Because four hours simply enough. This is armstrong and getty extra large. I was just thinking, is we're about to talk to a tax expert. How upsetting it must be to him these stories about tax payers all across America feeling like their taxes went up because their refund is smaller, even though their taxes actually went down. Yeah. We've known Stephen Moskowitz for years in a variety of capacities, uh,
personal and professional and the rest of it. And I'll tell you something about Stephen is he feels about taxes like shirtless guy in the stands feels about football. He is so into it. Uh, that makes it fun to talk about the changes in tax going a lot more. Steve Moskowitz joins the Steve, how are you, sir? I'm great, really happy to be a guest on your show. And you know how excited I get when we talk about taxes. Absolutely,
I really do. We could start there people who feel like their taxes have gone up because the refunds have gone down under the new law. Are you frustrated reading those news stories? Yeah, you have to take a look at the totality. Now, some people's taxes really did go up because with this new tax law. There really were winners and losers, but an awful lot of people don't realize when they get something in every paycheck that at
some point you pay for it. And theoretically, with the time value of money, you're better to get the money as soon as you can invest it. But what happens in real life. A lot of people just spend it and when they got the refund, it's like the old Christmas clubs that had a chunk of money and they could do something with, you know, buy something or go on a trip. That's that's what they're missing right right.
So let's talk about the changes in the tax code recently. Well, what's the headline, do you what has had the most effect positive and negative on people? Oh? By far they through where if you qualify, you only pay tax on of your business profit. That's the biggest one out of all this. This really really helped business people. Doesn't do a thing for employees. But if you're in business and you qualify, who wouldn't want to pay tax on of the profit instead of and qualifying real estate? What do
you mean qualifying? Can you pay tax and only of your real estate profit? Yes, if the real estate is a business, know if it's an investment. So what's the difference between a real estate business and investment is a laundry list of rules and essentially how much time you spend with it, what you're doing with it, how many
properties you're managing. And then the government came along with something called the aggregation of rules, and without going into all the technicalities, you know these things have limitations on it. One of the ways to get around the limitations is you have the choice of putting property together. Where properties, say would qualify with businesses some belt but if you put them together and you qualify for that, you get the benefit of on the profit for all of them.
So there's so much here, Oh my god, And it's mind bogglingly complex and honestly, and I don't mean to put you out of work, but the fact that it's this confusing and complicated, it's just it's a sin to me. It's un American, it really is. And I mean, you know, there's there's the big joke. Every time there's a tax simplification acts, and they've been tax simplification acts since I've
been in practice for over thirty years. The big joke is it's the tax People's Full Employment Act, where it just gets more and more complicated and mis exception and that, and most people really do need to rely on somebody because if not, you can leave so much on the table. And there's all kinds of changes, like the college plans. Now you can use them for kindergarten through high school. You just be able to do that, so you can
put an extra ten grand in that. And you know a lot of people were putting money away for their kids for college and under the old rules of plans, you have to use them for that. Now, I mean, you know you have an extra ten grand from kindergarten through high school. That's nice. There's all kinds of things. They're interesting. I asked you this every time we have
you on, just to make a point. When you started doing taxes, how many pages were there in the tax code with all the regulations and what is it now? It was so much simpler. And it's it's funny that very question was posed to us. When I was a student, we had the professor came in and he said, when he started in taccess, he put his hands up in
the air and said this was the rules. He said, now I can't spread my hands wide enough, and it's becomes infinite, because not only do you have the converse people in their infinite wisdom making rules, you also have the courts interpreting them. So you have a really good one where you know that the mortgage interest dropped from interest on a million dollars to three cores a million for any houses that were purchased after the law became effective.
So you have to watch out. There's a lot of people. If you already had the house, you can still go ahead and the duck the mortgage on the million the new ones three cors of a million. But then a case came out, and this applies to a lot of people. The vast case where boyfriend and girlfriend bought a house together, they each took the deduction. Here says no, no, no, the limitation is per house. The task would said, no,
it's per person. And that's a very common situation, especially here in the Bay Area, where say a gentleman and his girlfriend or or any people buy the house together, they each get the mortgage of seven fifties. So that would mean that if a boyfriend and girlfriend bought the house, they could duck the interest on a million and a half mortgage instead of just better off not being married
and just living together in that situation. Absolutely, And also there's other areas tax law where that's the check case as well. Wow, you shouldn't need a tax expert to buy a house. Stephen moscow Witz is with us, and we shouldn't discourage people getting married. No, I wouldn't think so. So Stephen, what's going to get me audited? These days? You know, anything can get you audited, But you should take everything to which you're legally entitled, no more, no
lesson if you get audited. So what it's like if a police officer stopped you when you're driving, if you wouldn't stop driving. But there's a lot of things. For example, as your income goes up, if you make more than a million dollars, you're chances of being audited are one in eleven. If you go to the other end of the scale, your chances of being audited or one in two seventy six. Yeah, we're making here in our job, so let's see that's eleven years. Calculate that pretty much. Volunteer,
congratulations on the raises, Thank you? Is that just because they think are people making more money, are more likely to cheat, or just because the taxes get more complicated and there's there's more likelihood that you may stay cheating. But it gets more complicated, and then you have the opportunities to do all types of things. You know, for example,
there's all kinds of fancy things you can do. Suppose, for example, you say, you know somebody say living alone, and they say, when I go to my reward, I would like the charity of my choice to have my house. Well, that's nice, but there's no tax benefit to that. But if you set it up while you're alive and you live in the house the rest of your life, but when you do die, the house goes to the charity, you get a tax deduction now, and that can be a big tax deduction, and all kinds of fancy things
you can do. Same way with selling property. Suppose you're gonna sell the property and you said, well, right, I'm going to sell the property and then I'm going to take the money and invest it in stock market, get tax, the capital gains tax. But if you say, well, I'll give the property to the charity and then you take a stream of income back from them because they sell the property and there's no tax on them. Your lifetime stream of income is gonna be greater than if you
saw that. There's there's a of things like that. Why can I can give it to a charity, but they'll give me a stream of income in return. Yes, and those are commonly done. And what happened is that charity gets a little something. But the big deal here is when charity sells the property, there's no capital games tax. If you sell the capital games tax, there's more to invest in the stock market. And the bottom line, the charity gets more, you get more, the I R S
gets less, and that's a good thing. Another thing, I know it drives you crazy, just because we've talked to you for years, this idea that in kind of you know, pop culture that you know the week of April fifteenth is tax season, and there's all these stories about taxes and everything. The tax seasons year round. It sure is because an awful lot of people go on extension, so that means we have until October fifteenth. But it's the planning because so many things, so many things you need
to do before the year end. Not everything like some of the pensions, you can still do in the next year, but there's so many things that you have to sit up. So tax is really a year round idea. Not it's like going to the doctor. You don't just care about your health the day you go for your annual physically, that's a good one. Would be like if I eat an apple and go run and go jog before I
go to the doctor's cigarettes a day, right, exactly. H Steven Moscowitz as a tax attorney's the senior partner at Moscow. It's l l p uh Steven Will. We got to do it again soon. Uh. It's you know, just to remind ourselves as voters how insane the tax code is. But then as taxpayers, you point out there are some things a lot of people aren't doing that we probably should be. So it's always great to talk. Thanks the pleasures mind, Thanks for inviting me, right, thanks, Yeah, I
tell you that's the funniest thing about Steve. He will stand there and talk about tax with fire in his eyes. Yeah, for as long as you want to talk about and and he's also you know, I hate to characterize him, but he's a real lover of liberty and American principles. And he's no great fan of the tax code and how complicated isn't what it does to people. So he's got this enthusiasm for making sure that people don't give the money grubbers of the government more than a dime
more than they should. And it's so damn interesting, frustrating and scary to find out that a lot of cases that he's fought, where you know, he's represented people in a in a in a court of law, this judge will go this way, this judge will go that way. Right, I mean, you just you need to know the judge.
You literally have tax laws where there have been twenty one decisions on whether this is legal or not yes and ten no. You would think on something like tax should be completely black and white and it's not just like everything else, right, And so you go into an audit and the auditor will say to you, the government auditor will say, oh no, no, no, Jones versus Mississippi says is completely illegal. They don't tell you that there are a dozen cases that say it's fine. Right, you
talk about un American. To me, the most non American thing is that my own government, who I'm paying for, if they audit me and they and I make a mistake, They could point it out, but they won't know. It's a prosecutor prosecutor to get as much as they can, not to be fair, not to come up with the fair amount they're trying. If they can screw me, they will. It's like, which is amazing To sum it up, baby through that's a way to cut through the clutter. Now
I'm fired up. You are listening to the arms Strong and Getty Show.