BiggerPockets Money Podcast: CPA Shares Tax Tips to Lower Your 2024 Taxes
Release Date: February 18, 2025
In this insightful episode of the BiggerPockets Money Podcast, hosts Mindy Jensen and Scott Trench welcome Amanda Hahn, a seasoned CPA, to discuss effective strategies for reducing tax liabilities for the year 2024. The conversation is rich with practical advice tailored for real estate investors, entrepreneurs, and everyday individuals aiming to optimize their finances and minimize their tax burdens.
1. Introduction to Tax Reduction Strategies
[00:00 - 00:32]
Mindy Jensen opens the episode by addressing the common concern of listeners: how to reduce their tax obligations for the current year. She emphasizes the importance of strategic planning to lower the 2025 tax bill and maintain financial growth.
Notable Quote:
Mindy Jensen: "We are here to share strategies to lower your 2025 tax bill and set you up to keep more of your hard-earned money going forward." — [00:00]
2. Maximizing Tax Write-Offs
[01:34 - 03:38]
Amanda Hahn highlights the significance of organizing and firming up business expenses before filing taxes. She advises listeners to meticulously review bank and credit card statements to ensure all deductible expenses are captured, thereby maximizing potential tax write-offs.
Notable Quote:
Amanda Hahn: "If you don't capture it, the odds of your accountant finding out there's some kind of business expense that's floating out there is very unlikely." — [02:33]
Amanda also introduces real estate tax strategies such as accelerated depreciation and cost segregation, which can significantly reduce taxable income for those who invested in properties in 2024.
3. Understanding Real Estate Professional Status
[05:10 - 09:07]
Scott Trench delves into the nuances of real estate losses and their ability to offset ordinary income. Amanda elaborates on the criteria for qualifying as a real estate professional—a designation that allows rental losses to offset W-2 income without caps.
Notable Quote:
Amanda Hahn: "If you are a real estate professional, regardless of how much income is made from a W2 or whatever, those rental losses can offset W2 and other types of income." — [06:14]
She explains that for those earning over $150,000, rental losses are generally considered passive and can only offset passive income unless one qualifies as a real estate professional.
4. Leveraging Tax-Advantaged Retirement Accounts
[12:10 - 16:08]
Amanda discusses the flexibility in contributing to retirement accounts beyond the calendar year, especially for business owners and self-employed individuals. She advises considering extensions to maximize contributions up until the tax filing deadline, providing additional opportunities for tax savings.
Notable Quote:
Amanda Hahn: "You can literally... contribute to an account... all the way up until the date you file your tax return." — [13:11]
Mindy clarifies the misconception about tax extensions, emphasizing that while extensions allow more time to file, taxes owed are still due by April 15th to avoid penalties.
5. Optimizing Itemized Deductions
[17:08 - 20:07]
The hosts and Amanda explore various deductions, including mortgage interest and property taxes. They discuss the importance of comparing itemized deductions versus the standard deduction to ensure maximum tax benefits.
Notable Quote:
Amanda Hahn: "We do have clients who use that [mortgage interest] pretty effectively in terms of claiming a home office or if you use your car for business purposes." — [18:59]
Mindy points out that with higher mortgage balances and rising interest rates, some listeners might benefit from itemizing deductions instead of taking the standard deduction.
6. Home Office and Business Expenses
[20:07 - 22:42]
Amanda clarifies misconceptions about the home office deduction, noting that while it’s no longer applicable for W-2 employees, it remains a valid deduction for business owners and real estate investors.
Notable Quote:
Amanda Hahn: "You could still claim it against business and rental real estate." — [20:38]
She emphasizes the importance of tracking all business-related expenses, such as vehicle use for property management and supplies, to optimize tax savings.
7. Planning for Future Tax Changes
[32:27 - 38:56]
The discussion shifts to anticipating potential tax changes in 2025. Amanda advises staying informed about legislative updates and maintaining open communication with your CPA to adapt tax strategies accordingly.
Notable Quote:
Amanda Hahn: "It's in those very simple conversations that they could help identify opportunities for you." — [37:48]
Scott shares his personal strategy of favoring Roth accounts, betting on future tax rate increases to benefit from tax-free withdrawals.
8. Opportunity Zones and Capital Gains
[33:12 - 36:14]
Amanda provides a brief history of Opportunity Zones, explaining their benefits in deferring and potentially eliminating capital gains taxes for investments held over ten years.
Notable Quote:
Amanda Hahn: "If you hold on to that asset for at least 10 years, you can get up to 10 years of tax-free appreciation." — [35:44]
She notes that while Opportunity Zones can be advantageous, they are more commonly utilized for capital gains from stock or crypto sales rather than real estate, where 1031 exchanges are preferred.
9. Final Tax Planning Tips
[36:16 - 40:29]
As the episode nears its end, Amanda reiterates the importance of thorough tax planning, gathering all possible deductions, and consulting with tax professionals to optimize filings.
Notable Quote:
Amanda Hahn: "Talk with your tax person about a lot of these things... makes sure you are able to file 2024 in the most optimal way." — [36:31]
Mindy encourages listeners to engage with Amanda for personalized tax advice, highlighting her expertise and availability through various platforms.
10. Closing Thoughts and Future Considerations
[41:07 - 43:09]
In a light-hearted exchange, Scott and Mindy discuss varying tax strategies, acknowledging differing viewpoints and the importance of individualized planning. Scott emphasizes his approach of utilizing Roth accounts to hedge against potential future tax hikes, while Mindy appreciates his thoughtful strategy.
Notable Quote:
Scott Trench: "I choose to go the Roth route because of the dynamic I just discussed. And I pay more taxes now and hope to pay less later." — [30:34]
Amanda concludes by reaffirming that tax planning is highly personalized, urging listeners to work closely with their CPAs to navigate the complexities of tax laws effectively.
Key Takeaways:
-
Organize Expenses: Meticulously track and document all business-related expenses to maximize tax write-offs.
-
Real Estate Professional Status: Qualifying as a real estate professional can significantly enhance the ability to offset W-2 income with rental losses.
-
Retirement Contributions: Leverage the flexibility of contributing to retirement accounts up until the tax filing deadline by using extensions.
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Itemized Deductions vs. Standard Deduction: Regularly evaluate which deduction method provides greater tax benefits based on individual financial situations.
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Home Office Deduction: Remains a viable deduction for business owners and real estate investors, but not for W-2 employees.
-
Opportunity Zones: Useful for deferring and potentially eliminating capital gains taxes, especially for long-term investments.
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Stay Informed: Keep abreast of potential tax law changes and maintain ongoing communication with a trusted CPA to adapt strategies accordingly.
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Personalized Tax Planning: Recognize that effective tax strategies are highly individualized, necessitating tailored approaches based on unique financial goals and circumstances.
For more detailed advice and personalized strategies, listeners are encouraged to reach out to Amanda Hahn through her company, Keystone CPA, and explore her various educational resources available online.
Connect with Amanda Hahn:
- Website: keystonecpa.com
- YouTube Channel: Amanda Hancpa
- Instagram: @AmandaHonCPA
Note: This summary excludes commercial advertisements and non-content segments to focus solely on the valuable tax insights shared during the episode.