Episode 12 – Kasey Ortiz on The Military Millionaire Podcast
00: 00 - 05:00
What's up military millionaires. I'm your host Dave. Today we have an exciting episode with the tax tip diva Kasey Ortiz talking about some different tax tips coming into tax season this year, there were a lot of reforms through 2018-2019.
It's just really important to listen to some of these different things and understand, I learned some new stuff about how the expenses changed and some different stuff this year, so definitely check it out. Maybe these few tips can save you a little bit of money. If this is your first time listening. Thanks for joining the community.
This podcast is produced every week for your enjoyment. Show notes are found at Frommilitarytomillionaire.com/podcast.
Now relax and enjoy the show.
You're listening to the military millionaire podcast, a show about real estate investing for the working class. Stay tuned as we explore ways to help you improve your finances, build wealth through real estate, and become a person that is worth knowing.
Hey, everybody, it's Dave here with the military to millionaire. I am here with Kasey Ortiz, who is a retired Marine gone tax, in fact, her name on Instagram, which is how we met, is the tax tip diva. And we've kind of been talking already about some tricks of the trade and things like that. But uh, I'm really excited about this episode, because taxes is something that nobody understands it has such a negative connotation, but you actually taxes can be one of your best investment sums at the end of the year, every year if you're smart about it.
So anyway, with that, without further ado, Kasey, free to tell us a little bit about yourself.
First of all, I want to say thank you, Dave, so much for reaching out to me, and letting me be a part of your podcast and to get some information out there to all of your followers to all of your listeners to all of your viewers, congrats to you on all your success and everything.
Real estate is a hard nut to crack. So congratulations on being able to be successful in that.
Just to give you a little background, like he said, I am a former Marine, I did almost six years active duty in the Marine Corps. Before I was forced to take a medical discharge. When I took my medical discharge, as some of you know, you might receive a lump sum amount of money, they might catch you a check. Because your operation you know, you can't fulfill your contract, whatever.
So I received a lump sum, but they cut it because I was disabled, just like everybody else. I went to the tax people, you know, the big boys H&R liberty, whoever Jackson Hewitt, I took my paperwork, and they did my tax return. And they tax that lump sum of money.
Low and behold, the next year, I took a basic tax class because I was looking for something to do after I got out of the military. And guess what I found out, my income shouldn't have been tax. So I amended my return, and I immediately got my money back. And that's how I started my career in taxes. And I thought to myself, how many people don't know basic tax information, something that I learned in a basic tax class that could be detrimental to them, and they need somebody to help them. And so that's how I started in taxes. And that was a long time ago, over 20 years ago.
Awesome. And I really love the fact that you were able to take something that you learned in a class and just turn around and immediately put it to work and get you to earn yourself some money back. And then you turned around and built a career off of it helping other people realize how to save money in taxes. So that's really cool.
So you said you took a basic class? What would be I guess some some as we start getting into this, what seems like super basic tax advice that you would give anyone that you're talking to you about real estate or filing or I don't know all the right questions to ask. So we'll kind of roll as we go.
That's okay. You know, it's so funny you would ask, and you say you don't know the questions to ask. That is one of the cornerstones of my profession and why.
Number one, I launched the tax tip diva. So the tax tip diva is actually an online tax education platform that I created. My actual office and business was a brick and mortar storefront business, which I operated for over 14 years preparing taxes, doing business support, bookkeeping, things like that.
But in order to reach more people, I started this online platform because the clients that were coming in my office, or the people that were calling on the phone, or whatever that I have my consultations with. They would say the same thing they would say, well, no ever asked me that or I don't know what to ask you. Or if I asked him a question, well, nobody ever asked me for that information, you're asking me a lot of stuff, you know.
05:00 - 10:00
So I thought, well, how many people out there are not getting this. So one of the first things I would tell anybody out there that is in this field is definitely in real estate that's in small business is to know your tax professional, be in contact with them throughout the year, because things change this year has ushered in some of the most tax reform changes, that has happened in 30 years.
So you can imagine nothing from last year is the same as this year. And even if it is, it's going to be connected to a different form a different way, a different requirement of you know, documenting it and things like that. So that's one of the first things I would tell everybody, get to know your professional and keep in contact with them. Don't wait until tax time to talk to your tax professional. That's the worst thing you could probably do. Because you could be missing out on some valuable information during the year to learn some things you could have been doing, or should have already done and put in place.
Number two, it's the end of the year. So I want to throw this out there right quick. I want to give you a tip right now that's going to save you money right now on your taxes for 2018. You have today and tomorrow to buy, buy, buy, buy equipment for your business, buy supplies for your business, and expense it okay, because it will reduce your income bottom line. And even if you buy it on a credit card, December 31, it will still count for your 2018 taxes.
I ended the year with a tax live video. And if you go to my IG page @thetaxtipdiva, you will see there's a big post and it's expensive. That was our key word for the live expense it, buy expense it. That is one of the new tax rules that was put into place this year is the 100% depreciation expense for things that you normally had to depreciate over time. Now, part of this tax reform says you can buy, you know up to you have a cap of up to a million and a half dollars of equipment inventory, things like that expense it. So that's tip number two, buy, buy, buy expense it, okay.
And here's tip number three, and you're not going to hear this. People are like, well, that doesn't make sense. I was always told, you know, XYZ. So here's tip number three, stop invoicing, stop taking payments. And you're like, well, that doesn't make sense. Well, it does. Because Hear me out. If you record that payment this year, that's income to you. Because the majority of people are on a cash basis type of income recording, stop invoicing your employees, but go ahead and pay all your bills. So stop taking in money, but write those checks and pay the expenses, buy new equipment and, you know, get rid of those accounts payables.
All right. Sound good? That's just that's just a couple of little little things right now for the end of the year.
I like that.
I'm gonna tell my property manager not to check the rent check mailbox until the first because some of my tenants pay early and I don't want...
don't record it. Exactly.
I like that.
I didn't know the expense thing that's super cool.
So for me, like this year has been mean all of this is kind of a new like the new the camera, the lights, the mics, that everything for the blog, the website, the YouTube channel, all of that equipment, compute, the business computer, everything was bought this year, and I was planning on having to you know, I didn't realize it, it's all 100% that you can...
10:00 - 15:00
Yes, you do have that option. Make sure you let your tax professional know. That's the option you want to choose.
So when you give them your inventory and your expense and your asset sheet for the year, let them know, you want to expense these items. If you have a higher income this year, if your income is higher than last year, and you are definitely trying to get ways to bring it down, then yes, you definitely want to let them know, to expense your purchases of your equipment, or assets for this year as much as you can.
Yeah, that's really cool. I'm gonna, I'm definitely gonna use that.
In fact, that's actually really cool. Because I'm debating on buying a new microphone. That's, I mean, not outlandish, but fairly expensive. And so if I buy that today, then I can bounce out a little bit, which I like.
And if you buy it on a credit card, it's the same thing as if you bought it cash or with the cheque, it's still considered a business expense for that day.
So even if you buy it tomorrow on the 31st, then yes.
Alright, so I'm gonna real quick, I kind of told you the super basics, but I'm gonna tell you my tax horror story, which has nothing to do with real estate. But since you're writing a book, and you mentioned that you talk a little bit about unscrupulous tax problems with professional life.
So in 2000, there was like 2011 return, I went to this guy, he apparently had gotten out of the Marine Corps, I don't know he was, he still had base access. So I'm not sure exactly what's going on. I never figured all the how and who things out again, because I never found a way to contact this guy again.
Buddy of mine got his tax return done. And this guy was doing like, hey, you know, if you refer a friend, I'll give you like, 25 bucks. And so my buddy's like, hey, if you go to this tax guy, you know, he did my taxes. It was super easy. I brought my stuff, no big deal. He'll give me 25 bucks. I was like, oh, cool. So like, everyone, my unit was kind of doing it.
Which is really scary when I figured out the rest of this.
So everything was great. Got my tax return, no big deal. And then like, man, 2014 on recruiting duty yet 3 years later, the IRS calls me or sends me a letter saying hey, yo, was like, $5,000, because we, you know, went through your stuff and your taxes were wrong. And I'm like, whoo, hey, how did my I've never received that much in taxes? How do I owe you that much?
So I immediately was like, okay, stop everything and go and talk to a CPA. And I sit down and I'm on the phone with the IRS. With the CPA doing like this, he ended up doing a free consultation because I was totally screwed.
Apparently only showed me the return and everything was great. He then amended the return to include the maximum allowable amount of college credit like education, deduction, I think it's like $4,000 or something I don't remember. And so he accredited it and then I guess there's a way to split where part of the refund goes to one account my account, which was the number so I got this, a mountain to match what he showed me and everything was good. And then all of the education credit, went to his account, whatever, he got back on taxes, never saw it. And all of a sudden I'm so I'm on the phone with the IRS. And I mean, I, at the end of like an hour of talking back and forth. I finally just asked the lady on the phone like they are, you know, so is the only way I'm ever getting my money back from this guy at gunpoint. Because my signature was on the return and everything and she would not tell me that was the right solution. But she basically told me yes.
And of course I have, at this point, guys, phone numbers change, no way to contact him. The information on the return is the filer was all bogus contact info. And I don't know. I mean, I ended up paying the IRS it came out to like 5 or $6,000 After three years of insurance or interest.
So super exciting, what a great way to end actually wasn't even the end, it was like the summer. So I'm like I just got my tax return and I'm gonna go blow it on dumb stuff. And I'm gonna go blow it on two years, three years ago, the return that I got fraudulently done.
Um, so ever since then, I've gone to a CPA, which I think kind of cues we were talking earlier about people who go to the free place on base. And it always raises red flags for me. I mean, it might make sense for the single service member who's like 18 years old doesn't have anything to claim. But, man, I tell people if you've got any deductibles or any kind of anything other than just your W2, go to a professional.
I, so just to give you a little bit more background about myself. So I have been in the tax industry, like I said over 20 years over actually 25 years. And when I first started, like I said I took a basic tax class. And then I worked seasonally for all the big boys I worked for H&R block, I worked for Jackson Hewitt, I worked for liberty tax. I was the manager of several different offices. I even work at H&R block overseas because I have to be overseas and okay now at the time, and work seasonally for them as well.
15:00 - 20:00
And I can't tell you how many military spouses or servicemen came in with tax returns that were incorrect, or incorrectly paired by the on base free tax, you know, workshop.
Now, I will say this, number one, it is great, like you said for the basic servicemen the basic, you know, person, but if you have, if you're living in another state, if you're living out of state, and you have a rental property in another state, then you need to get a seasoned professional, I would say somebody that has more than five years of experience, preparing taxes, the majority of the people working in those workshops that are offering free services are first year, or maybe even second years prepares, they are not advanced professionals, they are not taking advanced courses, they're just taking the minimum education that's required for them to be able to, to sign a tax return.
Now, I will also say this, that multiple states have different requirements for education. But that does not alleviate the fact that they're still new, that they have not seen an abundance or different types of returns.
For me, I've been very fortunate, where I have seen what I consider a potpourri amount of returns. I've seen military servicemen who went overseas were deployed, and then they had their deployment income tax, and it shouldn't have been an amendment for them. I've seen military spouses that are working in a state that they're not a resident of having their out of state income, that they work at a job in their home state being taxed to the state that they're now living in, which shouldn't be because there are federal tax laws. And there's certain some state tax laws that have a military spouse residency at. And what that says is that if you're married to an active duty service member, and you have to move state to state, your income should not be taxed to your home of record. Because you're not there. You're a military spouse, you're only there because you're married to the active duty service member.
But again, just basic tax preparers may not know that they might not go the extra mile to ask. They just point and click an input on the computer. And a computer cannot ask those questions.
So thank you so much for that. And as far as your horse there, oh, my goodness.
It was fun.
That's terrible. And I do have to say, it's not uncommon, you know, terrible tax preparers, you know, are out there. And like you said, I am writing a book, I'm hoping to complete it by the end of January, so that I can have it out. And one of the things I talk about is due diligence, and the taxpayer and the tax preparer. In this case, you did everything right. You looked at the return, everything matched up, everything was great. You signed off on it, unfortunately, he made an adjustment to it, and then sent it in.
So there was no way you could beat that. And again, unfortunately, it's all you know, the taxpayers responsibility, which is a bad bad rule. There needs to be some new law written for the IRS to alleviate if you can show proof.
Now, of course, people go in all the time and say the dog ate my homework. Prepare, change my return. But in this case, if you're able to show proof and everything, you shouldn't have been liable for that because that's terrible.
Yeah, I mean, for me to be able to confirm with the IRS because they're able to look like well, where did the sec, where did the returns go? And they're like, oh, well, one went to this address. I'm like, okay, so where's the other one? And matched up to a California address and like, I never lived there. But like you said, it’s all my fault. So it is what it is. So we're not your fault. But you know, your responsibility, as Will Smith likes to say.
20:00 - 25:00
So yeah, I think that's some great advice. I like the fact you bought the spouse thing, because we didn't realize so my wife started working last year at the Education Center in Hawaii. And yeah, they have a, I mean, she, she did not have to pay taxes on any of her income earned in the state, which is huge. And also probably more of the reason that I'm going to claim some, uh, extra expenses, because that's a lot of income.
I mean, well, actually, that's not tax, so maybe I don't claim it this year, and I wait till we move back to Missouri when or whatever where her income is taxed, and kind of take the time depreciating it out. But that's all a conversation for, you know, once I actually see what my w2’s and stuff look like, but...
Right, um, I do have one more thing that I'd like to talk to you about.
I have a worksheet that is specifically designed for real estate professionals. And this is something that will help anyone out there who does not do or have a bookkeeper or an accountant or anything like that, to help them organize and get prepared for tax season, it will jog their memory on things that they can deduct, things that they might have forgotten to take to keep track of.
And also, it makes it easy for them to organize and calculate expenses. And I'm going to make that available. It's going to be on my website. But I'm going to give it to your listeners, everybody on your podcast for 50% off normally, the E sheet, it's an E sheet, it's a worksheet. Normally, it's $10 on my site, but I'm gonna give it to everybody, only your listeners for 50% off, it's going to be five bucks. And the code is going to be VET, v e t
Should be easy to remember.
I think so. And I thought it was pretty cute. So it's going to be V E T and I'll have that up on my site, and everything. And they'll just click on it. And after they add it to their cart, and they get ready to go check out they'll put the promo code in, and it'll calculate for them. But it breaks down a lot of things that I found real estate professionals and people in that field often forget about. And you definitely need to get it because it'll save you a hassle when you go in. And it might even save you some money. Because of course, not all professionals ask the same questions that I asked. Everybody doesn't do the same amount of digging that I do. And over the years, I've heard way too many times. Nobody's ever asked me that. Nobody's ever told me that. Nobody ever asked me to bring them that type of information or, or bring in, you know, that kind of calculation. Nobody ever explained to me why? I'm all about the why, why do I want to do this because I want to help you. And because I was in the same position as you I overpaid tax at one time, and there's no need for all of us to have responsibility to pay a tax.
But paying unfair tax is not something we have to do. And so as a tax professional, I work for the people, I don't work for the tax agency, and my job is to help you keep more of your money that you've already earned. And lastly, I started this platform so I could help take the fear out of taxes.
I agree with that statement a lot. There's a huge fear with taxes and people, you know, there's all this you know, taxation is theft. And I mean, I guess I get it on my moral background or whatever, like people get so angry about taxes, but I look at taxes as an awesome opportunity. Because you're right, it's inevitable. But when I look at the tax code, which I don't do nearly as much as I should, because I'm not intelligent enough to dig through that or have patience, but from what limited understanding I have and the book I've read. When I think of the tax code, instead of thinking of the money that I'm losing to taxes, what I think about is how the government incentivizes programs that they want people to invest in. So businesses housing, you know, all those different things they want people to create. And that's why I love real estate because I look forward to my return every year because every single year as I buy more real estate and invest and have more units and this and the other tax return just keeps increasing. And then you know it April, March, April whenever I get my return. It's like this big lump sum from everything that I did last year and I can just roll it back into the business. It's like a little Christmas bonus in the middle of the year. And people get so scared about taxes or fearful about taxes. And they don't understand that.
25:00 - 31:55
You know, I mean, there's some ways to, for example, you know, I had, for what I mean, I guess one thing like, this year I had a car that was it, just some stuff happened, and it was just not going to work out for me to keep, and I would call around different places to try to sell it. And it was, you know, I really wasn't going to get much to 300 bucks. And so then I started calling other places, and I ended up the American Kidney Foundation picked it up from me, and wrote me a receipt, say, and it was worth 500 bucks as a donation. And so now I've got, you know, hey, this car that I was only gonna be able to sell for 200 bucks is going to write off 500 bucks worth of my taxes and my income, which honestly is better than paying 200 bucks and having to deliver it to someone.
I think the more people learn about taxes, the more opportunities there are out there, whether from the service member side, or I mean, the real estate side, there's so many benefits with depreciation. And I mean, just everything else, it's super cool to dig into.
And on that car note, I'm going to drop another tidbit on everybody. This tax reform also ushered in a new car allowance. So the minimum car allowance amounts changed for business purchase vehicles. And that's something also that everybody should be aware of, as well as the hybrid, and clean energy vehicle changes. And these are federal changes. So don't worry, no matter what state you're in, these are federal tax law changes that I'm talking about.
And so that's something else I want to let everybody know, on my IG page, on my Facebook page, the information I give out is federal knowledge. These are federal rules and regulations that impact everybody. This isn't an individual state thing. So don't think oh, she's talking about just how it affects people in California or how it affects people in Hawaii or how it affects people in Virginia. No, this information is federal policy. These are federal tax laws. These are federal tax benefits and deductions and expenses that I'm talking about trying to help everybody.
Awesome, it was super cool. Any last minute real estate related tidbits you'd give as far as filing or like your favorite benefit of being an investor, whatever, before we wrap things up?
So one of the things I like to tell real estate people, real estate professionals, is make sure that you are getting the most out of your real estate deductions okay? Meaning, make sure you're not just taking the rental depreciation, basic rental depreciation, make sure that you have a cost segregation study done, or something in that field done so that you can max out your expenses, you can max out the benefit of owning and having a rental property okay? Because you want to break out the landscaping, you want to break out the plumbing, you want to break out all of those things that can net you a bigger and better tax return overall. And that's something you definitely want to look into in your state where you're at, because cost segregation and cost segregation studies are different per state. It can be costly, but it's costly in the beginning, but it is more beneficial in the end okay?
Yeah, that's exciting. I need to do that on my templates, because I've got all kinds of crazy.
If you have any type of multi unit property then a cost segregation study is a must. And down.
You heard it first.
Yeah, you know, it's funny, because I have heard about cost segregation, but nobody, I don't think I've ever realized that it's a study or something that I have to get done as opposed to just saying, hey, do this, which is kind of a bummer that I'm finding it out right now. I don't think that he's going to be working tomorrow but that's still huge because I would have walked into the end of January to our CPA and said hey, yeah, I got this building I need to do cost segregation on he would have been that's great, you should probably do that.
Well, you know what I would be more than happy to come back on. And we could do a whole different podcast just on the cost segregation and how it affects them tax wise, and helps them their bottom line.
Reach out to me, we'll make that happen.
Yeah, let's do that. That sounds exciting.
Awesome. Well, hey, Kasey, unless you got any final parting words of wisdom us has been super exciting. I love hearing about especially the expensive piece, which is some of the changes with the new tax year, so it's gonna be kind of crazy going forward, but definitely reach out and talk to you about cost segregation studies.
So the only thing I want to say is go out there in 2019 and make tons of money. Congratulations to all of you real estate professionals. If you're on here listening and considering starting your real estate business, do it, stop sitting on the bench, jump in the water. The water was warm, get it done.
Follow me on all my platforms. Instagram, I am @taxtipdiva, Facebook, I am also the @taxtipdiva, and my website, thetaxtipdiva.com.
I will have that worksheet up for everybody. You'll be able to find it under digital products. It'll be an E sheet. And don't forget the bonus word promo for 50% off is V as in victory. E and T vet.
Thank you so much for having me.
Awesome. Thank you very, very much.
It's been a pleasure. And I will definitely make sure to link for everyone listening. I'll link in the show notes to the E sheet as well as remind you about the password for the 50% off.
Thank you very much.
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Kasey Ortiz is the Tax Tip Diva
She was in the Marine Corps for 6 years. She was medically retired and received a lump sum payment as she exited the service. When she filed taxes that year it was taxed. The following year she was taking a basic tax class and learned that it shouldn’t have been taxable!
She amended the return, and got her money back! Now she has invested over 20 years into helping service members, real estate professionals, and the likes expertly negotiate their tax returns!
- Tip: Know your tax professional!
- Tip: Expense it!
- Tip: stop invoicing/taking payment at the end of the year
- Tip: Do a cost-segregation study on multi-family real estate (more on this in our next episode).
Kasey’s passion for taxes is obvious, and she offers some valuable resources on her website:
She is on Instagram as @thetaxtipdiva
Link to the 50% discount on real estate professional tax worksheet: https://thetaxtipdiva.com/discount/VET (code: VET)
She has also thrown in an unadvertised discount on her tax-tip planner:
Join me in the BiggerPockets Pro community! https://www.frommilitarytomillionaire.com/we-recommend-BP-Pro/
Books I recommend
First read: https://amzn.to/2KcTEww
Real Estate Investing: https://amzn.to/2ltPRNm
Real Estate Investing: https://amzn.to/2yxFBNf
Building Wealth: https://amzn.to/2ttiwpf