Turkey and Tax Season

What do we have to talk about today? I know we're going to talk wine, you don't have to remind me of that one, but wow, what else?

So obviously today's the election, but we're not going to talk about the election because everyone has heard enough. We don't have any answers, no one does, so why beat the dead horse, right?

The morning after. I don't think the election should be a surprise to anybody, because we knew that with the mail-in ballots and all of the voting being done in these ways, mailing it, going in person, whatever your choice, I think everybody knew that there was going to be a delay in getting the final verdict. But just like with anything else, it was supposed to happen last night, and somehow we all forgot that we knew it wasn't going to be resolved last night. It's really weird how the human mind works. But I woke up this morning to a beautiful sunrise, and I took a picture of that and I threw it on my Instagram, and it just reminded me that there's so much more than bozos running for the presidency of our country.

Yeah, and really, I got to tell you, I don't, I'm, we vote who we want to vote for. We all express our opinion, although everybody seems to be fearful to talk about it. Nobody wants to tell you who they voted for. But it's interesting, we all have this freedom to vote, but we get so caught up in it I think we forget about things like a simple sunrise. And I don't know, maybe these guys can really change the world, but frankly I think President Trump's done a pretty good job, and I think Joe Biden believes that he can do a good job. But really it doesn't come down to one man or one woman. We ended up, I think, with somewhat of a status quo when it came to the Senate and the House. So you got Democrats in the House, right, and Senate is, I think probably, I decided it looks like it may not stay without Republicans, but we'll see, probably stays with the Republicans. So did we really, what did we accomplish? I don't know.

I can tell you what we did accomplish, and the markets are telling us this right now. The markets are betting that Biden wins.

Oh, they were as of yesterday too.

Yeah, they started, the futures started going up last night. Look, if you consider the stock market, they are betting on a Biden win, and that's because they believe that Biden and his crew will do more stimulus. So three trillion dollars of proposed stimulus from the Democrat side would naturally feel really good to pumping up the economy. But if we had a Republican win, if President Trump is back in office for four years, their plan was something around one and a half trillion. So for me, either way the markets are going to love this, because it's going to put stimulus in play in a more defined or definitive way. But my biggest concern is that it is stimulus one more time.

Yeah, eventually you can't keep...

Eventually all these checks that we're writing are going to catch up to us. I don't think we're immune to some of the problems we've seen with, say, in countries like Greece, where too much debt caused him to crumble. Not suggesting that happens to us anytime soon, but boy, we are putting a lot of debt on the books. And I don't know, I think we've become pretty darn accustomed to instant gratification. We don't want anything to feel bad or hurt or be painful, and so we just look to the Fed to bail us out, and I just wonder how long that can last.

Well, I guess we're going to find out, right?

Well, one way or another we're going to keep piling debt on. Everybody says we shouldn't do that, yet we keep voting for people that do it. And I don't remember, if you look through the history books, I don't believe that every time we had a pandemic that we had record amounts of money going into the system to fix it. We didn't close the country, we didn't close schools, we didn't do all not dealt with a available, and everybody seems to have lost their mind on this thing. And so I would call it pure panic, just pure meltdowns of everyone.

It has been that way, right?

It's really felt like a giant meltdown, really, of a pretty enormous proportion here. It's just epic, really. So all right, well, let's talk tax season. We're in the season for trying to strategize on taxes, and we're also in turkey season.

Yeah, I really like that. I don't know if we're in turkey hunting season. Every time I say that, when we were talking about all this and we're looking at the blogs that's coming out, all I could think about was turkey season. Growing up, my dad always hunts, so I was like, is it turkey season? I guess it is. I know it's deer season, because yeah, he, I'm gonna call him out, he didn't call me until late on my birthday recently because he'd been in the woods all day. He was hunting. I was like, well, yeah, I guess it's deer season.

The only way that your dad gets a pass on that is if he bagged a big buck.

He didn't. So he saw one, did not kill it, but I told him if I'm coming home for Thanksgiving I expect some tenderloin to come back to North Carolina, so I tasked him with that. But yes, it is turkey season, Thanksgiving season, time to be thankful, time to be thankful for what you have. I know we're talking about everything is a little chaotic right now, but like Phil said, just a sunrise, something to be thankful for.

It's really the simple things in life, frankly. And at the end of the day, if Biden wins, if Trump wins, whatever the outcome, our lives are going to go on, and we're going to either make the best of it or we're going to have pity parties, and that doesn't help anybody. I think at the end of the day, four years from now, we'll be right back where we are today. We'll be dealing with this one more time. And fact of the matter is, it's not the end of the world. We've had elections go good and bad so many times through our history, and who knows if this is a good one or a bad one, but I can sure tell you that the outcome, it's not, I don't think it's as bad as people tend to make it. So I think we just have to live with whatever we get.

I can tell you one thing: as a conservative, I'm not going to go out and beat the drum and get upset and be angry about it, and I'm certainly not gonna go loot and break windows or anything like that. I'm just gonna live. I'm gonna do my work, I'm gonna do what I do every day, and I'm gonna enjoy life and just appreciate what I have. So I think that's all we can do, and I think it's what everyone should do. But at any rate, let's talk past the election and let's talk about taxes. How are we going to minimize the liability? We got eight weeks left.

I was really thinking more along the lines of talking about Thanksgiving. I want to talk about turkey and dressing and all the wonderful things that we have at Thanksgiving. I can't wait. I start to think about all the food that I enjoy at Thanksgiving, and literally you begin to salivate.

It's so good.

Yes, so good. But this year is going to be a little unusual, because nobody wants to group, nobody wants to be together. I don't know. I don't think we're gonna have a house full. I don't know that we're gonna be in anyone's home. It might just be a small Thanksgiving this year.

So you can still cook all that delicious food, believe me. I'm going to smaller portions, get a smaller casserole dish and whip it up, and then you're good.

Yeah, well, I figure whatever we cook, this too much, we'll invite a few people local that we know and trust in terms of how they've been monitoring themselves and trying to control against COVID. But I don't know, I hear a lot of families saying they're going to try to keep their distance, and then I hear others saying nope, it's business as usual. So we'll see. But I am looking forward to Thanksgiving, and for everyone out there that celebrates Thanksgiving, I'm sure you're looking forward to it as well, and however you spend it, we sure hope it'll be a great celebration for you.

So speaking of abundance, we've got an abundance of things coming down the pike with tax season, and taxes are complicated anyway.

Oh yes, absolutely. I will not even pretend to be or want to be a CPA.

No. I'm married to a licensed CPA, and it's complicated stuff, and this year they have really complicated it because of the CARES Act. We got so many new things.

But not just CARES Act, the SECURE Act too.

Yeah, so coming into 2020, so there at the end of 19, or 2019, we had SECURE Act, then we got the CARES Act that happened in record time due to COVID. And then you take all of that, you try to package it and say, okay, what does this mean for me? Individuals and business owners, especially small businesses in this case. Many of our clients are small business dental practices, etc. They've got a lot to think about. In fact, I just finished a call with a client maybe less than an hour ago, and just about the entire call was all about how to deal with all these potential pitfalls or blind spots that really no one's thought about until now. And it all goes back to, or it all correlates with, CARES Act.

Oh yeah. And the first one to talk about is PPP, which when it came out with the CARES Act, just experiencing it with our clients and hearing them and working with them and trying to help them understand it, because it was pretty ambiguous when it came out. There were a few things that no one quite understood, so it was just up in the air, and finally we got pushed through, and a lot of people received that PPP money, and now it's, how are you gonna treat it during tax season?

Yeah, ambiguous is the right word. There were so many parts of the CARES Act. I remember a number of us in here, we would read and we'd think about certain parts of it, and you'd read a few pages beyond and all of a sudden you say, wait a minute, this counters what we just read. And so there was a lot of ambiguous language, and there was lots of revision that was made, and I'm not sure that it's done at this point. But what I do know is this PPP loan, this one deserves some talking about. That's why it's number one on our list. So let's touch on what the PPP is, or the Paycheck Protection Program. A lot of you listening, if you own a practice or a business, you probably received PPP money. A lot of people did. And if you did, it's a forgivable loan. So on the surface, Sarah, that sounded great. Everyone thought that's free money.

Well, they did, but they were also very skeptical. They're like, they were this pie in the sky that we're talking about here.

Well, at the end of the day, we all know there's no such thing as a free lunch, and I remember a few of our clients saying, we're gonna pay for this somewhere.

Yeah, we'll pass, what's the cause.

So let's just forego this, and we'll consider it maybe if there's a second round, or we just don't consider it, period, because we don't need it. And they were in a financial position that they weren't forced to do it, so for them it might have worked out good. Now that we know how this thing is supposed to work and we've got a little more clarity on it, I think it's interesting as we come towards you, and the question that I'm hearing now, Sarah, is: will the PPP create distributable income from my business? Is it going to create a tax burden for me? And the fact is, it's not going to be shown as what you would think of as normal profit, right? However, it's going to feel that way, and here's why. So when you pay for things with PPP that are forgivable, those are generally items that you would normally deduct.

Deduct, exactly.

Well, you can't deduct things twice.

No, right.

So if you get it forgiven, if the loan's forgiven, now you have all of those expenses that were essentially forgiven, so you can't deduct them. Therefore you're essentially going to pay the tax on that amount that was forgiven. The amount that was not forgiven is not taxed, because it's a bona fide loan. Has a payback schedule, an amortization schedule, and so you're going to pay it back, whether you pay it back early or not, but

those dollars can't be taxed, the dollars used for things that qualify you for the forgiveness. That's right, 100. You're going to pay tax on that. So if it looks like on your financial statements that you're showing a lot of income though you know you didn't make that much money this year, yeah, it's going to feel the same. It's going to feel just like you did make it, and yes, you're probably going to pay a fair amount of tax on those dollars. But the alternative would have been you'd be closed. You would not have any of that income. So it's going to essentially work out about the way it would if things had not changed, if we didn't have COVID.

Right, right. It balance things out, help preserve your business moving forward. It was a bridge, so to speak, and sometimes you have to pay money, not over one percent though, for that bridge. So I would say a one percent interest rate is worth it to maintain your company. Totally cheap.

And really it put everybody in a good place. My concern is that's a lot of debt that the country has to eat. And yes, it was needed, it helped in a huge way. I'm glad that our government is able to do those things, but I worry that we get zealous and all of a sudden something goes wrong and we immediately... Today, if you notice, today there is no question. When we have a hiccup in our economy, no one says, oh wait a minute, let's think about this. It's just an immediate, okay, what will the Fed do?

Yeah, just bail us out. And we got used to that back in 0708 during that crisis, and no9 hit and everybody said, okay, gotta do some bailout here. By 2010 Ben Bernanke was just putting some huge, huge promises on the map, and they all came to fruition. And so that was the start to an incredible amount of debt being accumulated during what essentially was eight years, roughly.

And so when President Trump took office, everyone thought that it would stop, and well, really it hasn't. We've continued to see debt go up, and I don't think it's necessarily a product of just the president. I think it's a product of the way we've built this economy, and we have so many things that are promised, number one. And number two, we don't want to say no to anyone. Everyone's used to hitting their telephone and/or their smartphone, they can order whatever they want, it shows up that afternoon or the next day. But we expect the Fed to do the same thing. And so not sure which happened first, but either way, our instant gratification way of life I think is probably dangerous, and eventually it'll bite us.

So PPP, if you've got any questions about that, reach out to us by email, call us, we're happy to talk about it. Spent a lot of time on the phone with a client this morning going through some of the nuances, and it's not as simple as what we've made it on this show. We've given you the highlights. There's a number of things that you're going to want to know before you start applying for forgiveness, or simply the way you think about it in terms of how it's going to affect your taxable income.

So yes, we also have a ton of resources on our website from PPP when it first came out and then the revision of June 5th. We've got all of those details on our website. So if you're curious, you definitely want to speak to your CPA in terms of tax liability, but if you just want general knowledge on it, we've got a lot on the website.

Yup, agreed. Okay, so number two, we've got employment tax credits. This one, Sarah, a lot of people have no idea this exists. I talked to a few clients this week and they're up in arms about having to pay their employees if they go out for COVID.

Right, right.

And they have no idea that this one is potentially available to them. So let's talk about tax credits.

Absolutely. And when the PPP first came out, this was not a qualified expense, so paying for family sick leave for COVID, that wasn't one of the qualified expenses. On the flip side of that coin, now we have the employment tax credits, which are going to help you offset that.

That's right, yeah, in a big way. It's dollar for dollar.

Dollar for a dollar, so the full amount of your employees if they have to be home because their child has COVID or because their child is out of school, and that was a huge one. So you're able to get tax credits for those.

I think there's a couple of points on this part of the CARES Act that bears, or that's worth mentioning and probably warrant some explanation. So Sarah, you just said that if someone's out because not that they have COVID, but they're caring for someone with COVID.

Correct, so family leave.

Yeah. So you still get the tax credit. The employer pays them, and there's a mandate. If your 500 employees or fewer, you are supposed to pay these people, and there's a set amount of time, a mandate if you will, that says here's how long you pay them. If they have COVID, it's 10 days. If it's family members, then there's additional time that you're going to be paying them. However, you have this offsetting tax credit that is good for any wages that were paid during March 13th through December 31. And then you've got time away for, say, sick leave. You get the same tax credit. So if they're out for themselves or they're out to care for someone else, great tax credits there.

And one of the questions that I was asked just today is, if my employee has sick leave accrued, can they use that first? And I said, well, the answer in short is no. The rest of the answer is why would you take that from them? Because you're going to get all of the money reimbursed. Essentially you're going to get a dollar for dollar offset with this tax credit, so why would you let them keep their... let them keep that.

I think sometimes employers, and being an employer I can certainly appreciate how they think, but sometimes employers start thinking, oh my goodness, it's going to cost me a little more money. And there are cases where that is a legitimate concern, but in this case, if the federal government's going to give you a dollar for dollar offset, then I think you let them keep their sick leave. Don't try to... I think that's just being greedy.

Yeah, it relieves the burden of decision here. There is absolutely no reason why you would not just use the tax credit. Just use the tax credit, it's free.

And I think you become a better employer. Your employees will respect it, that you were trying to take care of them. And look, I know that employees, employers don't always get along, but this is a crazy time, and many employees are fearful of what they're facing and dealing with. People probably aren't making the best decisions right now because they're stressed or they have a lot of anxiety going on. But as an employer you get this tax credit, and a tax credit is a 100 percent offset. It's a dollar for dollar offset. So just know that that'll be a big question come year end when you start working on your taxes.

One thing I failed to mention when we started with the PPP: document, document, document.

Yes.

Everything that you're doing, please document it. Your CPA is going to need it. Whoever handles your tax work, they are going to need good documentation to prove what you did fits within the scope of the rules for the CARES Act and for how it's going to affect your taxes. So don't forget that.

Good call. All right, the next tax topic in turkey season is RMD, so required minimum distribution, which the SECURE Act, long before we were dealing with COVID, moved the required minimum distribution age from 70 and a half to 72 beginning January 1st. So it didn't eliminate RMDs for people who are already taking them. However, if you were supposed to take it after January 1st of 2020, you no longer have to until you're 72.

that's right. And the way that the SECURE Act read, and this wasn't a change, just changed the age from 7.5 to 72, but in the year that you turn 72, I believe you have until April of the next year to take your first RMD. So now if you turned 70 and a half in 2020, you do not have to take your RMD for another year and a half. Is that right?

Yeah, a little bit more. So yeah, it's almost two years really. Two years. But if you are turning 72 this year, then you got to take it. It's time. You got to look for that by April 1 of 2021, unless something like the CARES Act comes along and eliminates RMDs, which is what happens. So we had the SECURE Act that went at the end of 19, and then here comes the CARES Act, they got pushed through March, into March.

That's right. And then so that just eliminated RMDs. So there's a couple of perks to that. One, if you don't need the income, and we've talked about this a good bit, but we still come across clients and people that don't realize it, you don't need that income, no reason to take your RMD and pay taxes on that money.

Absolutely. And so for 2020, this is 2020 only, correct, the CARES Act gave a pass card. Everybody that's taking RMDs or that is required to take one in the year 2020, you can, if you choose, you can leave that money in your IRA. There's no penalty, no tax, you get a pass card.

Oh yeah. And part of that too was so that you weren't having to sell investments at a bottom. That's right. Which we all know we're not at the bottom anymore. That changed very drastically and very quickly. Yeah. But that was another piece to it, just to make sure that people, because in order to take that RMD you have to raise cash from somewhere. So that's right.

Yeah, that's exactly right. So I think the RMD piece is still important. I know we've mentioned it, like you said, Sarah, on a couple of our shows, but as we're getting to year end, a lot of investors, or a lot of IRA holders, tend to wait until year-end for their RMD, so that required minimum distribution. If you are planning to take that between now and year-end, just know you don't have to, and if you know you're going to pay tax on it, chances are you ought to just leave it in your IRA unless you need it for income.

Right, absolutely. So keep that in mind, and like Phil just said, people taking it usually at the end of the year, I think they haven't thought about it, especially if you're retired and you're not reading the CARES Act and you're no longer a business owner. These things don't apply to you, so you might not have gotten communication about it.

Yeah, and some people just, we've talked about emotions and how emotions drive all of our decisions. Well, some people do it purely because they think they have to, and their emotions kick in and say, oh boy, I've got to do this RMD, I know I'm supposed to do it every year, and if I don't, I get a penalty. Yes. So they're not thinking, oh, is there something I can do this year, is there a break that I'm going to get this year. They just think, well, I've always done it, I got to keep doing it. But not this year. For 2020 you definitely get a pass on that.

So if you're unsure if it affects you, or if you're not sure that you either need or don't need that RMD, call us. If you're one of our clients, we've probably already talked about it, but if we have not, let us know that it's on your mind and we'll gladly go through the numbers with you to be sure that you don't make an unnecessary distribution that's just going to cost excess tax for no reason.

Absolutely. All right, couple more taxes to get through before we get to the wine. All right. All right, so QBI, qualified business income deductions, section 199A. So you'll hear it, section 198, 199A deduction.

Slow down. You're trying to hurry up, but you must want to get to the wine real quick.

Look, that's a tongue twister. Section 199A deduction, aka section one, yep, that is a tongue twister for sure, or the QBI deduction, qualified business income. And it's a big one. It is huge. It's a big deduction. 20 of certain pass-through entities, some 20 of that income can be deducted.

Yeah, so a lot of clients, we've heard this question: hey, will I qualify for QBI, or the qualified business pass-through, will I get that income deduction? Well, maybe, maybe not. There is limitations on this, and if your income is above 326 000 per year as a business owner, and that's not unusual for folks in the medical industry, and joint filers in particular, you get a two-earner household and maybe both are dentists or both are doctors, then you could imagine it'd be easy to go over that number. Well, you may not get any of the QBI, and so that's not a good thing. That's not the answer that everybody wants, because the way this thing, when it came out, the way it was portrayed was everybody was going to get this 20 deduction. It's just not that cut and dried. So if you're over that amount, you're going to see it phase out quickly. If you're under that amount, then there's a pretty good chance you're going to get a nice bonus here with that 20 deduction there on the what's called qualified business income under section 199A.

Right, and there's qualifiers based on what type of business you have, but if you're under that, then you are getting, and you meet all of those qualifications, then yeah, you're going to get that 20. So that's right. Definitely, even if you make over that, there is a phase out, right? So definitely talk to your CPA regardless, just to see if some of that is available to you.

Yeah, we saw a return last year where they were well over that number and they still got a little bit. It was a couple thousand dollars worth of QBI, and that qualified business income deduction still helped a little bit. It's a couple of grand that they didn't have. So don't assume that because you're over 326, oh well, okay, I won't worry about that. Hopefully your CPA is talking to you about it, they're bringing it up, but if they're not, you need to know about this one. It can certainly, particularly for a newer business owner where their income is rising but maybe it's not quite there, don't miss this when it can put some extra dollars in your pocket.

Absolutely. And you don't have to itemize to get this deduction. You can just do the standard deduction. Most people making that are probably going to be itemizing. Yeah. However, that's just one of the, it's not a stipulation. So if you are just using the standard deductions, you can still qualify for this.

Yeah, oh, and speaking of that, I think we're going to get to it here in a minute, but there's some new rules this year under CARES Act as it relates to itemization, or itemizing on your return. Got a lot more flexibility with that this year. The limits are much, much higher. I think we'll talk about that. But at any rate, let's hit our next point, number five, retirement plans, 401k and cash balance plans.

Yes. So obviously we talk about this all the time with planning on the show. You want to max those out, please. One of the things that I think a lot of, I know our clients, a lot of doctors, or anyone that was out of business, if they do an incremental deduction, then they're probably going to be behind for the year, even if you just missed a couple of weeks. The way we have it set up is that you max out in increments, so the end of year you hit your 19 5 or 26 depending on your age. But if you've missed a couple weeks, definitely want to look into that. And a lot of the business owners too, for longer than they were closed, would stop their salary, so they might have reopened but they didn't reinitiate their salary yet for maybe a couple of months, and you've missed all of those deferrals.

Yeah, and you can make up for that here at year end, but it definitely tends to take a bite out of your income a lot more if you didn't plan for it. It's best to get back on course with those things as quickly as possible. But if you find yourself here at year end and you know you skipped some of that, just look at your cash flow and see if you can make up for those lost W-2 payouts to yourself for that compensation, and maybe you can sort of true that up here at the end of the year. And if you can, then you should still be able to max out your plan. But if you can't, just know that going forward, anytime you have a break in your pay like that, you're probably missing those deferrals. You want to get back on course as quickly as possible.

Absolutely. And because it is systematic, so for a lot of our clients to use ADP or Paychex, it's a systematic deferral. You're not thinking, you don't have to go in and type it every paycheck, so to speak. That's true. So you just forget. Oh wow, I missed a few thousand dollars. It's true. But yeah, so a lot of our clients, I know when we do our year-end meetings, we talk to them about, okay, here's where you're at, here's how much we need to do to catch up or true up for the end of the year. But definitely double check your numbers. Talk to your payroll company. They're going to be the number one person who can give you that information.

Yeah, and just don't miss that. It's huge. It's a big part of your retirement plan, so don't, or your retirement planning, so just don't miss that opportunity.

So number six, section 179. We talk about this more than probably any part of the tax code, and always this time of year. In fact, I was just talking about it on one of my calls this morning. It's that time of year where all of the reps that sell anything to a business, they're out for blood. They want you to buy the latest and greatest. Oh, and by the way, you really need it, even though you don't. But these are people that make their living by selling you these things, and they really don't have any knowledge of your financial condition. And we've always said that if you're buying things simply to take a deduction, you're buying a tax deduction. And look, if you don't need the equipment, if it's not something that you must have before year end, or you don't have a plan on how this equipment's going to make you better, then you'd have been better off to just keep your money, pay the tax, you would have more in your pocket.

Right, versus buying goods that now you're going to tax deduct. You're going to accelerate the deduction, and next year in subsequent years, if you don't have income that truly offsets the cost of that equipment and then some, so return on investment, if that's not apparent, then you've spent a lot of money for nothing, all to get a little bit of tax savings.

Right, not a good plan. But I see people make the mistake every year, and some pretty big dollars get spent on equipment for businesses, whether it's well thought out or not. They get into that emotional thing. Sounds like a good deal, 12 months same as cash. Oh, and don't forget, don't forget, Mr. Business Owner, you can deduct all of this this year, it's going to save you a ton of tax. And they'll run a one-pager like that, say here's what it's going to save you, but they don't take them beyond that. And there's so much more to planning for these major purchases. It's far beyond section 179, and I wish there was more education out there on that. But let it be said that you heard it here: don't go buy a tax deduction unless you truly need that equipment.

So yes, let it be based on planning, not wants. Right.

Right, and we have the ability to help you plan all of these things, and most of you could probably plan it on your own. But here's who can't plan those things for you: the salesman. Right. They don't know your finances. Don't let them talk you into buying a lot of stuff that you may or may not need.

Yeah, so make sure, section 179, if you're using it, use it to your advantage and not to your disadvantage.

Yeah, an advantage is not saving a little bit of tax in the current year unless you know you've got a clear plan for what this equipment's going to do for you longer term. So just be aware of that. We've got a number of ways that we can help you discern if it makes sense or not, so don't be a stranger to us when it comes to 179. Let us talk to you. And if you work with a CPA, by the way, that always supports 179, I'm not saying that they're a bad CPA, but I think you probably deserve a different opinion. Some CPAs are just, by their nature, they focus on let's save tax today, right, and they're not really thinking about your projections for next year in subsequent years and

If they're not considering those things, then I believe people take this 179, they use it prematurely, they end up costing themselves a lot of money. I just think it needs to be reviewed, vetted a little better before you just go out and make these big purchases.

Yeah, they're usually very big purchases.

Oh yeah, for sure.

Speaking of your CPA, our last point is just to be proactive. So if you pay quarterly taxes, state, federal, make sure that you know what you're going to be paying, when they're due, and you get those paid, because you want to avoid interest and penalties on those.

Yeah, that's for sure. No question. I think that prepaying is a good thing. You can at least write that off, and you got to pay those anyway, so why not? But definitely know what your payroll tax is looking like, your estimated, all of those things you can use to your advantage. Don't pay what you don't owe, but if you pay additional state taxes, for example, by year end, great way to save yourself a little bit. That's a deduction you can take on your federal return. So those are the kind of things that we love to see you do before year end. I tend to like that a lot more than I like going out buying a bunch of new equipment.

So you like it, or it makes more sense?

It makes a lot more sense, for sure. I talked to a dentist this morning and he was telling me that he wanted a new cone beam, an upgrade to his cone beam technology. And for a listener that doesn't know what that is, it's very, very sophisticated x-rays basically, and it allows them to do things that 25 years ago you could never do in a general dentist practice, in a general practice, because they didn't have this level of accuracy. And heck, the only place you'd find cone beam technology was in a hospital. So practices today have this, and so if you're getting an implant, for example, you can rest assured that you have, or they have, digital images of you using cone beam.

Well, these things are not cheap, and so this dentist was saying, "Hey, I think I want to upgrade that, but I'm not a hundred percent sold on the idea." And I said, "Well, it's a simple, there's a simple question here. Are your procedures for the codes that match procedures that use CBCT, or cone beam, are they up or down? Do you have enough to warrant this, and do you see them increasing? Are they trending up?" And I said, "We can look at a couple things, and very quickly we can decide: does it make sense to spend an extra 50 or 75 000 to get the latest and greatest, or is what you have sufficient?" And he said, "Well, I was really thinking about it more from a tax benefit standpoint."

Oh, there we go.

It doesn't always make sense. So it really does, just think about that. Anyone that's considering it, just make sure you don't make an impetuous decision and buy things that you don't really need. It all goes back to planning, people.

True. Yeah, so true. So simple, but so true.

All right. Okay, so that's taxes, everybody. If you have questions about taxes, call us. We've got eight weeks, seven weeks until the end of the year, so you still have time, but don't procrastinate. Let's get busy on this stuff so that you can be better prepared as it relates to your taxes.