There is an old Looney Tunes cartoon where Daffy Duck is portraying Sherlock Holmes. Daffy is seated at a desk stacked with papers vigorously working the calculator. Porky Pig, portraying Watson, walks in and asks, “Whatever are you doing, Holmes.” “Deducting, my dear Watson. Deducting,” came the frantic reply.
Deductions come in a variety of flavors. We are all familiar with deductions matched with an expense. Donations to charity are deductible on Schedule A. Business owners deduct marketing expenses dollar for dollar.
There is another elusive deduction taxpayers only dream about: the non-cash deduction. The appeal of the non-cash deduction is the large write-off without a matching real world expense. Capitalizing on non-cash deductions can supercharge your retirement or debt reduction plans. The list of non-cash deductions is long. We will explore several ways you can reduce your taxes without spending a penny or taking a deduction significantly higher than the actual expense and stay out of jail in the process.Read More
Earlier this year Mrs. Accountant and I attended Camp Mustache in Gainesville, Florida. We were offered a ride to the Camp, but we also had several additional days planned around the event. Renting a car in such a situation is expensive since the car would just sit there for days while my wallet was financially abused.
My youngest daughter rolled her eyes when I mentioned I needed the phone number to the Gainesville taxi service. She grabbed my phone and started working on it. This is an unusual event for anyone who knows me. I use my phone as a phone. Period. I don’t care about, nor do I want to know about any of the other things smart phone can do. I make my own breakfast, thank you.
In a few minutes my daughter completed her assault on my virgin phone. She added an app to my phone. (To this day I have no idea what an app is. Whenever the kids talk about apps I joke that we are living on The Planet of the Apps.)Read More
One of the mantras of the FIRE (financial independence, retire early) community is the owning of income property. With rare exception, investors do it all wrong, taking on extraordinary risk for no reason.
Side gigs are handled the same way. Whether you run a full-fledged business or a side gig, you probably make the same mistake real estate investor’s do.
Americans love to invest at home. There is a tendency for people from all countries to focus their investment dollars in the domestic market. The comfort of understanding the local business climate clouds the investor’s judgment. American’s are the worst. For decades I have recommended 70% S&P 500 index fund/ total market index fund and 30% international index funds for my American clients. This is still weighted heavily toward U.S. companies. The diversification in broad-based index funds with a third of the portfolio in international is a good mix in my opinion. Small business owners and real estate investors rarely make such a sound decision.Read More
Berkshire Hathaway Inc. held their annual meeting this past weekend. Warren Buffett noted some of his failures over the previous decades (missing Amazon, for example) and Charlie Munger added Google as a big miss. Both men agreed they’d continue missing many opportunities in the future. Buffett and Munger made it clear they learn more from their mistakes than from their successes. They felt winning was a poor teacher as it fooled people into thinking they were right.
Steve Jobs had some Syrian blood and was raised by adoptive parents. Armed with only this information it would be hard to imagine a path that would lead to Jobs creating a company which would become the largest on the planet by the time of his early death at age 56. The odds were stacked against Jobs, yet he rose above the travails and changed the world.Read More
Things have been looking up at The Wealthy Accountant. Traffic is increasing and the audience is expanding. Even better, the original demographic attracted to the site has expanded, bringing in more people to benefit from the information provided.
The newfound success also causes problems. People unfamiliar with the FI (financial independence) community are frequently shocked at the way I present information. It’s an easy thing to do. Right up there in the title is the word accountant. The blog ought to be about taxes and similar stuff found in a CPAs office. Then you open the cover and find me standing there. Don’t worry! It would scare me too.
There is a major misunderstanding on what this blog is about. Yes, the word “accountant” is in the title. There are a few reasons for that. First, it’s getting hard to find an unused url in the dot com universe anymore. Second, I don’t want you to be an accountant (unless you want to be), but I want you to THINK like an accountant. There is a difference.Read More
Over the years I have retired many times. So have you.
The demographic of this blog leans heavily toward early retirement. This has always bothered me. I always feel like I have to be an apologist for all the folks enjoying their work. Life would be less bright for me and my brethren if we were forced to do what we enjoy most, less. Why is this? What is the hang-up with this retirement thing?
Zig Ziglar, God rest his soul, pointed out to me 30 years ago what retirement really means. I only met Zig once and it was enough. We talked and shook hands. In that short meeting I confessed to Zig I was going to cash it in and sit around reading all day. Now Zig is a good guy. He didn’t say nasty things to me, but for the smallest fraction of a second his face had a tell. I knew Zig was going to tell me something profound.Read More
Tax season is officially over and not a moment too soon. As much as I love the work, when months go by without a day off it begins to wear on me. The worst part is the sitting. Too many hours planted in a chair coupled with sleep deprivation and health is not getting the attention it needs.
Loving something as much as I love tax work is also a challenge for people around me. Mrs. Accountant is an angel, allowing me the opportunity every year to disappear for months to help complete strangers and semi-strangers with their tax, accounting and financial problems. My daughters have learned from an early age dad is a very intense man when it comes to his work.Read More
The demographic reading this blog does the things necessary to retire early. The same demographic believes in a side hustle to retire even earlier or to fill time once work becomes an elective. These facts make hobby rules an important consideration. The tax law has a massive loophole few use.
Accountants in the room will understand what I say next. A client walks in the door and his hobby finally turned a few dollars of revenue. No worries, the client says, I can lose money in my business for three years before I have to shut it down and start over. The client actually thinks there is a rule saying you must make a profit 2 out of every five years. By this yardstick, Tesla, a publicly traded company, would have to shut down. (Tesla has a decade of loses as I write this.)Read More