Tax Tips and Secrets for Year-End Planning

It’s that time of year again. Decorations, fruitcake and taxes. Consider these last-minute tax tips before the end of the year:

• Use your capital losses against capital gains.
• Consider selling some of those loss stocks.
• Defer income where possible.
• Set up profit and sharing programs.
• Look at your itemized deductions. For example, you an deduct up to $2,500 in student loans.
• Consider prepaying your expenses by credit card.
• Charge expenses this year even if you do not make payments until next year. Pay a bit more in state taxes this year so you can get the deduction.
• If you refinanced your home or a loan, any nondeductible points are immediately deductible.
• Hire your child and put some of this money into a Roth IRA for them.
• You can write off up to $25,000 on a new vehicle. You can write off the business portion use.
• Write off up to $125,000 on other business expenses. Make the purchase this year, take the deduction and
pay for it next year.
• Postpone income and accelerate deductions.
• Donate inventory and take a deduction on what it is worth.
• Do seller financing on your business if you are going to sell your business. This is a way to defer the tax.
• Set up an S Corp. and if you pay yourself a reasonable salary, anything beyond that is a dividend that is exempt from social security and federal unemployment tax.
• Take a 100-percent deduction for an employee party.
• Deduct 100 percent of your health insurance premiums and consider hiring your spouse and setting up a self-ensured medical reimbursement plan. This will allow you to deduct other medical expenses.
• Get a dollar-for-dollar tax credit reduction in your taxes for implementing energy measures such as solar panels or energy-saving windows.
• Deduct your business losses.
• You can also forward your business losses for the next 20 years.

Regarding this last item, for example, if your spouse earns a $50,000 salary and your business had a loss of
$10,000, you can net out the two so you pay taxes on $40,000. Or, you get married and your loss exceeded the
whole family’s income for the year. You can carry that loss back as if you got that loss in prior years and get
a refund from the federal government, and sometimes the state, for the last two years of taxes that you paid.
Or, you can elect to carry forward your losses up to 20 years and offset the next 20 years of earnings.

Should you do your own taxes?

• It is better to work with a CPA rather than doing your own taxes.
• Having a business is complex.
• The IRA found that those doing their own taxes had 11 times the error rate.
• This increases your chances for an audit.
• If you use a CPA, you can sue them if there is an error.

How do you find a good CPA?

• Use CPAs with a degree.
• Use a CPA who works with mortgage companies.
• You also want a CPA who will do tax planning.
• Don’t hire a rookie — they should have at least four or five years of experience.

 

 Hoss Pratt: Play Now | Play in Popup | Download (305)

Hoss Pratt is 23 years old, has been in the business for l year, and at the time of this interview, had been on 8 listing presentations in one week! Prior to moving to Texas, Hoss was mentored by a top producer (Brad Korn) in Kansas City.

Frisco, Texas is one of the fastest growing communities in the United States and has a very high inventory market. One Hundred people are moving into Frisco every day and there is a great deal of new construction, which is competing with the resale market.

Agents in his office, following a more traditional approach to the business, are holding open houses on Hoss’ listings in order to generate buyers.

People with whom he initiates relationships by telephone (FSBOs and Expireds) frequently comment, when they meet him, that they thought he was older. His key to overcoming the “lack of experience” is by exuding confidence.

SYSTEMS

Hoss is using the 8 X 33 touch program; everyone he meets receives a handwritten note and is put into his database, and every week for 8 weeks, they will hear from him by letter, postcard, email or phone call. After the initial 8 weeks, they go to the 33 touch program. This program consists of 33 touches in one year.

Hoss uses Top Producer 7i as his contact management program. He observes that Top Producer allows him to implement his systems and he views it as his assistant. Every day, it tells him how many letters he needs to send, to whom, and what phone calls he needs to make. Hoss has systems for specific leads. For example, when a sign call comes in, a campaign is launched, and he just has to follow the actions that come up on the appropriate day.

Hoss utilizes a service provider that provides him with FSBO leads. These leads are put into Top Producer. An initial approach letter is sent, followed by a phone call three days

later. For the next 2 months, the prospective seller will receive a letter and an alternating phone call every three days. Hoss points out that the FSBO contact game is verycompetitive for the first 2 weeks and that it takes 6 contacts to get them to convert.

KEY ELEMENTS OF SUCCESS

Brand new in the business, Hoss followed the advice of his mentor, Brad Korn (www.BradKorn.com) who advised him to use “The Millionaire Real Estate Agent” book by Gary Keller, as his roadmap for success.

To build his database Hoss went out and knocked on 5 doors per day, every day. Within one year he has compiled a database of 600 to 700 people and he stays in touch with them on a regular basis.

Hoss focuses on sellers who have “raised their hands and have said that they want to sell FSBOs and Expireds.

Hoss is not “Outcome Oriented”. He inputs leads into his database not to get the listing, but to have an opportunity to earn their business. He knows that if he stays in touch with them longer than everybody else, he’ll get their business. His conversion rate is 10-15% of everyone that goes into his follow up system.