Bri Conn, CFP®: Welcome to Childfree Life by Design. Today, we’re digging into tax strategy for Childfree adults, the write-offs people have tried to pull off, the ones that actually hold up, and what the tax code means when you’re building a Childfree life on your own terms. I’m Bri Conn, here with Dr. Jay Zigmont and Maddy Roche. And in this episode, we’re covering creative tax deductions gone wrong, the lesser-known things like the passport revocation rule for unpaid taxes, and how the tax system treats Childfree financial choices, from staying single to filing as an unmarried taxpayer, to accounts abroad. If you’ve ever wondered whether you can write off your entire social life or how marriage really affects your tax bracket and filing status, this conversation gives you the clarity and planning tools to make intentional money decisions that support the life you want.
Intro: From Childfree Insights, this is Childfree Life By Design, the go-to resource for building the Childfree life you want. Every episode gives you practical guidance, clear direction, and meaningful conversations to help you live intentionally and [00:01:00] design a future on your terms. This podcast is for educational and entertainment purposes only. Please consult your advisor before implementing any ideas heard on this podcast.
Bri Conn, CFP®: So today we are gonna be going through a few different stories. These stories have either happened to clients or the core concept has happened to them, and I’m gonna be reading the stories. Maddy has not heard these before, so she will be reacting to them. And then Dr. Jay will be going through and discussing and providing more context for all of them as we get going through these stories. The first one I’m gonna read here is the content creator lifestyle. Imagine launching a side hustle, say a small consulting gig or a lifestyle blog. You log on to social media, and a tax influencer tells you a life-changing secret. If you post about your day, your entire life becomes a business tax write-off. Armed with this advice, you decide to write off every single dinner out, [00:02:00] every vacation, and every personal gadget goes down as a deductible business expense, successfully reducing your reported business income to exactly zero. You’ve convinced yourself you’ve cracked the tax code. Then the IRS mails you a letter asking you to see your receipts.
Maddy Roche: My first response was to laugh because that would be a major tax loophole, and I think we would have a lot more people sharing about their lives and not paying any taxes if that was true. I would be amazed if that was a reality. I am no tax expert, and we are not giving tax advice, but I do believe there is a word like reasonable that’s included in some of this that qualifies whether things actually qualify as a business expense or not. That’s an interesting jump from the content that you’re posting about to being what can be written off, I’m not sure that that’s what the IRS intended for. Jay, what’s the reality here?
Dr. Jay Zigmont, CFP®: So, okay, the old school pre-internet version of this was, “I’m going to write off my horse [00:03:00] because obviously I’m gonna race my horse or put it out to stud or something, and I get to write it off.” And the IRS is like, “Yeah, no.” Like, their argument from an IRS standpoint is, is it a business? A business is defined as something with a profit motive. It is not a hobby. So that means if you’re gonna be like, “Hey, I’m just gonna put all my stuff on the internet, and I get to write it all off,” you’re wrong. Now, that being said, there are some content creators have real businesses and have a business expense, and that makes some sense. The one that I saw related to this, I had somebody reach out, he said, “Okay, here’s what I’m gonna do. I’m gonna open a travel agency, and I’m gonna go do a whole bunch of travel, quote-unquote, researching locations, and I’m gonna write all my travel off.” No, that doesn’t work. You are not running a business for a profit motive. Now, somebody will say, “Well, you know, my neighbor got away with this,” or whoever, my friend. And you’re absolutely right, people get away with it [00:04:00] all the time, until the IRS shows up at your door. Like that’s the problem.
Maddy Roche: Even if that person who had been wanting to start like a travel agency had a LLC and was intending to earn a profit in some way of consulting about travel, would that still not fly?
Dr. Jay Zigmont, CFP®: So this is where it becomes an issue. If you never show profit of your business, eventually IRS is like, “This is not a business.”
Maddy Roche: Fair enough.
Dr. Jay Zigmont, CFP®: And there’s all different rules of thumb of like, hey, how many years and how does it work? And I think the challenge is IRS, if they want to chase you, they can. And people go, “Well, I got away with it for a couple years,” and it’s gone. Well, IRS, if they think you have tried to defraud the government, not only can chase you down, make you pay your taxes, they can send you to jail. And once it’s fraud, they can look back at your taxes as long as they want. And that’s where a lot of the stuff people see on social media, like fighting IRS stuff, I’m like, yeah, that’s gonna end up with [00:05:00] somebody with some handcuffs on them, and I sure as hell don’t want it to be one of our people.
Maddy Roche: And what was I thinking about the reasonable business expense?
Dr. Jay Zigmont, CFP®: So this is where if you’re trying to run a business, I’ll pick another business instead of travel ’cause it’s easier than some of the other examples. I’m gonna run a restaurant. Well, restaurants as a whole lose money. They’re not great businesses. Well, but I’ve got a building, and I’m serving food, and I’ve got receipts, and I’ve got things. IRS is going, “Yeah, that’s a business. It didn’t work out. You lost money. Fine.” It’s these ones that are on the borderline where they’re like, I think you’re trying to write off your horses or your travel or other things, where it just doesn’t pass that sniff test of like, ooh, that’s not really a business. If it is a real business, fine. Well, if it’s a real business, you’ve got a separate banking accounts, checking accounts. You’ve put money aside for that. You’ve got a business plan. You might have raised money for it like, there’s a lot more than just, “I’ve got an LLC.” You can get an LLC for [00:06:00] anything.
Bri Conn, CFP®: Fun one to start on. We’ll go to the next one, the passport ghost. Picture this, you’ve spent years dreaming of an international vacation, planned the perfect itinerary, and packed your bags. You breeze through the airport, hand your passport to the agent, and suddenly you’re pulled out of line. The agent tells you your passport has been revoked and is no longer valid. There’s no dramatic backstory here, no international manhunt. You aren’t fleeing the country. You simply ignored a string of certified letters from the IRS regarding a lingering tax dispute from years ago.
Maddy Roche: Oh no, bummer. Of the reasons you could be pulled out of line at an airport just trying to think of how bad this particular one is, ’cause there are some scenarios that would be even scarier. Wow, I had no idea there’s that connection, and it makes total sense. What an easy way to track people and to identify where folks are. Interesting. Who would pull you out of line in this case, Jay? It’s could be TSA.
Dr. Jay Zigmont, CFP®: [00:07:00] What happens is your passport’s no longer valid. So you need to have a valid passport to travel. Now, here’s where it gets really interesting in this current political world. And by the way, I can’t talk taxes without talking politics, so I apologize if you don’t want to hear about politics, but taxes and politics are 100% connected. Now let’s say there’s any question on your citizenship, and now your passport’s no good, you might not be coming back in the country, or all the other things, and it’s simply because you didn’t pay your tax bill. So now, it’s not going to be, like, your first notice, you know, you owe blah. They really start watching when you either don’t file, you have multiple years owed, large numbers owed. And what they’ll do is they’ll say, “Okay, you can’t have a passport.” And actually IRS can put a lien on your house, they can garnish your wages without even telling you. They’ll send you an email, but they’re like, “I’ve already took the money out of your bank.” The letter you get from them is like, “We took this.” It’s not like, “We’re going to.” And when you go to, like, renew your [00:08:00] passport or something like that, they go, “Nope, you can’t until you get good with the government.” And if you have a citizenship issue at all, you might have hard consequences.
Maddy Roche: Yeah, to think that you’re trying to save money by not paying your taxes and then you have a great expensive vacation you now can’t go on. That’s a double whammy.
Dr. Jay Zigmont, CFP®: Well, sometimes people are like, “Well, I’m fighting with the IRS on this issue.” Listen, bottom line is the IRS is gonna get you. Now, you can be on a payment plan with the IRS and still your passport will be good, because then you’re current. You are making a good faith effort. Oh, you’re, you know, pay back your taxes, fine. The other one I think we’re going to see more of is as technology starts getting more and more into IRS computers, ’cause they do a lot of audits by computer, as AI starts getting into other things, you’re gonna see systems starting to connect together. And what that really is going to mean is, oh, we see this W-2 we got from your employer, but you haven’t filed your taxes in three years. [00:09:00] Well, that’s a problem. You know, you have to file taxes every year unless you’re in one of those weird exempt worlds. Sometimes the elderly folks with a very low income, you don’t have to, but you have to do that. And as the systems start talking to each other, you’re gonna see other things happen. Same with student loans. We’re seeing some work right now where there’s a good chance if you’re not paying in on your student loans, they might do the same thing to your passport, that would really freak people out.
Maddy Roche: And to think of all the people they could go after, Jay.
Dr. Jay Zigmont, CFP®: Okay, so this is where we get political. This is where they hired a whole bunch of people for IRS, then fired them all. And what it is, IRS is really interesting. For every dollar they spend chasing down people you know, whatever, audit their taxes, things like that, they make back a multiple of it. So it’s worth every penny for IRS to spend money auditing people, and it’s really worth it for them to spend money auditing rich people. But what happened politically over the past year is they cut a big chunk of the IRS staff, so the IRS staff [00:10:00] does not audit the rich people, and instead you get flagged by a computer, and you owe 10 grand to the government, and next thing you know, you can’t fly.
Maddy Roche: Oof.
Maddy Roche: And I don’t know, if I got a letter from the IRS, I would do a lot of research on whether that was real or fake. I’d be worried of it being a scam.
Dr. Jay Zigmont, CFP®: I mean, usually the IRS letters are very clear. You go to irs.gov and you’ll see the letters they’re sending to you. They put them in the system first. Um, So what you can do and what I’ve done is you can go into IRS and say, “Send me an email notification of everything you send to me.” And I get that notification a week or two before the letter comes, which is perfect because if I’ve asked for it, I know it’s coming from irs.gov, and then I get the letter, I know that’s right. And I don’t know about you, but if I get a letter in the mail from the IRS, it freaks me out. Now, mind you, the last one I got was like, “Here’s your PIN,” which I needed. It’s not a I’m in trouble, but those are the types of things you need to have a loop to make sure you know. And I think the thing is anyone [00:11:00] goes, “Oh, I’ll get around to that.” No, no, no. That IRS letter comes, it’s got, whatever it is, 30, 60, 90 days, and then they’ll just start taking action unless you work with them.
Maddy Roche: Bri, what’s next? These are scary stories.
Bri Conn, CFP®: Is this the Halloween episode? You know we might need to release it on Halloween, yes. So the next one is the taxes over joy trap. Let’s talk about a couple who fell deep into financial independence, retire early, the FIRE movement. They spent months obsessing over state income tax maps, calculating tax brackets down to the decimal point. To escape high income taxes, they sold their beloved home near their close friends and moved to a tax haven state. Two years later, they are completely miserable, isolated from their social network, and realize they hate the climate, but hey, at least they save 5% on their state tax return.
Maddy Roche: It sounds miserable three sentences in. That’s not how I roll, but yeah, I think there are [00:12:00] trade-offs here that you have to think about. Are you really willing to sacrifice a huge portion of your happiness and livelihood just to save on taxes? I’m not sure. Of course, I wish we didn’t have to pay taxes, but, actually on a fundamental moral level, I think taxes are really important, and I think we should all pay them. I think the tax code should be equitable. I’m not afraid of paying taxes nor do I demonize it. So, yes, be smart with it, but I wouldn’t encourage anyone to change their livelihood to save on, I don’t know, $10,000 of taxes that actually I believe go to supporting our communities. Jay?
Dr. Jay Zigmont, CFP®: Yeah, here, let me challenge you here, Maddy. So I was talking to somebody yesterday who lives in New York City, and I live in Tennessee. So Tennessee has no state income tax. If we make the same amount of money, they’re gonna get taxed 15% or more on that money, and I get taxed zero. So really, we’re talking about your retirement account going 15% further. For some folks, that is big. Now, let’s be real, we’re in a political [00:13:00] world also. Not everybody wants to live in Tennessee. Well, there are other states that are options that don’t tax your retirement account. But in this person’s example, moving out of New York City would mean a 15% increase in their money, tax-free return. That’s a huge, huge financial benefit. It depends on what you’re trying to do. So I was talking to another couple that they’re gonna travel, like that’s their big thing. And the question was, where to put their home base. You know, like where do they put their stuff? And that’s where their residency is, but they’re there a couple months out of the year. Well, the answer is a tax-free state. They’re gonna do Washington. And I’m like, “Cool. Get a apartment near the airport or on the public transportation to the airport, and you can save that money.” On the flip side, you gotta make sure the life matches what you want. It’s worth it from a financial standpoint, but if it doesn’t match you, your life, your culture, well, then don’t do it.
Maddy Roche: Totally agree.
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Bri Conn, CFP®: Go on to the next story now. Student loans and the IDR tax tightrope. So a Childfree professional is carrying a heavy balance of student loans. To keep their head above water, they enroll in an income-driven repayment plan, better known as IDR. They work hard, secure a well-deserved promotion, and celebrate their bigger salary. Then tax season arrives. They file their tax return, their loan servicer runs the annual income recertification, and their monthly payment skyrockets so high that it completely wipes out the financial benefit of their raise.
Maddy Roche: I [00:15:00] empathize. I was under the shackles of student loans for a long time, and I have friends that are still. It is horrible and horrific, and that decision to, do I earn less to pay less it just feels like, one of the worst choices you have to make. I have no professional advice on this other than just I think it’s a reality probably for some of our listeners. And I hear you on that, and I’d be interested in Dr. Jay’s professional opinion on how to handle that.
Dr. Jay Zigmont, CFP®: Yeah, so old school there used to be what they called Medicaid divorces, where it was worth you divorcing your spouse in order to get Medicaid benefits in your later years. And those still somewhat exist. But now we’re talking about student loan divorces, and which sounds ridiculous, but it kind of is. You can, in many cases, file married, filing single, and get the income payment plans to work. But the way the tax code is right now, so we’re in 2026, so if it’s another year it might have changed. If we’re in 2026, it [00:16:00] is remarkably rare, I don’t know that I can think of a current client that makes sense, but it’s remarkably rare that being married would improve your tax situation or your student loan situation. So I’m gonna try to get ahead of this and say, “All right, you got a whole bunch of student loans,” or you’re in a high tax state, particularly with the state and local taxes, the answer is don’t get married. Have the party if you want, have a commitment ceremony, just don’t legally get married. Whatever that works for you. That is actually better for many people around taxes. Once you’re married, it is that game of how do I lower this? Which the fun part of this is if I filed married, filing single, and then I max out my 401K as a traditional 401, I can lower my income and lower my monthly payment. The hard part is with the new WRAP program, which is coming out, you might still have interest that’s due and it’s growing, and it’s gonna now take you 30 years to forgive that loan. So while it might lower your [00:17:00] income-driven payment, it doesn’t really help you with the loan. Student loans are a disaster. They just are to the point where if somebody asked me, “You know, go to, going to college, are we gonna take out student loans?” I’m gonna say, “Don’t take out student loans. Don’t go to college.” Which is weird coming from somebody that’s, you know, PhD and taught in universities and all that, but, like, I can’t make the math work. But once you’re in there, you’ve got to play the game of how am I gonna get out, whether it’s paying the loans or waiting the 30 years or, I mean, the only right now way to get rid of student loans is death and disability. But you’ve got to find balance. The other one I always warn people on the student loan side is if you ever refinance your loans, you may no longer qualify for federal programs such as income-driven repayment programs. And by the way, if you are gonna refinance, never put anyone else on it because what happens is if you refinance with your spouse, you end up both responsible for that loan. So even if one of you gets disabled, it doesn’t get rid of the loan. It’s [00:18:00] this trap that’s just, I don’t know how you come out of college at 20-something with a $300,000 loan and get out from underneath it. I just—
Maddy Roche: Oh, Impossible. Nearly impossible.
Dr. Jay Zigmont, CFP®: I mean, I just did some math for somebody who their daughter’s going to a in-state school. In-state school for the four years is gonna cost $160,000.
Maddy Roche: Oh no!
Dr. Jay Zigmont, CFP®: I don’t know what you do with that.
Maddy Roche: I understand the parent dilemma, although we typically work with people without kids that you want your kids to go to school. And then at 18, as a kid, you wanna go to the school, but you’re not thinking at all about, you don’t, and you have no perspective whatsoever of what it means to pay back something like that. That’s where I wish we had financial education earlier in our lives.
Dr. Jay Zigmont, CFP®: Well, if we had financial education, nobody would take a student loan or a credit card. You turn 18, they give you a T-shirt for signing up for a credit card. And then they give you a student loan for $100,000. I just don’t get it.
Bri Conn, CFP®: So we [00:19:00] just talked a lot about not getting married. I do wanna talk about something, though, the unmarried estate and gift taxed minefield. So let’s look at high net worth Childfree couple who chooses to stay unmarried. They buy a beautiful home together, and one partner contributes a massive lump sum of cash to the other account to cover renovations. They assume that because they are life partners, their money is shared. Years later, during a routine review, a financial planner delivers two surprises. That cash transfer quietly triggered a federal gift tax return, and because there’s no marriage certificate on file, they have zero automatic inheritance rights regarding their state’s inheritance and estate taxes if one of them passes away.
Maddy Roche: Oh God. I’m not sure if I didn’t get married if I would assume my finances were totally tied to my partner’s. I’m not sure where that disconnect came in. But this is an area I have no idea about. And I guess [00:20:00] choosing to not marry is a choice, I believe, to not merge your finances. I don’t know, maybe people merge their finances when they don’t get married. But if inheritances came, yeah, that’s probably something you don’t think about, which is it’s considered a gift to you, or to the other partner. So yeah, Jay, please shine some light on this ’cause this actually might be applicable for me.
Dr. Jay Zigmont, CFP®: It’s a weird world. There’s a couple states, not a lot, but I think it’s 7 or 10 or something like that, that have estate tax that they charge whenever somebody dies. The federal level is $15 million. So most people aren’t gonna be giving their spouse $15 million or more. I mean, if you are, that’s a different problem. Talk to us. You know, we’ll work with a financial planner. Now, the thing is, so if we use Massachusetts as an example, their limit’s 2 million. That actually is not hard. A house in Massachusetts is probably one, 1.5 million. So it’s very easy to trigger these estate tax without realizing it. So the way the federal government does this is if you’re married, you [00:21:00] can give as much to your spouse as you want, it’s never taxed. It’s an unlimited gifting. As an unmarried couple or group, you can only give 19,000 a year to anyone as a gift, and you’re not taxed. Now, what happens is 19,000’s not really that much money. You go on one good trip, you could spend a good chunk of that, and you’re actually expected to keep track of all the gifts. Now, most people don’t do that, but there’s records now. So, like, you Venmo somebody money. Well, is that a gift or, you know, are you paying the rent bill? Well, if you’re paying the rent bill, then they have income. These are the things that happen in unmarried couples that we don’t think about ’cause it starts triggering issues. And if you end up, you’re saying, “Okay, one spouse makes more than the other, gonna leave a lot more money to the other one,” how do we do that without triggering these you know, state taxes becomes a problem. So let me give you an example. In New York, they have this really weird system that the first [00:22:00] 7 million you don’t pay any taxes on. That’s fine. Then when you give 7 and something plus million, you start paying taxes. Well, when you hit 7.5, you pay taxes on every dollar back to one. So it’s like this, cliff where, like, ooh, this all of a sudden got really expensive, and without good estate planning, you’re out of luck. The other thing that’s connected there is without good estate planning, you don’t have power of attorney in place, you mean nothing legally. You can’t make any decisions for your spouse, any of that, so it becomes this nightmare. So what happens is getting married checks boxes and makes your life a little bit easier on some of the tax side, but you may end up paying more taxes because you’re married. It’s like this, you’re stuck in this circle.
Maddy Roche: Is paying rent income?
Dr. Jay Zigmont, CFP®: Ah, so here’s the thing. So let me use an example, ’cause I, I had a client of this. Client is unmarried, Venmos money to their spouse for rent. Well, is that income or is that a [00:23:00] gift? The answer, by the way, is to pay the rent directly to the landlord. But now, you’ve got $1,000 in rent coming through to your spouse, unmarried spouse, it might look like you’re renting a room from them.
Maddy Roche: What the spouse is the landlord?
Dr. Jay Zigmont, CFP®: Then it’s income.
Dr. Jay Zigmont, CFP®: It’s one of those where people don’t realize you could be stepping into tax issues without meaning it.
Maddy Roche: What does IRS say about an answer of, “I had no idea”? Do they accept that as an excuse?
Dr. Jay Zigmont, CFP®: Ignorance of the law does not get you out of trouble. Many times with the IRS, if you realize you made a mistake and you in good faith fix it, you’ll be okay. If they find it, they don’t care what you say.
Maddy Roche: Interesting. I’m not sure how many people know that if you receive income or rent from your partner while they’re living in your house, that that’s considered income.
Dr. Jay Zigmont, CFP®: But why wouldn’t it be?
Maddy Roche: I just never thought [00:24:00] about it.
Dr. Jay Zigmont, CFP®: So this is the question. If you’re not combining your finances with your spouse and you know, you’re not married, it is no different than a roommate. Well, your roommate giving you money for rent is income.
Maddy Roche: My roommate and I would not sleep in the same bed, Jay.
Dr. Jay Zigmont, CFP®: Some people they do, some people they don’t. That’s up to you. Like—
Dr. Jay Zigmont, CFP®: I mean, but, But what’s happening is people are doing things in good faith and they think they’re doing the right things, and then they step into a trap. What I worry about more are the ones it drives me crazy when I see a tax filing firm, like a CPA firm named, like, Creative Tax Planning. I’m like, creative and innovative should not be in the same sentence with taxes. It just…
Maddy Roche: and rule following.
Dr. Jay Zigmont, CFP®: I want old-fashioned, check the box, we don’t play games on my taxes.
Maddy Roche: Fair enough. Well, I learned a lot, Bri and Jay. Thank you. I appreciate being brought on as, like, the ignorant guest host [00:25:00] of just having my mind blown every example we have. Do we have any others, Bri?
Bri Conn, CFP®: We have one more: the hidden foreign account. So finally, let’s look at a Childfree nomad. Our traveler decides to live out a suitcase for the year, bouncing between Europe and the Southwest. To make everyday life easier, covering local rent, gym memberships, and café tabs, they open a foreign bank account in Spain and deposit a chunk of their savings into it. They have no malicious intent. They just wanted the convenience of a local account. Eventually, they head back to the US, leaving the account open and forget it exists right up until a compliance notice from the Treasury lands in their mailbox.
Maddy Roche: Bummer. Well, I have not opened an account internationally. And I don’t know many people who have. I don’t have a lot on this one. Jay, is this common? How would you advise someone?
Dr. Jay Zigmont, CFP®: Oh, it’s way too more common. And there’s 17 different versions of this. So, one of the ones that we see all the time is [00:26:00] like, “Hey, I have family outside the US. Uh, They opened an account in my name, and they’ve been giving me money.” We do the family money going back and forth. Lot of cultural components there. Or I’ve actually seen folks, they open a Wise account, and now they’re keeping money in a Wise account that’s in euros. Well, once you get over $10,000, that’s reportable. Well, 10,000 is depends on how you’re traveling. If you’re spending a good amount on travel, you could very easily get over that limit. And they don’t mess around. It’s called an FBAR form. They want this form filled out, and it ultimately goes to the Department of Justice, ’cause they’re trying to figure out, are you laundering money overseas? That’s the question they’re trying to get to. Like, are you supporting terrorism, other things like that. When really, I think just about every case I’ve seen, it’s either been like, “Hey, I like to travel,” or, “I have a family member overseas,” or, “I inherited something overseas.” It’s always, like, innocent, but as soon as you find it, people go, “Oh, I didn’t know I had to report that.” Now, you asked a second ago, Maddy, [00:27:00] “Well, is that an oopsie?” Well, you’re allowed a once a lifetime oopsie on that and say, “Hey, I need to file this form. I need to file for back years.” And you’ll end up still paying a penalty, but it’s not 10K a year, and the penalty could be up to 10K plus 50% in fines on any of the money for each year. So it’s essentially all the money disappears. There was a great article on this. And if we can find it, we’ll link to it. A couple was a US citizen, went and lived in another country, and they’re like, “Yep, I got no problem. You know, I got no income in the US. I’m not gonna file anything.” And then all of a sudden the government came down on them, and I think the fine was something like 3 or $400,000 for not filing these forms.
Maddy Roche: You could have gone to college for that.
Dr. Jay Zigmont, CFP®: Mind you, their entire tax bill they owed was like 10K.
Maddy Roche: Oh, no.
Dr. Jay Zigmont, CFP®: Yeah. So it’s not the tax bill, it’s the FBAR forms and others that you trigger by mistake.
Maddy Roche: I think this is such a good reminder, and Bri and I have recorded an episode [00:28:00] about building your bench. But if this is not a perfect example of why having a financial planner in your corner and a damn good CPA I don’t know what is. And whether it’s Childfree Wealth® or a different fiduciary fee only firm, audience members, get an advisor. Work with them. Because as Jay just said, and it’s gonna haunt me for a long time, ignorance of the law is not an excuse. And I just wanna live, I wanna be able to make decisions and do what I want, but I’ve gotta have the team in my corner that will tell me, “No, no, no, donating to your relative out in a different country is problematic,” or something like that. I would never know that.
Dr. Jay Zigmont, CFP®: Here’s the thing, Maddy. The CPA and the financial planner are only as good as the information they get. And in all of the cases I’m thinking of, it was one of those where they might’ve had a CPA, but they just never told them about the foreign accounts ’cause they never thought about it. It’s like, “Oh, it’s 10K over in this over here. My family uses it to help pay some bills or whatever.” And I’m like, “Oh, you got a problem.” And they’re like, “What do you [00:29:00] mean?” They’re always like, “I did nothing wrong.” And I’m like, “Well, you did it intentionally, but you missed something.” And what happens is they’ll then say, “Well, my CPA didn’t tell me.” Well, if you didn’t tell your CPA the situation, they would never go, “So do you have, like, any foreign accounts over 10,000…” That’s not a normal question. But with working a financial planner, because we’re doing so much getting into people’s lives and understanding everything about it, one of the times it was like, “Hey, are you planning on any inheritances?” And they’re like, “Yeah, my father’s already given me $100,000. It’s sitting in this account in this other country.” And I’m like, “Whoa, wait. Pause. Wait, what?” And that’s where you start having those conversations.
Maddy Roche: Interesting. and fascinating, you think you’re living a simple life, and then really when you talk to a professional, it’s like, “Oh no, you’ve got a lot of caveats here.” You’re receiving rent, you’re paying your spouse different money, more than $19,000 a year. I mean, yeah, you can get caught in a loophole. Thank you, Bri. I’m not gonna sleep for a week.
Dr. Jay Zigmont, CFP®: We’re not trying to scare [00:30:00] you. This is where our firm, our structure, we’re one of those where we just don’t play games with taxes. We will pay every penny we’re owed. We don’t give IRS a tip. We’ll tiptoe up to the line. Whatever’s legal, we’re good with. The questionable stuff, no. So one of the other ones, it was kind of in broad one, but one of my favorites, I had a CPA tell a client that because they have a business, they can write off meals. Well, the client took that to interpret every meal, because the two owned the business together, could be written off. And I’m like, “No, that is not the case.” And they said, “Well, my CPA said it.” I’m like, “Okay, your CPA is wrong, or you’re misinterpreting it, but whatever it is.” And they eventually left us as clients, ’cause like I didn’t want, they didn’t want to hear it. I’m like, “Cool. That’s fine. You’re not a good client for us because we’re gonna follow the rules.” ‘Cause I don’t want to be sitting across the desk from an IRS agent. It’s kind of how it works.
Maddy Roche: That is an interesting situation [00:31:00] of people are always like, “Oh, I can write this meal off,” I think documentation, of course, is important. But under the umbrella of being a business owner, I suppose you could spin almost all meals out as being business expenses, right?
Dr. Jay Zigmont, CFP®: Only if you’re meeting with a client to discuss business. When you and your spouse, who run the business together, are going out to lunch, that is not business.
Maddy Roche: It’s not a business?
Dr. Jay Zigmont, CFP®: No, it’s not a business related expense, because that meal does not facilitate business, it is part as of your normal spending. Same with one of the ones we used to have an issue with, but just kind of working through. You can’t write off your commute to your business if it’s part of your normal daily practice. You can write off your mileage when you’re traveling for business to a meeting. And this is where people are like, “Well, but I said the word business, I can write it off.” No.
Maddy Roche: Fascinating. Okay, good to know, Jay.
Dr. Jay Zigmont, CFP®: Maddy’s, Maddy’s over here taking notes, gonna double check her number.
Maddy Roche: I just hear people always so flippantly say, “Oh, I can write this off. I can write [00:32:00] this off.” And then “FOMO, I want to write shit off. I don’t know how to do it, but—”
Dr. Jay Zigmont, CFP®: Yeah, so IRS has been cracking down on two categories, and that is travel and meals.
Dr. Jay Zigmont, CFP®: ‘Cause people are doing it.
Maddy Roche: I had an Uber driver once try to tell me that I could write off everything.
Dr. Jay Zigmont, CFP®: I always get my financial advice from my Uber driver.
Maddy Roche: I’ve had some good conversations with Uber drivers before.
Bri Conn, CFP®: Well, that was our last story. Jay, do you wanna summarize three big things for people to take away from this episode?
Dr. Jay Zigmont, CFP®: I think Maddy took the big one, which is just ’cause you don’t know doesn’t mean you can get away with it. And I don’t know. I’m just gonna put it this way. Don’t get your tax advice from social media or your Uber driver.
Bri Conn, CFP®: Well said. So that is all for this episode of Childfree Life by Design. Remember, intentionally choosing to invest in moments of joy is just as important as investing in your future. Until next time, happy designing. [00:33:00]
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