When the ball dropped the other night, you likely made one of two types of resolutions.
OR…
You got reasonably specific about something you actually do want, but the chances are, it’s no better than the generic stuff we’ve all heard above. I’m talking about the junk like…
“We’re going to invest in cryptocurrency.”
“I’m going to run a half marathon by August this year.”
“My business is going to break $500K this year in profit.”
The problem is, as good as those sound, if you didn’t think or create a plan to achieve those goals, their just as useless as the cliché ones everybody else used…
“My husband and I are going to sell our stock options from work and invest that money in the top three cryptos my research has told me are poised for reliable growth in 2022.”
“I’m going to do an hour of cardio each day, while gradually building my endurance. I’ll be adding in a second cardio session each day – running or biking. One day each week – Tuesday – one of those workouts will be swimming at the gym.
“I’m going to recreate my pricing structure and create new products for the business which I’ll launch on March 1st, 2022. I’m going to have strict rules on how I spend my time at work to allow me to not lose valuable time getting stuck “doing” email and I will limit my social media time to one hour each evening after I get home and have spent time with my wife and kids.”
I guess you can see how all these examples amount to the same goals, but each gets more and more specific.
Who do you think is going to accomplish the most? You guessed it – the ones that are most specific.
Honestly, it’s not too different from preparing taxes.
Yeah, I said it.
Creating specific, measurable goals isn’t radically different from tax preparation. Let me explain:
Today, there are SOOOO many ways that individuals – especially those who receive W2s for their work – to handle their own tax preparation that many tax specialists and CPAs worry about the potential loss of income from software suites.
Not me.
In fact, I really like the fact that tax preparation has finally gotten “easy” and the software to support it is available. It makes my job easier. The truth is, with the level of experience that many preparers operate on, it’s not ethical to charge for our skills for those most basic returns and filings.
Think of the sheer number of tax software on the market for taxpayers, and the options for professionals are even more extensive. Honestly, I’d rather educate a young person on how to use the software than to charge them for preparing their return.
…But I LOVE working with business owners and those who need who need professional level tax preparation, especially when they never thought they needed a pro to help them, and my team and I can show them how critical our services are.
Here’s just a few examples of business owners and people who MUST have professional level guidance in the tax arena:
- If you have over $200,000 in annual income or no income at all.
- If you make more than $5,000,000 annually.
- If you are paying Alimony
- The Earned Income Tax Credit
- If your numbers are TOO perfect
- If you have unreimbursed employee expenses
- If you deduct 100% of a business vehicle
- If you think you should deduct a Hobby Loss (tip, don’t go there!)
- If you own cryptocurrency
- If you worry about the ethics of your previous Tax Preparer
If you’re nodding your head as you read this list, then “doing it yourself” is NOT a good idea.
Now, you might be thinking, “With the pandemic, how many audits would the IRS really do?”
Guess what? The IRS can use Zoom, too. Sure, it might not be as intimidating, but the results would be the same. In fact, in many cases, the “new” ways the IRS reviews mistakes on taxes are more egregious than the “good old days” because you’re forced to fight by mail, and the amount of time it takes to prove you’re right is exponentially longer, and thus, far more frustrating.
So, in the end, if you are prepared to go and handle your taxes on your own, I’d still like to invite you to come in and discuss what hurdles you’ll need to be prepared to jump over.
All the best and Happy New Year!
Serious real estate investors don’t rely on intuition—they rely on structured financial strategy to drive decisions and scale efficiently.
Most investors think a property is profitable if: Rent > Mortgage That’s dangerously wrong.
Bad bookkeeping doesn’t show up as an obvious expense. It shows up as: Missed opportunities Overpaid taxes Bad decisions
At some point, your business stops being “simple.” And your bookkeeping setup? It quietly starts breaking.
Taxes are your largest expense as a real estate investor. The difference between average and elite investors? Strategy. Not income.
Most real estate investors don’t lose money because of bad deals. They lose money because they don’t actually know their numbers. And not in a surface-level “I check my bank account” way— but in a true, decision-making, portfolio-optimization way. This single mistake quietly drains cash flow, increases taxes, and prevents scaling. Let’s break it down
If you own between 5–50 rental units, your biggest financial risk isn’t the market—it’s poor tax strategy and bad books.
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Ordinary Income: Ordinary income from investments includes interest, dividends, and rental income. Let's briefly explore each: Interest: If you earn interest from investments like savings accounts, certificates of deposit (CDs), or bonds, that income is generally taxable. It is typically taxed at your ordinary income tax rates, which vary based on your income level. Dividends: Dividends are a company’s earnings distributions to its shareholders. They can be classified as either qualified or non-qualified dividends. Qualified dividends, which meet specific criteria, are subject to lower tax rates similar to long-term capital gains. Non-qualified dividends are typically taxed at ordinary income tax rates. Rental Income: If you invest in real estate and receive rental income, it is generally considered ordinary income and is subject to taxation at your applicable tax rates. However, you may be able to offset this income with eligible expenses, such as mortgage interest, property taxes, depreciation, and maintenance costs. Capital Gains: Capital gains occur when you sell an investment for a profit. The taxable portion of capital gains can be further divided into short-term and long-term gains: Short-Term Capital Gains: If you hold an investment for one year or less before selling it, any profit you make is considered a short-term capital gain. Short-term capital gains are taxed at your ordinary income tax rates. Long-Term Capital Gains: Investments held for more than one year before being sold may qualify for long-term capital gains treatment. At the federal level, the tax rates for long-term capital gains are generally lower than ordinary income tax rates and vary based on your income level. At the state level, while a handful of states tax such gains at a lower rate than the state ordinary income tax rates, most states tax all income, regardless of type, at the same rate. Net Investment Income Tax: In addition to regular income taxes, certain high-income individuals may be subject to the Net Investment Income Tax (NIIT). The NIIT is a 3.8% federal tax on the lesser of your net investment income or the excess of your modified adjusted gross income (MAGI) over a specific threshold: • For single or head-of-household filers, the threshold is $200,000. • For married couples filing jointly, the threshold is $250,000. Net investment income includes interest, dividends, capital gains, rental income, royalties, and passive income from businesses. It is essential to consult with a tax professional to determine if you are subject to the NIIT and how it may impact your tax liability. Strategies to Minimize Investment Income Taxes: While taxes are a necessary part of investing, there are strategies you can employ to minimize their impact: Tax-Advantaged Accounts: Consider investing in tax-advantaged accounts like individual retirement accounts (IRAs), 401(k)s, or Health Savings Accounts (HSAs). These accounts offer tax benefits that can help reduce your overall tax liability. Tax-Loss Harvesting: If you have investments that have decreased in value, you can sell them to offset capital gains from other investments. This strategy, known as tax-loss harvesting, can help reduce your taxable income. Holding Periods: By holding investments for more than one year, you may qualify for the lower long-term capital gains tax rates. Donating Stocks to Charity : By directly donating appreciated stock (that has been held long-term) to charity, you don’t have to recognize a taxable capital gain, but you can still receive a charitable contribution deduction for the fair market value of the stock (if you itemize deductions). This allows for a much greater tax benefit than if you sell the stock and then donate the funds, because you will pay capital gains tax on the gain from the sale!
What Are Cryptocurrency Taxes? Cryptocurrency taxes are the taxes that you owe on any gains or losses that you realize from the sale or exchange of virtual currencies. The IRS treats cryptocurrencies like property, which means that any gains or losses you generate are treated as capital gains or losses (just like when you sell stocks, real estate, or other capital assets). How Do Cryptocurrency Taxes Work? Cryptocurrency taxes work similarly to other capital gains taxes. If you sell or exchange cryptocurrency at a profit, you'll owe taxes on that profit. If you sell or exchange it at a loss, you may be able to deduct that loss to reduce your overall tax liability (although there are certain limitations when claiming capital losses). The amount of tax you owe on your cryptocurrency gains depends on how long the cryptocurrency has been held since the initial acquisition - if you own it for less than a year, your gains will be considered short-term and taxed at your ordinary income tax rate. If you hold it for more than a year, however, your gains will be taxed at the long-term capital gains tax rate, which is generally lower than the ordinary income tax rate. What Do You Need to Do to Comply with Cryptocurrency Tax Laws? If you've invested in cryptocurrency, it's important to understand how to properly report your gains and losses on your tax returns. Here are some steps you can take to ensure that you abide by the law: • Keep Accurate Records - The first step is to keep precise records of all your cryptocurrency transactions. Keeping track of the gain or loss from virtual currency trading is easy if you are using a broker that issues you Form 1099-B (Proceeds from Broker and Barter Exchanges). However, if you don't use a broker who keeps records of your trading activity, you will need to do so on your own. This means that you must keep track of the following: •Purchase Date •Purchase Price •Sale Date •Sale Price Don't forget that sales aren't the only form of taxable transactions. You must report the disposition of a virtual coin if it's sold for cash, traded for another cryptocurrency asset, or used to buy something. It's also important to note that virtual currency splits can create ordinary income, as can airdrops, mining, and staking. • Report Your Gains and Losses on Your Tax Return - When you prepare your tax return, you'll likely need to report your cryptocurrency gains and losses on Form 8949, Sales and Other Dispositions of Capital Assets. You'll also need to include the total amount of your gains or losses on Schedule D of your tax return. • Pay Any Taxes Owed - If you owe taxes on your gains, you'll need to pay them when you file your tax return (and they will be included in your overall tax liability on ALL taxable income). If you don't pay your taxes on time, you may be subject to penalties and interest charges. Conclusion As cryptocurrency continues to become a more popular investment vehicle, it's important to understand how to properly keep track of and report your gains and losses on your tax returns. The IRS is cracking down on these types of transactions, and you don’t want anything to come back and bite you later! As always, if you're unsure how this applies to your specific tax situation, please consult with a tax professional.