loan store, but here's a job. And so got it. Yeah.

So he worked at the 7 11 7 or stop and go, like they called them. Right. And I

Remember yep. We had stop and go. We had U to 'em in seven 11, I think with the three big

Ones. Yeah. And then seven 11 went away, stop and go, went away eventually. And then now seven Eleven's coming back. Yep. In towns

I've noticed that I noticed one the other day in spring, brand new and big store. Yep. Big

Store. And so he worked for seven 11 for about 16 years or so while doing that, you know, he, he saved up his money and, and this is coming from, you know, saving every nickel and dime that you made. You know, like my mom would have to like budget, you know, we can't buy this apple for 5 cents because we need it for rent or not. So, and so he worked there for 16 years and during that time he accumulated, you know, like, well he saved up a ton and then they started to go into the waster car wash business. Okay. And so he was, he bought one waster, ran it and made good money. And then from there he just bought a couple more

And just continued to save money, continue to put away. And then

He bought take to work at seven 11.

Wow. So he is, he's working basically, maybe this is where you get your work work ethic fund that I was teasing about the absolutely. From your dad. Absolutely. so he was working two jobs and your mom's helping out three jobs putting all this together, running these different companies. Yep.

And, and I remember all this because when I was 16 years old, when I even 16 and when I was like 12 or 11, I used to, we used to every Friday and our Saturday night. Right. We would go and collect the money from the wash materials. Okay. And that was what we did Friday and Saturday night, we didn't go out with our friends. Yeah. You know, we'd go out to dinner as a family. And then from there we would go to the money, go get the money. Yep. And then, you know, you have coin counters and things like that. And so you know, I, that would be an exciting

Time. It was exciting

For me cuz I made, you know, it's one of those things where it was, it was work. Yeah. You know, it's not work unless you make it fun. Right. Yeah. Yeah. So that's why I love what I do. But so it's, it's one of those things where, what I started to do collect coins because you have coins you're in front of coins all day. Right. And so I can tell you like a 1964 quarter sometimes made out of real silver and you can tell because you can look at it and you could feel it and when you drop it, it drops different than a regular quarter. Wow. And then, so I had, I built this little I call it little, but I have it in a little box plastic box and it's a bunch of coins that I've collected during, during that time. That's so cool. Yeah. Like the, the Buffalo nickel and things like that. I mean, you know, people put these coins in the vending machine machines and stuff like that and yeah. But that's that's what we did for, so you did and

Then the car wash and then didn't he get into the car business itself. So then that

Was, yeah. So when he retired from the seven 11, he opened up a, a car business right now, the street from where he was at. Okay. And so used cars, used cars. Yeah. Used cars bought, you know, $500, $600 cars and went and sold it for, you know, 3000, 2000. Was he a mechanic? He was not a mechanic. So the funny thing was the first car he bought was an Eagle premier. Okay. Bought for 500 bucks, brought it home. And the engine was gone and my mom got so mad at him. I bet she was like, this is the first purchase you make. And look, you know, you know, this is not going good, but eventually we got fixed and, you know, bought more cars and things like that. And the good thing was he had a great relationship with the, the banker, the local banker that's certainly banker and you know, the president knew him really well just cuz he bought properties.

Well he bought these businesses where he needed the loans. Yeah. And so he already built a relationship with the banker. And so when he went out and opened up his car lot, he needed a lot of credit. Yep. So he went to the bank. Yep. And they gave him a lot of credit. It was easy back then. Yeah. I mean, you know, it's all about relationships. Right, right. And so he went to the car business and did that for, I would say maybe 10 years, 10 in the used car business about 10 good 10 years. And then he kind of switched over to a little bit more higher line cars. Well, not midline cars. I understand. Yeah. And and for another like three years or so, and then he finally retired, it was too much just too stress, too much stress on

Him. So he was, was he by chance still operating the was areas and all that? Or did

He sell the, during that time during the time when he had the, the, the car business? Yes. Wow.

So that just con that was a great

Business line for him. Yeah. Made, made money on his own.

And that's kind of cuz what you were telling me and stuff. A little bit about when, when you were growing up cuz you're a gearhead. So that's where that started because you started toying around on these used cars that your dad had.

I was actually toying around the washing machines first. Okay. Cause we, instead of hiring people, you, you like the Maytag man. Yeah. Maytag and you speed queen. I mean I know all, you know, and so you know, we'd have to fix, you know, machines, aren't broken, we'd have to go and fix it. So, so you have to be handy right. In order to make money in that business, you can't just go hire sure. You know, speed queen or Maytag guy to come in and cuz that's going to eat up all your costs. So we would take the machines apart, you know, fix the motor, fix the belt, fix, you know, take the, the transmission inside the inside the wash areas. Okay. And the washers and things like that. The dryers never broke just cuz it was very simple. I mean the only thing that could break on is the heating mechanism on it. Okay. So that's how I got like tinkering with mechanics. Right. Kyle interested in that. And then when it came to the car business I got into, you know, tinkering with cars. Cause, but

You got, look, I, we, I say that you say tinkering are cars, but you wound up building hot rods. I mean almost racing cars. Yes. For lack of better

Words. Yes. I mean I had a, which shows

You a little bit nuts.

Yeah. I had a, a 1400 horsepower, a

Toyota super 1400 horsepower that all 1400.

Yeah. To the wheels. So yeah. That's nothing nowadays. But back in, you know, early two thousands late, I was kidding

When I said, cuz that seems like a tremendous amount to

Me it's it was a lot, it was a lot to handle. And you know I couldn't say that I built the motor and everything just cuz that was over my pay grade. You know, if I pull the motor out, send it off, they build it. I go put it back in, pull the transmission out. They, you know, tinker with it, make it stronger. I put it back in, you know, fuel lines and stuff I can do. It's not that's all. Yeah. So it's, it's you know, I just, you know, when you love what you do, it's not a

Job. And so you, you, you you're living in Spring Branch. Yes. Grow up Spring Branch. Where'd you go to high school?

I went to high school at St. Thomas high school

St. Thomas. And so then after

St. Thomas went to university of St. Thomas university

Of St. Thomas. Yeah. And you knew immediately you were going to study accounting.

So the, the thing was immediately. Yes. Cuz when I first semester there I made, I told myself, this is what I told myself. I said, I need to make a decision on what I'm going to do with my life. Right. Yeah. Whether it was going to be something in the medical field or what it going to be something in the business field or what, what field a better pursue. My parents, obviously Asian parents. Right. They always want you to become a doctor.

Is that, that's just the deal. That was the deal. You're going to be you, your last name is going to be WN and you're going to be a doctor. That's right. But I think it, I think 99% of all Vietnamese had the last name of WY. Isn't that right? It's like

Something like that. Yeah. Absolutely. And so we, we then I, I was trying to make a decision. My mom, really mom, I told my mom, I said, I can't, I can't deal with blood. Like I really can't like, right. That's just one of those things where I faint when I see blood. I mean, I may not, you would've been a very bad doctor. I would've been, yeah. I would've been, they would have to, I would be the patient. Yeah. We'd have to. Yeah. Yeah. And so my mom was like, okay, that's fine. Be an optometrist because you don't deal with no blood, no blood or anything like that. And I looked into it and I just said, you know what? I just, I just, you know, biology, things like that, you know, I took AP bio and AP chem and in high school and I just, I didn't enjoy as much as calculus pre-cal things like that.

And then, so, you know, people are hearing this well, then he should become an engineer. Yeah. I could have, I could have, you know, with all the, you know, you know, calculus pre-cal, things like that, but it was more of a being wanting to take over what my dad had built. Right. Ah, and being able to help him do the books and things like that. Okay. And so I told myself, I said, you know what? I told my dad, I said, I'm, I'm going to, I'm going to get an MBA. Yeah. And get a master's and my and get my CPA. And my dad said, that's fine. You okay? My dad actually gave me his blood scene. He says, that's fine. I actually, you know, I'm glad that you're doing that. Yeah. Because because then now he has someone to try all his stuff to, and, you know, be able to, you know understand the business side of things.

Right, right. So I figured that out the first semester I was there because before I came, because I had a lot of friends who, you know, they took the scenic route right through college. And so, you know, they didn't start, you know, their career until, or, you know, they didn't start taking their, their classes toward their degree until maybe third year. Right. You know, or maybe halfway to their second year you had focus you. And so I, I didn't want to stay in school because I wanted to get done with school, get what I needed to do, get my degrees and and get out and start, you know, living my life. Gotcha. So you go out there, you start becoming a CPA and you started where I started at a small local CPA firm at Thomas legend company. Okay. It was a firm that was owned by my dad's, I mean, my friend's dad.

Okay. You know, I've known him since the third grade. So he told me when the second he found out that I, I chose, you know, accounting and masters. He, he said, you know, come work for us. Gotcha. So during it was a 2001 or, or so I think it was when I started taking a lot of the classes. Right. He offered me an internship there. So I came there. Oh, that was cool. Yeah. Worked there while I was in school for, you know, two years. And then after I graduated, he offered me a full-time job. Excellent. And so instead of going and try to get an view at, you know, E and Y or Anderson, or, you know, PWC at the time, I said, you know what? I have a great opportunity here. And I learned a lot, oh, small local CPA firm.

You learn, you learn everything from doing the books on paper. Yeah. Right. A bank legislation on paper all the way to, you know, I start are doing I was doing S E audits and things like that. Yeah. So I started out being an auditor just because that's where they wanted me to. Yeah. Yeah. And then as a couple years went by, I, I didn't enjoy doing the auditing side. So I wanted to start getting to tax cuz every time someone hears that you're, you're a CPA. Right. Or an accountant, they're like, oh, you do taxes. That's the first thing that I want to ask you. And during the first couple years I, I wasn't in tax. So I was like, no, no, no, I'm an auditor. And they're like, oh, so you work for the IRS. I was like, Nope. Yeah, no, I do SCC audits for the public companies. Yeah. So that's what I did. And so that makes you very attention to detail by the way, I would think. So see audits and things like that. It makes you write paragraphs on your findings and you have to be very clear and precise on all your paragraphs. Wow. Because the reviewer needs to review without you being an in front of them. Sure. Right. And understand everything you're trying to state and say. And

So, but then you, you went over and started doing more on the, on the personal side and that's kind of where you are today. Yes. And so what is that, what's your favorite part of being a CPA on the personal side and stuff

Like that? Yeah. My favorite part of being a CPA is, is not about preparing the tax return. It's more about meeting my clients, talking to them. Yeah. Getting personable with them, right. Helping them with whether it's, you know, let's say tax planning for 20, 22 or helping them structure their business correctly or helping them, you know, Hey, my business, not doing too well, what do I need to do to you know, maybe get more sales or reduce their expenses, things like that. And there's been times where I've done, done that analysis. And I said, you know what, you know, I do your bookkeeping, but you need to do your bookkeeping. In-House because you can cut that part about. Right. You know? And so,

And so, but that way you get to be a part of this success of the business. Absolutely. And, and you feel like you're building something in, in a part of something. Right.

I get that. Yeah. And it's not just about, you know I'm being your CPA because I'm a CPA and, and, and you need one, it's more about building a relationship. Gotcha.

All my clients. Well, so let's, let's kind of catch up now to more to the president, you know, these last couple of years, and I can't believe it's lasted this long, but under this COVID situation. Yep. There's been an extraordinary amount of change in how people need to prepare their taxes and how they do prepare their taxes. Cuz we get those questions here, obviously with, with Henry being a part of Redfish, you know, is constantly coming in and there's been so much has changed. I was some of the things just off the top of my head that I was thinking of people working from home, there's been a lot of people changing jobs. Absolutely. There's been stimulus checks. There's been P PPP loans. Yeah. I want to kind of break. Can I, is that okay if we kind of go into that and break that down a little bit? So let's talk about first these stimulus checks that people have been receiving. So let's just pretend that Joe blow, listening, received X number of stimulus checks. What does he need to do as far as IRS reporting and tax reporting on these stimulus checks?

So on, on the tax reporting side if your CPA or account didn't ask you last year, they should have, if you received these checks. Right, right. And then they would also should have asked you how much you received, because if you didn't receive any check and your income went down in 2020 for the 20, 20 tax return, you could have received those stimulus checks as a credit on your tax

Return. So you could have gotten them back. You could have gotten what you, if you didn't, if they didn't show up.

Right. So the, the first stimulus, the first two stimulus checks were based on, you know, filings of 2018 or 2019 tax filing. Yeah. How would

Someone know if they should have gotten them? How would someone know if they should have gotten them? Well,

If you didn't get it, then what we do is we put that you didn't get it. And then based on the 2020 income, then they calculate whether you

Got it or not. And help me remember was everybody eligible to receive.

Everyone was eligible, but there are people unless you made over were single, if you were 75,000, your AGI was over 75, they qualified. If you were married, then 150.

So if you made over 150 grams of Mary cut, then that's why you're not getting it. Right.

So but if you didn't get it during that time, because let's say your 1819 was great, but then your 20 actually was when COVID really, the hit was in 2020, and you're filing the return in 2021 and you didn't get it based on your 18 or 19 return. But then your 2020 return was, let's say, you know, for a married couple, let's say it was a hundred. Right. You should have gotten it. And that's why, you know, I had a lot of clients who asked me last year, said, why are you asking me this? Cuz this is not taxable. Right. And I said, get right. It's not taxable, but if you didn't get it, then you know, we can claim that yeah. On the return. So I had a lot of clients who we did try to claim it and they came back and the, I actually adjusted the refund maybe either greater or smaller depending. Okay. What they do is they do a reconciliation themselves. Well, so

That all comes out in the wash. Right.

It all comes out. Correct.

Okay. So that was on, on, on the stimulus front. So people do need to be reporting that they get it and the amount and then get it to you. Right. So it

Doesn't show up anywhere on the return of what you got. Right. But

Because it isn't nontaxable and it's,

Non-Taxable correct. But

It does. That's why they could put it in the form of a credit. That's correct. Okay. All right. So then we in addition to the stimulus checks, we had a lot of people doing PPP loans. Absolutely. So that is a giant can of worms theres a ton out there. So let's talk about that for a minute. So there

Was a lot of unknowns when the PPP loans came out, initially a lot of even government was saying, yeah, these are going to be taxable, you know, or they're going to reduce your expenses. Right. But then when it came down to the final ruling these PPP loans that people got end up being, not taxable. Yeah. It, it, it didn't even reduce your, your expenses. Like they were saying it was going to be. And so people applied for them, got them probably around March of 2020. Right. And it was either eight or 24 week covered week period. And so what the, I mean by that is, you know, you have eight weeks or 24 weeks to use this money toward either payroll or rent or right.

You had to be specific to what you used it for to be able to prove

That this is what you used it for. Right. And it was either 60 or 70% that was going toward payroll in the rest of it could have been used toward utilities and, and rents and things like that for your business. So and so the forgiveness part of it came in 2021 where a lot of the banks were rolling out emails and saying, Hey, you need a PPP loan. You need to apply for the forgiveness. And then based on, and there were a lot of revisions on the forgiveness application as well. Oh really? So yeah, there is three applic, there's three different applications. If you had PVP loans under 150,000, it was a very simple, I think it was a 35 0 8 S form, I believe. And that was a very simple five minute something you fill out and you just have to say, yes, I did use it for payroll and I did use it for you know, utilities, things like that.

And you were done. And then there was another part of the form where it was the midrange, what I call the midrange. So if you got more than one 50, but less than I believe 2 million, if that's the, the higher end of that, and then you can apply you have to go through application process, answer a bunch of questions of how many employees did you have when you got the disbursement? How many employees did you have at the end of the covered period? And you had to put in how much money you spent actually spent during the covered period, you know, whether it's eight or 24 weeks and also, so you have to sustain, you have to submit payroll reports.

Okay. Yeah. But you get all that through the bank who, who did it? Yeah.

Well, the email comes in and then, you know, you get what your CPA and they should have helped you. You know, I helped a lot of my clients actually did the do it. So they,

You ended up doing the work. Yeah. I ended up

Doing it and going, let them review it and then they sign off on it. I got it.

Right. I got it.

I got it. But yeah, a lot of it was whether I did the payroll part for them or not, it, it was more of, you know, them not understanding the questions and things like that. So,

So one of the other things that came about was we had people obviously working from home. And so we had, I think that's why you had the number of pelotons sold. We were stuck at home. And so everybody's online, everybody's doing different things and they started creating office space in their home. Correct. So, but it's, it varies for different kinds of employees on whether or not you can take advantage of what you did for the home office. If you were working from home, are I correct? That's correct.

Yeah. That was a, that was a big question I had last year. A lot of my clients asked me, you know, Hey, I work, I'm working from home. I, you know, I heard there was a tax deduction for working from home. And so if you're a W2 employee there is no long, there's no longer a tax deduction.

Right. And so just in case people are W2 employee, you work for XYZ company, they pay you a salary and they say, we want you working from home right now. You cannot claim no. Any more deductions or anything on the home. Yeah. Because

The starting in 2018, they got rid of that portion on the scheduled a deduction. Okay. So previous to 2018 there was a, there was a section in there where it was called un-reimbursed employee expenses where you could have taken things like, you know, cell phone usage right. And home office expenses. Right. And then if you had enough to itemize, you could have, you know, benefited from, from those expenses. But you know, in 2020, you know, there's, that section is no longer there. Right. And so you have to there's nothing you can do. Well, you were a 10 99,

Right. So, but if you're a 10 99, so that's a whole that opens up a tremendous amount of opportunity. Yes. And people should be, or should have made a list. I would think of everything they spent money on in that home, in that home in order to make it an office. Cuz that does add up. Yes.

So anything with the home office expense deduction on 10 99 contract workers, which you would either file it, you know, on your schedule C most likely you have everything that you spent on your home where there's landscaping utilities internet landscaping. Yeah. HOA fees, anything mortgage and real state taxes, anything you spent on your home, you gotta take a portion of that as a deduction. If you are a 10 99

And that's going for, cuz I wait a minute, cuz now my ears just peaked up cuz I, I did not do any of the landscaping stuff. I didn't even think about that. So I need to add that when I get you my list. Yes. So need to add that because I do have, have an office at my house and I do sit at home and I do a lot of work. So now my landscaping, I get

A deduction. Any, any expense

Related to, I love you man. I get that a lot. Okay. That's that's amazing. So landscaping, another one that you turned me onto, I didn't even think about it. My dry. Yeah. Cause I have a dry cleaning bill every week I wear shirt oftentimes slacks and whatever. I take it to the dry cleaners.

Yeah. Because you have your own business. Yeah. You know, that's part of the things where, you know, you can't now you can't write off like things like you know, the washing machine.

No, no, but my dry cleaning bill is typically going to be my button down shirts and my slide. That's

Just what it is. Cause you need that to go meet with clients. That's right. So that's right. That's where the cost comes in at. So as long as it's a, you know, it, it meets the, the the criteria of a, you know, a business. Yeah.

Right. So let's go back to the home cuz now, now my brain's really clicking here. So you said that the landscaping, what about if you had a new roof put on your home or any kind of construction?

So any of that is, is part of the, the percentage. So what we do we take yeah. We take, let's say, you know, you lived in a, a 3000 square foot house and your office was 300 square feet. Right. So that's 10%. Yeah. Right. So we get to take 10% of any expenses that you spent on your house during those years. And so a lot of clients actually spent money to renovate, let's say a room above their garage to make that their true home office. Yeah. And so, you know, they would ask me Henry, can I re deduct the whole, the whole thing? Like, you know, I bought a desk for it. I bought, you know, I renovated the thing I said, no, but if you bought the desk, that's fine. If you bought a computer, that's fine. You take it. And it's entirely. But if you were to redo the Sheetrock and you were to, you know, add electrical outlets, things like that, that, that would be including in the 10% you,

Okay. So then you take the, the, you measure out the square footage that you have as an app portion of the hole. And then any household expense you get to duck that percentage off. Correct. When it comes. Correct. Okay. So my list to you just got bigger. I need to go back and I need to start adding in some things like that. I didn't know. That's F fantastic advice. What other things, so I'm trying to, is there anything else that we can be thinking of? What about the automobile?

Automobile? You have the mileage deduction. All right. How does that work? So you can't do commuting models, right? So commuting models is something like when you drive from your house to your office, okay. You can't do that. But if you go from your office to a client, you can, you can. Yeah. So yeah. There's certain rules on, on, on what mileage is deductible, what mileage is

Not. And, and I know that in the, in the past we have discussed, so you can either add up the mileage, by the way, before we, that can be a pain up the mileage. Yes. What, what are, what are some little hints that you give out to your clients that would help them to add up their miles or something like

That? So the best advice I can give my clients is use apps, right? There's a mileage IQ app, mileage

IQ is the name of it. Just so you describe mileage

IQ IQ. Correct. And there's a lot of other apps out there, but I, I know the one that I've a lot of my clients have used and been very happy with is mileage IQ. Okay. So what you do is every time you finish driving, it actually tells you was this, it asked you, was this time you drove, you know, was it mile, was it business or off or personal, right. So you swipe one way for business and you swiped the other way for personal. Okay. It's just one swipe. And then you can, you can be driving around all day. And at the end of the day, you can look at your phone and it can have 14 different times that you stopped. That's

Fascinating mileage. I, yeah. I need to take a look at that. Yeah. Cause what I have been doing, and I know it's real old school is, is I know I was out the clients yesterday and it's, it ended up being a 36 round trip mile round trip. And so I just go into my spreadsheet and I record that I was here and I do it. So that's manual so that I

Used to do the same thing.

But now you just, but mileage IQ, you

Think that's the way to go. I IQ because it pay it, there is a monthly subscription, but at the end of the day, it pays for itself. Got it. Because if you lost, let's just say you lost one day, one day of, of mileage. And that day you drove, you know, 50 miles, right? Yeah. Where you're looking at roughly 55, 50 6 cents a mile.

So that can add up. That can add up. I know that we were talking to a client, was it Monday? And she puts crazy miles. Yeah. How many miles? 33,000 miles. Yeah. 30 a year. A year. 33,000 miles. Yeah. I mean, so she puts on crazy mileage. And so then she gets to deduct 50 that that's a, that's a it's

Size deduction. Right. And there's no income to take. There's no income recapture for mileage deduction.

Awesome. So if you're driving lots of miles, make sure that you are getting the most out of it and stuff like that because let's face it, it does beat your car up.

It does. And the miles reimbursement takes into the, that to account out. So how the mileage reimbursement the IRS or the government keeps recalculates, the mileage reimbursement rate every year. And they base it on, you know, depreciation of a car, average depreciation. And they base it on what the field cost was and just cost of, you know, tires and yeah. You know, GD P type of stuff. And then they adjust the mileage rate accordingly. Okay. So every year it's going to be different.

It's going to change. Yeah. And so you guys gotta know that you gotta put that in there. So, well,

The client doesn't need to know that if but you do, right. Yeah, I do. But the, you know, if they use mileage IQ it's

Oh, they already do it. Yeah. Actually has mileage IQ already does it for 'em. Well, here's a, and then another thing thought was really interesting. And we had talked about this. I think it was last year at some point, but we were talking about clients who lease their vehicles versus own them. Correct. So if someone is leasing a vehicle and they're using it for business mileage, they don't need to keep track of the mileage. Correct. Because they can actually write off, is it a hundred percent of the lease?

Well, it depends. If you use that car for a hundred percent for time for your business only then yes, you can ride off a hundred percent. The lease, you can ride off insurance, you can ride off, you know you can ride off the insurance on that car, on that vehicle.

So only if you lease, but if you own only if you lease only if you lease. So if you lease the, so the amount of the lease and the amount of your insurance, let's say you use it 70% of the time you're working. Yeah. So you get to write off 70% of the total lease costs that the insurance costs and that could add up to be more than the mileage

Used. Right. It depends on, you know, your personal, like yours, always personal

Situation. So you really need to kind of do the, and if you're, so maybe if you're in the market for a new car, right. You might want to consider if it's primarily going to be a work vehicle on leasing it, because with even the insurance side of it, you could end up saving yourself quite a bit of money. Correct.

So with leasing a vehicle that there's also no income recapture now, unless you say, you know, cuz you mentioned earlier, you know, let's say you use that car for 70% of the time for business and 30% personal. Right. So how that works is you take a, you, you get to deduct a hundred percent of the lease on your business side and then there's something called the auto income inclusion on your personal return where you recaptured 30% of that as income. I'm just getting a little

Technical. Yeah. But I, but that's, that's what you, I mean, it's still amazing to me all these things that were out there that I didn't even know about. Right.

And so yeah. People ask me all the time, should I buy or should I lease a car and ask them, you know, depends do the right. Right. It depends. And, and you know, that's the, an accountant's favorite answer is it depends because there is no right answer for just, you know, if I were to say, oh, buy it right. And, and we can deduct it. Well, there, that's not, maybe not the best. Gotcha.

So, well, when it comes to all these different kind of deductions and stuff, and, and obviously I I've been a, a your client obviously as you work with us here at Redfish, but it's, it's, it's been a learning curve for me. And one of the things, and, and I know I'm old school, we were talking about this, I keep this massive spreadsheet. And what Henry did for me is said, keep a list of these items. And I have columns on this spreadsheet. I, I have my marketing dollars. And so like, I'm paying conmigo and we've talked about them. And so they get, I pay them every month. And I record what con what I pay conmigo to do the marketing side for my Google analytics, things of that nature bank charges, auto things I buy for the computer. And I keep all of these different columns on, on here.

Now I'm a spreadsheet nerd. So I can, I actually enjoy going through the spreadsheet. And at any moment looking how much I've spent on the given year, I can look at it and I can see it. What is your advice as a CPA, as far as cuz I do think that good record keeping makes sense. Yeah. And I have walked into, I've walked into this woman's business and we talked about it. She literally kept everything in a shoebox. Yeah. And I was like, oh my gosh. And it's very unorganized. And when you're unorganized, you do lose money. That's correct. That's

Absolutely correct.

So what are, what are some of the ways or tips that our listeners can glean from this, on what they can do to keep better records, to keep it organized. And then so they're not like putting it all off, so they have to do it all at the end of the month. They're like, ah, I hate this.

So first thing I want to say is if you do have a shoe, you should have a shoebox full of receipts. Okay. Whether it's whether it's in a folder or a shoebox, an actual shoebox and you should label it every per year. Okay. And the reason for that is because if the IRS already came back and asked you to prove these expenses at you have yeah. Shoebox to go to you have, Hey, this is my shoebox is all my receipts. I'm going to go through here and provide these receipts to the IRS.

But could you, and it, instead of keeping the receipts, now, maybe I've been doing it wrong, but I have a debit, a business debit card that I use. Every expense goes through that. And I have statements. You need

To have the receipts. Oh, that's the best way for you to prove to them. Right.

I've been doing it wrong, Henry.

Yeah. So a lot of clients say, oh yeah, I have my, my credit card statements. I have my bank statements. And the IRS will not a hundred percent take that as in case of an audit. Yeah. They will. Not that as proof of wow. Yeah. There, there are instances where they could, but,

But so I'm getting ready to screen. Yes. And we're getting ready to start doing all receipts. Okay. Yeah. Keep it's shoebox. I'm writing this down. I don't, I probably won't be a shoebox to me that just looks like right. But

A full, you know, you can get one of those accordion that has different, you know, slots and you can put every year and then you have the next X amount of years in there. Okay. And so here's another thing, a lot of people overlook. So when you go out to have a meals, like

I'm really disappointed now on this podcast, I'm really just, cause I have a lot of work now that I have to, you have no idea what you've just done to me. All right. Please continue. So,

So one of the things that you should do also specifically with meals, receipts, right? Yeah. Because there's four criteria on meals where the, the, I wants to know, they wants to know the date, the time, the time, right. The day. Yeah. And that you had, you, you spent it where it was. Yeah. Okay. And then those two are actually on the front of the receipt already. Yeah. Okay. But then what you should do is you should turn your receipt around and write down who was there and people was there, there, and what you discussed that was business related, those

Two things just in case they come back and ask because they

Will ask you, they could come back and ask you, you can't just have a receipt stating that you took, you know, two people out to dinner. Right. Right. So, so at least when you, they see that they say, oh, this was an actual valid business expense. Okay. On the, on the meals and entertainment.

So keep the receipts record what they're going for in some form or fashion. Right.

So yeah. We're going back to you know, the recording part aspect there, right. So you said you're, you know, an Excel, you know, person and you love, you know, putting things, Excel. I love my Excel sheets. Yeah. And so, but it's easier for you cuz you can, you know, you can have your pocket for receipts and you can go the next day and, or look at your bank statement and say, Hey, which is what I did. Right. Hey, I spent this and this is going to go into this category, that category. Well you gotta think about the people that are on the run. Right. The people that are yeah. Good point out in the field, you know, maybe a construction worker or owner. Right. Who has his own business. And so he's driving around. So is he going to remember to write down his mileage every, every day?

Is he going to remember, you know, Hey, I stopped at this convenience store this seven 11 to go purchase drinks for my guys, things like that. Well he's, he should keep those receipts, but is he going to remember to record it or is he going to put in a shoebox and go give it to his accountant at the end of the year? Yeah. So my recommendation is if you have a business, keep it simple. You have one checking account, right. If you need, if you need to, and that's fine. Or if you need a saving, that's fine. But one checking account is you're operating yeah. In and out. Right. And then the second thing is, or, and or one credit card. Right. Okay. And so what that does is that allows you to get, know that everything you spent on through that checking account or through that credit card is related to your right.

So what I tell a lot of my clients who don't want to use QuickBooks, right? Cause QuickBooks is a way to keep track is a great way to keep track of incoming expenses. But if you're a smaller business and you don't want to spend the money to first of all, pay for QuickBooks, what does QuickBooks cost QuickBooks? So there's two versions. You can get a desktop version, which is probably around 300 bucks. I'm not, you know, sure. Maybe three 50, that's not bad. And then the online version, which is a monthly subscription, which they have smaller versions, maybe 10, $15 subscription per month. But then it goes up to like $30 a month. That's still not bad. It's still not bad, bad, but then you gotta figure out how to use it. So a lot of, a lot of people don't Don how to use it.

And so and so yes, that's the bad part. Yeah. but what in, but some people do know how to use Excel. And so what you could do is every month you can go onto your bank account and download the Excel, you know, transactions for that month. Yeah. So do it every month so that you can keep track, you don't lose it any, right. Just, I would wait until like today is the second right of February. So I would say maybe wait until the 3rd of February to make sure all the pending transactions have actually clear. Yeah. And then you go in there and you download January 1st through January 31st and download that in the Excel format. And then you can go in there and categorize based on what you spent. Right. so you know, the, the four columns that you should really have, or, you know, kind of pay attention to is the date. Yeah. The description, which is like who you bought or spent the money with the category and the amount

So that that's on, I'm keeping it in, in there in the, in the QuickBook or keeping in Excel. Are there any apps that you're aware of? Cause I'm stuck on this receipts thing. So is there any apps that you're aware of where people can record a receipt or take seat or is it just simple matter of just hanging onto them? There,

There are apps where you can take a picture of your receipt and and kind of, kind of keep track of it. Right. And then I know there's a a scanning also right thing called I think's neat. Neat. Neat. Yeah. Yeah. And, and they actually sell the scanner and they actually sell the software to kind of keep track of your receipts. And then they actually populate that I had one client that uses that they populate it into an Excel. Okay. And they actually categorize it for you. They help you categorize it. So it was helpful. It was helpful. And

But if you are keeping an expel, an Excel sheet, like I do, it's just a matter didn't we just on the receipts itself. Yes. Just

Hang, I don't need to see the receipts

Don't send. So Brad, don't send Henry the receipt, a shoebox. That's correct.

The receipts. Got it. I don't need it.

Let's let's reemphasize this for some of these Redfish clients that we have. We don't want your shoebox

Unless there's a a 10 and a half or 11 in there.

No, there's, there's typically, there's typically not at least from what I've seen. So as far as just the typical for organization, the hard part is probably the beginning. That's correct. And getting it set up and then it's just, it's kinda like working out or diets or whatever, getting started getting stuff, but then it's just keep up with it. Yeah.

Keeping up with it, making a habit

So that that's going to be the key there. Easier

You make it for yourself. Like if you download the, my IQ app, right. And I'm going to go back to this, you know? Yeah. Construction worker or the construction owner, general contractor who owns his own business, he drives to maybe three or four projects, you know, a day. And he may be stopping at the bank to make a deposit or stopping at the convenience store to fill gas and things like that. Well, guess what, you have all these transactions going on. And if you have a mileage IQ app, you can just swipe left to right. At the end of the day, you don't have to do it right then. And there, you could wait till the end of the day. And then and then if you, you know, have one checking account or one and one credit card, you can and download those transactions at the end of the month. Awesome.

Just make it a habit to do that.

So, well, see, there's a lot of these little things that I, that, that I don't even think about it. So now here we are at the time of the year. And so what you've been sending out lately to our clients is what you call the tax organizer. Correct. And so for if they've worked, if, if they you've been our client in the past, asked it pre-populates

What was in there previous year.

Right. And just kind of give you an idea of what you had. So then this goes out to help you gather the things that you need to gather in order to get back to us so that we can do the taxes. Correct. some of the other things that I think it's, it's, it's real beneficial is you've had two real big hires or we've had two big real hires this year and Dawn bait. Yes. And she specializes in bookkeeping and correct all

That kind of stuff, bookkeeping.

And then we have a office

Office who specialize is in tax return preparation, right. Payroll. And he also does bookkeeping as

Well. So, so really now it, you know, so you're running the division. Correct. And so then you have a office and, and, and Dawn that are hopefully doing a lot of legwork for you. So you don't have to do these 24 hour day, three day. There is three days in a row. It was, you did it 24 hours. It was, yeah, I was, yeah. You work insane hours, bro. It was like two years

Ago. Yeah. It was, I, I don't re I do not. We'll never re re I would never forget that year. Yeah. It was yeah, it was really

Bad. Yeah. So hopefully we got that. We got that behind us now and you know, on that kind of stuff. So I won't be overloading you too much, too much. I kind of want to overload you a little bit. It's always fun. Like

I said, if it's, it's, it's fun. Yeah. You know, I love what I do. So it's, that's why I, you know, and truly the

Fun part is when we do, you know, we talk a lot about Frank and, and so we, to being able to sit down and go through someone's business and really try to help their business and getting more profitable and stuff like that. That's fun. Yeah.

And it is fun because, well, you know, I tell all my clients this, like, you hire us to do your books and your, your accounting and, and, and your, you know, tax returns so that you can focus on what you do best. Yeah right. You go out there, you, if you're a salesman and you go out there and you, you know, you push your product, you want to be all focused on that. You don't want to have to worry about trying to, Hey, is, is on my book straight or things like that. Right. Or how much money am I going to owe in taxes? I mean, you know, let us take

Care of that. And then obviously the other things you do that we do for clients who, with payroll yes. And all that kind of stuff, they can full be as seamless as possible. And one of the things that I like about what we've set up Henry is that is we take whatever the fee we think the fees will be for the accounting, for the bookkeeping. And we just divide it by 12. And so it's a monthly pay subscription, correct? Is that what we have now for CPA services? Correct. Which that's what I think is a big benefit for people to break apart the payment. It makes it a lot easier. You're not curious of how many hours it's going to be. And then you're getting a bill saying, I, what, yeah, it's already set up it's throughout the course of the year. There's no surprises.

And the feedback we've gotten is pretty tremendous is you know, I know the revenues that we had from year one to year two doubled as far as the tax revenue. And so I'm looking at hopefully making you stay up more late nights here soon just to manage. Yeah. Just to, to manage the work, just to manage work. I'm hoping. So the work got it. Well, Henry, this has been a, a it's. I'm so glad we finally got this done. And got you, got you in here to do the podcast. I know he's probably going to take off and do a lot more work right now, cuz frankly, I know that I'm got a lot more do it. So as far as real quick, before we let, before we go 20, 22. Yeah. Anything, anything we need to think about there?

Yeah. So there, there is a new rule or a new regulation that came out in 2022. I haven't followed it too closely, but it is it's out there. And I, and I don't know if they're going to change this or not, but as of 2022, if you receive Zelle or Venmo or cash app, if you receive money through that, those apps, yeah. They're going to send you a 10 99 K at the end of the year. You're kidding. Right. So it will affect some people and it won't affect others. And so if you were just, let's say you use Elle for, you know, and this is throughout the year you use Elle and you go out to eat lunch or you go out to eat dinner and you know, you and your brother or your sister decide to split it. And then they, they, they send you a hundred, 150 bucks, right, right. To split the dinner. Well, if you have X amount of those transactions and over a certain amount, I lose 600. You will get a 10, 9, 9 K from Zel or Venmo, or really yeah. For, for those incoming transactions. But

This will be only okay. So I, cuz I use, you know, you know yeah. That I use it all the time. I'm thousands of dollars. That's so basically starting at the end of next year, I should be getting a form from Zelle

For any money that you received received, received. Correct. Not spent not spent again. This

Is more cause I don't receive money. I use it for sending.

Correct. So, so this is a, a big deal because not just for the per the, the business owner, but it's more for people who use it on a personal level, you know, like, like I saying to, to just get reimbursed and pay back things like that. So, you know, that's this, they came out with this rule because in my personal opinion is to make sure that people are reporting income. Cuz there's a lot of days, a lot of things people do nowadays is they get paid by Ze. Right. And so they don't report that, oh, it's almost like cash. Yeah. Pay me cash. Just Zemy I just Zemy right. Versus if you write a check, I sold a

Baseball card Zemy

Yeah. If you have, if you, if you have a check, they have to go to the bank and, and deposit a check and then comes a deposit. Well, I know Elle's linked to the bank account, but it's, it's just one of those things where the IRS came out and they came out and they said, they're going to require this in 20, 22 interesting big deal. So people are not going to, a lot of people are not even aware of, of this you know, regulation that came out. Yeah. With this rule. I wasn't first I've heard. Yeah. And so it was a, it was a huge deal. Now they may come back and change things. You mean they've been changing a lot of its like the PPP loans. Yeah. Things like that. They could because they, you know, they came out with it so they can go and change it.

But as of right now, I believe that it's still in effect where if you receive money from Zelle or Venmo or cash app, any of those, again, this is receiving it. You're going to have to report that as, as income. Whether it's, it was a personal thing or business. Right. And so, and here's the problem with this, which I haven't figured out how to address it yet. So let's say your business and you get you know, $2,000, you get paid $2,000 from your customer. Yeah. And they pay through Zelle. Yeah. Well that customer, most likely is going to issue you a 10 99 NEC at the end of the year for that $2,000. And the, if he Zel you then Ze would also issue you a 90 K for $2,000. And so what the IRS is looking for is $4,000 worth of revenue generated revenue, but you actually generate, oh, I got two.

And so I don't know how they're going to address it yet or how we're going to deal with that. They may, they may be a line item in there in, in next year's return where that says, you know, double income or something like that, or counted twice based on the 10 99. So there's a lot of questions to be answered. I mean, yeah. Pretty much questions to, to be answered, which I don't know the answers to at this point, but I just want to make the listeners aware of this and, and to be aware of it because I know it's heavily, heavily used. Yeah. I mean, there's a lot of people that use cash Appell and invent. Yep.

Anything else on the 20, 22 front you can think of off top of your head? No, I know there's a

Lot going on in there. There is a lot.

Well, I've enjoyed it, my friend. Yes. Thank you. Thank you everybody for listening. And we'll be talking back at you real soon. Have a great day.

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