Do you know how to wipe out 30% of your tax liability in the blink of an eye? Learn the coolest tax savings idea ever (that 95% of the population is unaware of) with Tim Berry and Matt Theriault this Tax Hacker Tuesday!
What You Will Learn About The Coolest Tax Savings Idea Ever:
- A tax savings idea 95% of the population isn’t aware of
- How you can wipe out 30% of your tax liability in the blink of an eye
- How to make a last minute-tax savings move at the end of the year if you made more than expected
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Matt Theriault: Hey, rockstars. Welcome back. Glad you’re here for another episode of Tax Hacker Tuesday. And real quickly, I don’t know if you listened to last week’s episode, but Tim put together something very special for the audience right here at Epic. And he put together his Tax Hacker Blueprint … a blueprint, literally a custom blueprint just for you on how to hack the tax code in your favor ethically, honestly, legally, and even with Uncle Sam’s blessing.
So it comes with five specific elements to create this blueprint, and it’s all custom just for you. He’s gonna give you a one-on-one consultation to establish where you are and where you wanna go. He’s gonna give you a custom tax action plan, organized into easy to follow steps. So you can keep all of the money that’s rightfully yours. He’s gonna give you an asset protection plan, organized into easy to follow steps to you know how to protect everything that you want to be protected, as he puts it, so the bad guys don’t come and get it. And then he’s gonna give you an accelerated retirement strategy, so you can enjoy life while you’re still young enough to do so. This working 40 to 50 years, it doesn’t have to be that way, and he’s gonna position your life and position your assets into a format that really will accelerate your retirement strategy so you can go kind of against the norm, go against the grain and beat everybody there. And then he’ll also give you quarterly check-ins to keep you on track towards your goals.
So that’s the Tax Hacker Blueprint. It’s normally $3,000 a year that he charges for this level of planning and consulting. The introductory offer is half off just for you here at Epic for $1,500. And if Tim and his team can’t save you at least double that, then it’s totally free. You pay nothing. So go to taxhacker.com, grab Tim’s free book on how to navigate the loopholes in Trump’s new tax plan, and then after you’ll have an opportunity to schedule some time with Tim and his team, and just let them know you heard this on the Epic Real Estate Investing Podcast. No questions will be asked. That introductory offer will be yours, and then tell them that you want your Tax Hacker Blueprint. Go to taxhacker.com, and everything you need, it’s right there. Alrighty? Now on with the show.
Speaker 1: This is Theriault Media. Did you know that up to 50% of your lifetime income will be wiped out by taxes? What if you could stop this madness? Isn’t it about time you play on a level playing field with the wealthiest 1%? Now you can. Tim Berry, Attorney at Law, shares here each and every week current tactics and strategies that anyone can implement to hack the tax code, protect your assets, and keep what’s rightfully yours. It’s time for Tax Hacker Tuesday.
Matt: Alrighty. Welcome to the Epic Real Estate Investing Show. It is Tax Hacker Tuesday with my attorney and friend, Tim Berry. On Mondays here at Epic we show you new and creative ways, as well as time-honored ways of making money using real estate, and then on Tuesdays, we show you how to … actually, Tim shows you how to keep it. And if you have a question for Tim you can go to taxhacker.com/questions and post it there.
Tim Berry: Hey, Matt. How are you doing, sir?
Matt: Doing fantastically well.
Matt: And a lot of hubbub on last week’s discussion about trusts.
Matt: And … pardon me?
Tim: I said, “Indeed.”
Matt: Indeed. I thought you said, “Neat.” That too. So some other stuff that came up, and we got to talking about it. And another type of trust, and kinda related to … ’cause I think we referenced the medical field a couple different times, and then two weeks ago, three weeks ago, when you weren’t here, one of your buddies came on and answered that question about the attor … not the attorneys, the doctors with the high income and how to save taxes. They had to pay off their loans and all that stuff. And you had another idea. Something I’ve never heard of.
Tim: Yeah, this is probably one of the coolest tax saving ideas out there, and you said you weren’t aware of it. 95% of the population isn’t aware of this. But this is a great way how you can wipe out 30% of your tax liability in the blink of an eye. Just a super neat, super effective way to get some massive tax deductions.
Matt: Got it. So that’s 30% of your tax liability. Not if you’re in the 30% tax bracket, you make it zero.
Tim: Correct, exactly. It’s gonna wipe out 30% of your tax liability, but the cool thing is, let’s say if you’re making $100 million a year … well, that’s not a good example … let’s say you’re making $300,000 a year.
Matt: Yeah, let’s not talk about me on this show. Let’s make it more about [crosstalk 00:04:18].
Tim: I know. I’m not supposed to talk about your finances. I’m sorry about that, Matt.
Matt: Yeah, yeah.
Tim: I let it slip. What can I say? That’s good.
So if you’re making $300,000, and we wipe out $90,000 of it, that’s probably gonna throw you into the lower tax bracket. So we’re not gonna take it down to zero, but we’re probably gonna drop down your tax bracket, which is gonna be another little savings tool-
Matt: So it’s pre-bracket savings.
Tim: Pre-bracket savings. Let’s say that one five times fast.
Matt: I bet nobody said that today.
Tim: Yeah, yeah. Talk about [crosstalk 00:04:49].
Matt: But me.
Tim: But yeah, that’s …
Matt: PBS, yeah. Alright. So what is this doohickey?
Tim: This doohickey is called a charitable lead trust, and the way this charitable lead trust works is that you set up the trust, and then you hard wire into the trust a stream of payments that you’re gonna make to your favorite charity or charities for the next 30 years. And so, for example, you say on year one, I’m gonna give out $200 to my favorite charity. In year two, I’m gonna give $240 to my favorite charity. Year three, I’m gonna give 20% of $240, whatever that would be … $288 or something of that nature to my favorite charity. And we build this all the way up for the next 30 years. We increase 20%. So that’s probably gonna be a $20,000 payment or something like that in 30 years, but you hard wire that inside this trust document. And then what happens is at the end of the year you go through and you analyze, you use something called a net present value analysis. And you take the net present value of all those payments, and you say, okay, at the current interest rate … the IRS is using the interest rate right now of 3.4%. At the current interest rate, I would have to invest $100,000 today to make all these payments, so I get $100,000 tax deduction.
And here’s the cool thing. And people just stop and listen to this a couple of times. If you’ve downloaded this recording, you’re gonna play back a couple times, because it’s gonna move a little bit fast. But if you get the $100,000 tax deduction this year, how much was the payment required in this year?
Tim: $200. And next year was $240. And yet you got a tax deduction of $100,000. Let’s say you’re in a 30% federal income tax bracket and a 10% state. $100,000 tax deduction is equal to 40,000 bucks cash in your pocket. You with me there, Matt?
Matt: I am.
Tim: Okay, cool.
Matt: In the 40% tax bracket, right?
Matt: [crosstalk 00:06:54]
Tim: So you just got paid $40,000 cash, and yet you’re only putting out there $200 this year. And here’s the other cool thing in this one, we’re using the interest rate of 3.4%. That’s what the government thinks is a fair interest rate right now. 3.4. I’m hoping, Matt, that your listeners can make a little bit more than 3.4. If they can make 10%, my guess is their actual net present value of those payments is about $25,000, as opposed to the $100,000 the IRS says. If they’re making 15% I think it’s right around $10,000.
So the IRS, in this year, gave you a tax deduction that’s equal to 40,000 bucks cash in your pocket, and yet your true cost at 10%’s right around $25,000, so you just made $15,000 on this little arbitrage, on this deal. And yet you helped out your favorite church or charity too. How cool is that? And if you’re making 15%, your cost was only $10,000, so you got paid $30,000 to do this. So this is just a super cool strategy to utilize.
Was that way too complicated?
Matt: Yeah, well, we’re gonna walk through it and break it down.
Tim: Okay, cool.
Matt: Talk to me like I’m five years old.
Matt: And, alright. So we create this trust over the next 10 years. We’re gonna start with 200 bucks, and it’s gonna increase 20% every year.
Tim: Yeah, and we’re gonna make it 30 years, ’cause we want the [inaudible 00:08:23] valued money to work for our benefit, so we wanna drag it out as long as we can.
Matt: Okay. And then that final payment could be right around what? 20,000 bucks, right?
Tim: I’m just tossing that figure out, but yeah, let’s say 20,000 bucks.
Matt: Okay. So the $100,000 deduction comes from what those payments will be over the 30 year period.
Matt: Okay. So you are gonna pay $100,000, but we get to take the deduction this year when we’re only paying $200.
Matt: Alright. I got it. Can you take … so the next 29 years there’s no deduction to take, right?
Tim: There’s no additional deduction to take. This thing’s on cruise control.
Matt: Got it. Alright. Now, when we’re talking about the return thing. That’s where you lost me. So if the listener could get a 10% return, what are they getting that return on?
Tim: Oh, I see. Okay, I’m sorry. Right now the IRS thinks that the average listener is gonna go out there, knock on the door of B of A, and say, “B of A, can I put my $100,000 inside of a CD paying 3.4%?”
Matt: Got it.
Tim: And that’s the return. That’s my investment return. And so they’re saying the person’s gonna make 3.4%, and if that money is invested at 3.4%, they’ll be able to make enough to make these payments. But I’m hoping, Matt, your listeners have the ability to take money, the $100,000 let’s say, and invest it and make a higher return than 3.4%.
Matt: I see what you’re saying.
Tim: And so now if they invest it, and the return on that money is 10%, their true cost of these payments is roughly, like I said, about 20,000 bucks or so.
Matt: Alright. So slow down.
Matt: First of all, where’s this bank that’s paying 3.4% on their savings?
Tim: Oh, so true. So true, Matt. Good point.
Matt: But okay, so let’s come back. So you get the $100,000 deduction …
Matt: Which means $40,000 of real cash in your pocket.
Matt: So you have to go put that $40,000 to work to make these payments for the next 30 years.
Matt: That’s what you’re talking about.
Matt: Alright. Got it. ‘Cause you kept saying the $100,000. I was like, well, it’s not really $100,000 that you have to invest.
Tim: Well, one thing with the trust is you have to put a dollar amount that is equal to the amount of the tax deduction inside the trust. So if you’re gonna get $100,000 tax deduction, you’re gonna put $100,000 into the trust.
Matt: Okay. Oh, okay. So there’s $100,000 in there.
Tim: So there’s $100,000 in there.
Matt: Did not get that. Alright. Now, where does the $40,000 come from?
Tim: That’s tax savings.
Matt: So of the $200 grand that’s left that you’re getting taxed on.
Matt: Got it. So are you able to invest that $100,000 while it sits in the trust?
Tim: Of course.
Matt: Okay, so that’s where it happens.
Tim: That’s where the magic happens, so to speak.
Matt: Alright. So it’s kinda like, for example, kinda like a self-directed IRA kind of thing. You can self-direct that money invested.
Tim: You can self-direct that money. And a simple example. Let’s say that somebody needs a hard money loan. $400,000. The trust, you’re the trustee. You write a check to the person, you make the hard money loan. If you can make 10% annually, your true cost of making all these payments out to the charity over that timeframe is only about 20,000 bucks.
Matt: Got it. Alright. So let’s say we have this $100,000 in this CLT. Charitable lead trust?
Tim: Mm-hmm (affirmative).
Matt: That’s what it’s called? Lead?
Tim: Charitable lead trust, yeah.
Matt: Charitable lead trust, okay. You invest that and let’s say over the 30 year period you doubled it. Right? So there’s $200,000 in there.
Tim: Oh, you’re gonna do more than double over 30 years.
Matt: No, but I’m just saying. But you’re only responsible for the 100, what happens to that other 100? That goes to the charity too, or do you get to keep that in some way?
Tim: It goes in your pocket.
Matt: Goes in your pocket.
Tim: Goes in your pocket.
Matt: Is that whenever you want, or is that the end of the term?
Tim: The simple answer is at the end of the term. The realistic answer is … so long as you’re making enough to fund those payments, that excess money could go in your pocket.
Matt: Got it. Okay. I totally understand now.
Tim: Totally understand. There you go.
Matt: Now I see why it’s slick.
Tim: Yeah. It’s super slick.
Matt: So this may not be your initial investment strategy, this is if you have extra money you’re trying to “hide”.
Tim: Oh, hide’s such a nasty word.
Matt: I know, it’s terrible. You’re trying to put it in a tax-protected environment.
Tim: Well, let’s make it even more simplistic. If you’re looking to wipe out 30% of your tax liability for the year. And here’s the other cool thing about this. It’s kind of a procrastinator special. So long as you set this up by 11:59 … I’m sorry. So long as you set this up by December 31, 11:59 at night, you find the document and fund this trust, you get the tax deduction for the entire year. So this is something if you can wait until the very end of the year, and say, “Gosh, I made a hell of a lot more money than I thought I was going to. This is great, but I’m gonna have a big tax liability. Let’s set up this lead trust.”
Matt: Got it. So you kinda like, in the real estate world, you’ve put this 100 grand in there, and now you get to be your own lender, lending to yourself. [crosstalk 00:13:53]
Tim: Exactly. You could even do flips inside here. You can do flips, you can do lending, you can do rentals. You can do whatever you want to.
Matt: That’s great. Feel so much smarter after I talk to you, Tim. You musta go a good [educomation 00:14:09], or something like that.
Tim: Oh, I wouldn’t go that far at all.
Matt: Sweet. Alrighty, so if you want to download Tim’s free book, you can go to How to Take Advantage of 5 Loopholes in Trump’s New Tax Plan the Mainstream Media isn’t Sharing with You. I would call this big loophole. Maybe. It’s something that could really impact and emphasize the loopholes that there are there. Right? And could cause those loopholes … I’m gonna have to do an edit here, or maybe we won’t … And Could Cost You a Small (or Large) Fortune is the title of the book. It’s really long. It’s a mouthful. So forgive me. I’ve only said it nine episodes in a row, so I should have it down by now.
So after you downloaded Tim’s book, you’ll have the opportunity to schedule some time with Tim. And either he or one of his cronies will get on the phone with you for a short five to 10-minute call, be really quick. And they’ll assess your situation. If there’s a good fit, they can help. They’ll take you to the next step to help you there, and if there’s not a good fit they’ll share some alternative resources to where a better fit for you can be made. Either way, Tim and his team are committed that you are better off after the call than you were before. That’s just “T” in Tim … that’s team in Tim, that’s what he does. Cool guy and Tim save me here, buddy. Any last bit of advice?
Tim: No, I think you’re doing fantastic on your own, Matt.
Matt: Alrighty, sweet. I will see you next week, and that’s it for Tim and myself. We’ll see you next week, like I just said, for another episode of Tax Hacker Tuesday on the Epic Real Estate Investing Show.
Speaker 1: That’s it for today as we dream of a tax system that works just for you, but until then, you have Tim Berry. See you next Tuesday for another episode of Tax Hacker Tuesday.