All Forum Posts by: Michael Plaks

@Alok S.

As @Eric James said - you do not need an LLC for the 20% deduction. You may consider an LLC for legal protection, but not for taxes.

@Daria B.

In my firm, we use our proprietary organizers designed in-house specifically for REI. They ask a lot of questions that you cannot find on the IRS forms.

We instruct our clients to never copy data from IRS forms to the organizer though. Instead they simply check a box that says "see attached Form 1098" etc.

@Nick Garf

The organization you're asking about is Fort Bend REIA https://www.meetup.com/Fort-Bend-Real-Estate-Investors/

Meets on first Tuesdays.

Thank you, @Jojo Joy

You can also ask on this forum

@Kevin Phu

Read this recent discussion of CPA charges

@Kevin Phu

OK, let me clarify my point, as well as that of my colleague @Nicholas Aiola. 

If you measure it in immediate dollar savings, as in - would a CPA charging me $500 reduce my taxes by at least $1,000 compared to doing it myself? - then a) nobody can promise you that and b) it's not the most important factor.

While it's totally possible (and even common) for a professionally prepared tax return to save you thousands of dollars, it is also possible that CPA's results will show more taxes than your version. That happens if you make mistakes in your favor, and we fix them.

So, why bother, then? Because, first, a correctly prepared tax return will not expose you to unnecessary IRS audit risk - a risk that can be very costly. We can also generate for you immediate tax savings (if you missed deductions, for example) and long-term savings (if you messed up depreciation or business classification, among other things.)

The most important help that you can get from a tax professional is actually not in preparing your tax return, but in helping you implement sensible business practices and tax-savings strategies. Those could be worth ten or hundred times the cost of the services. 

The decision is ultimately about your priorities. How important for you are things like peace of mind, IRS audit risk, minimizing your taxes, optimizing your business etc. Only you can decide.

A good analogy is a personal trainer. You can do push-ups on your own, but a good personal trainer will not only facilitate your training but will also steer you to an overall health improvement. And prevent injuries.

@Jason Williams

Your greedy CA, as you know, will always tax you on everything. There is an annual fee for the "privilege" of having a CA LLC.

If you do business in TX, your CA LLC will have to register in TX (one time fee) and file annual reports but not pay tax unless your gross income is over $1 mil. IL will also require a one-time registration plus an annual report, recently reduced to a very reasonable $75. States are different, but yours is (sorry) the least business-friendly.

These guys are in Fullerton. Their CPAs wrote a good book published by BP.

Is it worth it to pay for dry cleaning when you can do your own laundry? Is it worth it to go out when you can stick a boxed dinner in the microwave? Is it worth it to hire a web designer when there are YouTube videos that, for the most part, teach it? Should I continue? :)

@Hung Trieu

Rehabbing and wholesaling usually uses code 531390 - Other activities related to real estate. I do not believe that 423990 is applicable or helpful.

You do need an EIN, because you're going to be receiving and issuing forms 1099-MISC, and you do not want to use your SSN.