Is my CPA screwing me over?#395

All you have to do is show that your income has increased and you can buy more benefits at that time . No medical questions asked .

You guys should always be getting information specifically from your tax professional or whoever your personal finance professional is , before you go ahead and take any type of action . But I get questions all the time , whether it's from friends , colleagues , people who just write into the show and they want to know how we do certain things .

This is a surgeon who has been doing locums for a couple of years reached out to me out of frustration and we had a conversation , so let me just write out the question so you guys understand . Hey , doc , I've been working as a locums doc for almost two years . I've recently found out that I owe the IRS thousands of dollars .

I'm not happy with my relationship with my current CPA . It's hard to get in contact with them , everything is reactive and when I finally get through , the calculation has drastically changed and it's for the worst . Actually , the calculations that the CPA calculated is worse than what the IRS sent me . Oh damn , information about you can give me a Kevin Hart .

Damn , right there .

about . I'm really frustrated with my CPA . What things are you doing to get the most out of your relationship with your CPA ? That , basically , is the question that I was answering to dude . It took me an hour to get through the situation , but before we answer it on this show , I think the most important thing is to . The most important thing is to .

Mom has been diffused . Sorry , I had to start my timer . I'm like what is going on here ? The most important thing is to give the caveat of folks . There's two things that we need to let you know . One we are currently on our fourth CPA .

Oh yeah , just so you all know , we're on our fourth CPA and I always say this nobody is going to care about your money as much as you do . This is true . Nobody is going to care as much as you do .

They're not getting audited , you're getting audited , they're just helping you with that . So everything that occurs ultimately , when they are helping you , they are helping you in lieu of you . You are the person who is getting those notices .

You are the person who , when a tax thing or a tax IRS , when you're submitting your vacation or when you're submitting your taxes , it's your name on it . So the reason I bring that up is just so people know that you got to educate yourself on this . And it's tough right . If you own a car , you go to a mechanic .

The mechanic says you've got a CV joint , this and this bearing is out of place and a fuel injector is like I don't know what that is . I don't know any of that stuff . I didn't go to Apex Tech Auto mechanic . Now there is a good trade . You know what I'm saying . I don't know any of this stuff . How am I supposed to figure this out ?

I just want to pay someone to tell me what the problem is and then go on . So yes , they will take your money , they will provide an invoice . No-transcript was what they really fixed , what you really needed , right ?

It's a great thing and we always strive for really great outcomes of our patients , and sometimes it doesn't occur . A lot of times it does . There are times when it doesn't . One of the things that I always think about is these patients that I take care of . They don't have a choice as to who's going to take care of them .

Yeah , right , like if you have appendicitis and you live in a small town , or if you have appendicitis and you live in any town , like whatever ER you go to , whatever surgeon is located there , that's who you're going to get Right . And I think about it . I'm like man .

I just come into this room , I explain everything to them , I even show them pictures , I tell them how I'm going to do the case .

But the question is there's a person who is referring the CPA to you even know if they're having the best experience . That's the other thing .

The reason why we do four times a year is so that we can talk about every quarter . We can say , okay , this is how much you've built in QuickBooks , mm-hmm . Is it equivalent to the amount that you've paid in taxes , or are you keeping up with your tax payment , like your estimated tax payments for the state of New Jersey , as well as federal taxes , mm-hmm ?

Also , what are the goals that you want to get through with this year ? Do you want to save more money in a 401k or a sep IRA or some type of retirement account ? Do you want to pay yourself more in a salary ? Do you want to like ? I'm bringing up all these different things . We'll get into it more specifically , but continuously .

Four times during this year we're having these conversations to find out if we're meeting the projections right and that reason I like that approach is that person is keeping you accountable .

Many of us have grown up in , especially in the W2 world , right , if you're in the W2 world , you grow up with the well , you just do your taxes at the end of the year , you don't worry about anything because your job should have taken everything out like it's not your problem until the end of the year , and you go all the way till you know .

You got all the way till April 15th of the following year to basically put everything in , and that's literally the only time you need to think about your taxes . Now , this question in particular is different from that , because he's a locum stock and so therefore , he is his own employer .

And If you are your own employer , then you have to think about Yourself from the employer side as well as the employee side , and that's , that's just gonna take a little bit more effort , it's just gonna take a little bit more effort in exchange to have your freedom Right , you gonna have to you're gonna have to work a little bit more . That that is .

Because you are not a W2 , you know , like you were before , so I , it's just gonna take a little bit more effort .

No matter where you are in your career , you've seen patients your age or younger get seriously injured , have a long-term illness or even have a mental health issue that affects their ability to work . Now , what if that was you ? Know for a ? What if that was you ? Without disability insurance , how are you gonna replace your paycheck ?

An episode 176 Jamie Fleissner of Sefa life insurance explains why the best time to buy disability insurance is during your residency .

So when you're healthy , it's easier to acquire the coverage . Number two it's also less expensive because it's based on your age and your health . You're not getting younger or healthier over time , so you're at the ideal time .

The earlier you get it and the younger you are , the less expensive it's going to be so , whether you're a resident or you're in attending , it's never too late to protect your income .

The biggest things that we want to talk about is okay , what I do is , when I get home , I fill out a timesheet and Then I invoice . If I work you know 20 hours or how many hours and then I do all of that stuff in QuickBooks . Quickbooks sends an electronic email to the hospital thing , the hospital gets that .

They get my timesheets , they get my receipts the receipts being like the hotel and what have you and then eventually I get paid . Either they send me a check or I get a direct deposit right that goes into my bank account .

So not only is my CPA helping us with making sure that the invoicing is correct , making sure that the checks and the payments that we get match , they're also doing what's called bookkeeping also , so we pay an extra fee for them to bookkeep .

So bookkeeping made basically is is they go into our accounts and they make sure that oh wow , this $100 check that you got from the hospital , that is for the work that you did on December 15th 2023 , and they're able to match all of those things .

Yeah the amount that you charge that you use to charge for your Tesla , that's for specifically driving to your locums gig . Therefore that's tax-adductible . Yeah so not only does the , not only do you Need a CPA who's gonna be able to Properly you know , tax , you know , do taxes with you .

You need to have someone who's going to be able to properly categorize all of the payments that you're making , or all of the Money that you're bringing in , so that the CPA can do a right job . Yeah , right . So these meetings are what's going on , essentially . So . Are we all on the same page with bookkeeping ? Are we all on the same page with taxes ?

Are we all on the same page with the income that we're bringing in ? Then we talk about hey , me , renee , how much do you guys want to say for the whole year ? How much do you want to pay yourselves ?

Mm-hmm and based off of that , our company creates a salary for us , right , our company creates , we determine as a company how much we're gonna pay neat separately , how much Renee's gonna get paid , and then from there that determines what we can put into our retirement right . So , folks , we have what's called in our for our retirement plan .

With our business , we have something that's called a solo 401k , very similar to people who are listening right now . In your employee , you have a 401k . Basically , it's the same thing .

Yeah , right , it's just that we run that plan Mm-hmm , okay , and based off of how much money's we're getting in , how much our salary is , that's gonna determine what the maximum amount we can put into our 401k . It's works just the same way , right ?

So this is part of the meetings that we're having throughout the entire year Are we going to be able to max that out ? Mm-hmm ? Are we trying to max that out ? Things like that ? Yeah , so earlier also , I mentioned okay , guys , I don't know if I'm gonna keep the CPA . We're happy with our CPA , but sometimes they make mistakes , right ?

And sometimes you start to question like , hmm , like are we doing the right thing ? So , for example , like , we just found out that there are several months so we do Roth 401K contributions .

I'm not gonna get too much into the specifics , but basically , just like you will contribute to your 401K , we contribute to our 401K , but we do it in a Roth-type manner , right ? We were finding out that there were several months where we thought a contribution was being made but they were not .

What was on our basically in essence a W-2 slip or on our pay slip didn't match what was actually in our 401K . So somebody wasn't transitioning the money or transferring the money in and you have to get it in in a year's time , right ? So , for example , let's say you're trying to max out your contribution .

Let's say you want to put in a total of $20,000 in there . Let's say by the end of the year you only put in 10 . January 1st you can't go back and put anymore .

So we have a financial planner who , in addition to a CPA , in addition to a CPA , so our financial , when we have these meetings , the meetings like we are scheduling these meetings , like I have on the email chain , it's our CPA , it's our financial planner . And then we all come together and the CPA brings documents .

Our financial planner brings documents and we're hashing it out and trying to make it work .

I get that and you feel like , well , because I'm paying a premium , because they start to charge a premium , well , you're going to take care of my , you're going to look at my stuff in a premium way .

It might , but it just states that you're going to basically purchase my service and that pretty much is it . And as long as I do minimally what I say that I'm going to do , then I'm meeting . You know , I'm meeting the requirements . I might not meet your expectations , but I'm going to meet your requirements .

But the other thing I was going to say is that I think we should take a step back .

That one of the things that you , I think you should look for , and I think that we look for specifically , is is this person in tune with the way that I work ? And if they are in tune with the way that I work , are they willing to have a conversation with me that is more educational than is directional ? Right , Are they teaching me something ?

Because if you just you know , if your first meeting with your CPA is just basically talking over your head , saying things that you're like , okay , well , this sounds good , but you don't feel like you could reproduce that conversation to somebody else because you haven't learned it , then that's probably not the CPA for you .

You need to have somebody who one is asking you questions . We do this in academic medicine all the time . Right , you gotta do your needs assessment first . Figure out who your student is , Figure out what they know , what they understand , Because before I tell you everything that I know , I gotta know what you don't know , and I gotta teach you that first .

Otherwise , if I tell you everything I know , you're gonna have a deficit and it's not gonna make a difference .

But because you've only interviewed one , well , I'm just gonna go with that person and I ask them the questions you don't have a metric , you don't have any type of measurement , right .

You have to find a bunch of them and interview them , and I do think the question of the tax deductions and all that , basically what that comes down is are you educated to really have a conversation with that person ? How do you know what ? Yeah , they could be teaching you something , but they could be teaching you something wrong .

It's written by Tom Wheelwright , cpa how to build massive wealth by permanently lowering your taxes , and this book I read probably about six or seven years ago , and this book really changed my mindset on taxes because it really helped me to understand that the IRS is not really .

I looked at the IRS more of like they're there to punish you , and this book teaches you like the IRS is really more of . If you follow their instructions , they will properly reward you Reward you for it .

It's almost like a game , like gamifying certain things , and it helped me to understand a lot of tax deductions and a lot of things that we could do to improve our tax situation .

Now I'm gonna be really honest with you this book is not gonna give you the exact specifics on all of the different lingoes , but what it does is it makes you dangerous enough so that when you go into a meeting with your CPA you're like , boom , see , what happened is on page 47 , when it says educational credits and cream of the crap and saving all these

different things . It just makes you a little bit more dangerous . As to understanding what you should be asking , because I think one of the number one things that people have a problem with and it's said in this question is why is my CPA so reactive ?

Yes , and what we mean by reactive and reactionary as opposed to being aggressive or proactive , is you give them your receipts , you give them all those different things . At the end of the year , folks , it's too late by the time .

You're at that point where you're just giving receipts and you're filling out an organizer and you're talking about all the charitable contributions and you have three weeks left to go . The game is done . The game is done so if you have that type of relationship with your CPA , please only expect that to be a reactionary thing .

They're gonna come back to you and say , well , yeah , I did your taxes . It would have been $5,000 , $10,000 , $20,000 , $50,000 cheaper if you had done ABC D-E-F-G-H and people get really upset about that .

But that relationship starts in January , not in February or March of the next year , Right , when the taxes are due on April 15th , 15th and reading a book like this will help you to have asked those questions to them and saying hey , listen , like what we're doing , we have children . Is there a way we can get our eldest kid on the payroll ? Why ?

Because , well , if I'm gonna end up paying taxes anyway , or if the money's going to leave the bank account some way rather than it going to Uncle Sam . If Uncle Sam wants me to pay somebody , if I don't pay them , then I'm gonna have to pay Uncle Sam , then I might as well pay my child .

And remember that the premise of decreasing your tax burden when you are a business owner is that the more you spend on the business , the lower your tax burden will be . But it has to be legitimate tax or legitimate purchases , the IRS wants you to spend money to create business .

These are things that reading this type of book and understanding this book will help you have a more educated experience with your CPA .

And then the other thing , too , that we do that people don't know about is our business . Our locums business pays us me and Renee personally rent .

We do a whole bunch of things and that is just specifically for that work and , as a result , you need electricity to power that place . You need heat to power that place , you need to use a portion of the internet . So what we did is , with our CPA , we created a contract between equal access excuse me , not a contract .

We created a lease A lease , yeah , Between me and Renee and our company and we came to an agreement that our company is going to pay us a certain amount to basically do business in this damn house . And we've been doing that for a couple of months , or sorry , for a couple of years now For a couple of years .

yeah , and we have all the information , all the stuff , so our iris don't come for us , right ? We , we , we we , we , we have the receipts Right and they pay us a certain amount every month . We write a check from the business to us and that is our locums company paying us rent .

The trick is this how do you incorporate so much of your personal life into your business life that now pretty much everything that you do becomes a business expense ? That's a hack . That's a hack .

Now the taxes are probably gonna be a little different between $1 million and $5 million , but the point is that you want so many things to be a business expense that you wanna lower your tax burden in that way , and that's something that you can't just have in a meeting with your CPA .

You have to be looking around your house , thinking about all types of things , thinking about your children , thinking about the car you drive , thinking about the food you eat , thinking about every little thing that you can think of , to be able to say how could I make this a business expense ?

And if it's a legitimate , legitimate look y'all legitimate business expense , If you can make it a legitimate business expense , then you will lower your tax burden accordingly . But you gotta be thinking about it .

The loan payment or the lease payment comes out of the business because I need a way to get to work and the IRS doesn't say which car you can get . It just says how you should get the car and how you should use the car .

And we say to him that's not our car , that car belongs to a business . We don't even tell him our business . We tell him that the car belongs to a business and we are just borrowing that car so that we can use it for work .

So that's really important for you to be thinking about constantly what you can do to lower your tax burden , and don't expect your CPA to come up with all of the ideas . Yeah , they're not gonna come up with the ideas .

If you finally get enough knowledge to realize that the person's not doing as good of a job , or maybe you've kind of outgrown the relationship , it's time to move on , and that's kind of what we've done . And now we know the questions to ask , right . So someone can say , and they can huff and puff and all those different things .

And then after a while you're like , yeah , I don't think we're gonna work really well together , but I don't think that that should discourage you from doing some type of side business , side hustle , hustle , locoms or what have you . You can still figure it out . You gotta know the right questions to ask , right .

It's the same thing with medicine , like once you get out of residency , guys like you got the knowledge . It's just that there's certain things that you're gonna have to just educate yourself on On your own , on your own , and just figure it out . That's how it is , that's how it works .

And so I think when I got off the phone with this surgeon they were really positive about it . You could tell they were a little bit kind of hesitant of having to acquire the knowledge .

But I said the reason why you're calling me is because you haven't acquired the knowledge and what's gonna happen is you're gonna keep bouncing from one CPA to another CPA to another person . I'm not happy , I'm not here . Once you figure out the expectations based off of your knowledge , you can say you know what . This person can only take me so far .

Then you're less angry and more like I'm gonna use that energy to kind of educate myself and go from there . So , yeah , once I figured out that those transfers weren't taking place , I was kind of like , but then I was also kind of happy that we found it .

We figured it out and I'll continue to educate myself on well , how is it that maybe I can make sure this issue doesn't happen again ?

And we want you all to know that it's not gonna be perfect , but you gotta keep moving forward .

And so , yeah , I think that I think , even if this surgeon decides to stay with the CPA , regardless of what they decide to do , leave the CPA , stay with the CPA . It sounds like there's some educating that's gonna have to happen regardless .

They ask us questions about a lot of different things , so we're always here to answer it for y'all . Any question , just submit it to us and let us know . Alfred , if you can put the number below the text number of how to text us and reach us , we'll also put that in the show notes and let us know .

I'll just leave it to you like this , and people know what I'm talking about In trauma surgery , in surgery in general , there are very few gentlemen , or there are very few gentle women in surgery left and not to say that there was before , but there's just not many who just you look at them and you're like you're a good dude or you're a good woman , like I

rock with you . You make really good decisions . You respect everybody . He's one of those dudes that I'm like . I can work with you anytime If you ask me for anything . I trust that you're coming from a good place .