How to Save $100k+ in Taxes for Your Retirement With Mike Jesowshek

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[165] – Can the next 30 minutes save you a hundred grand or more in taxes over your lifetime?

In this episode, Jeremy Keil brings on Mike Jesowshek, CPA, Host of Small Business Tax Savings Podcast and Founder of TaxElm, to talk about tax minimization strategies to save a hundred grand or more in taxes over your lifetime. They cover topics such as the benefits of renting out your residence for short periods, gifting and its tax implications, and the requirements to qualify as a real estate professional for tax purposes. They also discuss tax strategies for W2 earners, including maximizing contributions to health savings accounts and starting a business or purchasing rental properties. Jeremy and Mike aim to help you understand and utilize these tax-saving strategies to their fullest potential.

Mike discusses:

  • The Augusta rule and tax benefits of renting out personal residence
  • How to utilize gifting money and the tax implications around it
  • Qualifying as a real estate professional for tax purposes
  • Tax strategies for W-2 earners, including retirement plans and HSAs
  • And more

How to Save $100K+ in Taxes Over Your Lifetime

What is the Augusta Rule?

The Augusta rule, an IRS-sanctioned tax strategy, offers a unique opportunity to benefit from your property while renting it out to someone else.

This rule allows you to rent your home or a property you own for no more than 14 days annually at fair market value, without needing to report it on your taxes.

This income is not included in your taxable income, offering a tax advantage and allowing you to earn extra cash without facing the tax implications typically tied to rental income.

Utilizing the Augusta rule, you can experience the perks of generating income from your property while circumventing tax reporting, a clever approach for bolstering your financial portfolio.

What are the tax implications when gifting money to my kids?

When gifting money to your kids, the tax implications primarily affect the giver rather than the recipient.

Generally, there won’t be taxes if the gifted amount remains below the lifetime limit, which is approximately $13 million. If the gifted sum exceeds this threshold, the tax obligation falls on the individual providing the gift. Recipients typically don’t encounter tax responsibilities when receiving the gifted money.

It’s worth noting that the lifetime limit might fluctuate based on changes in laws over time. The threshold could shift due to various factors, such as alterations in regulations or modifications in government policies.

What are the tax implications of estate tax and state inheritance tax?

The estate tax, applicable when one passes away and their estate is transferred, usually applies at a substantial level – approximately $26 million for a married couple.

Before reaching this point, there’s often no concern about the federal estate tax. However, certain states might have their own estate or inheritance tax laws. For instance, in the state of Wisconsin, the estate tax aligns with federal rules and doesn’t include an inheritance tax. It’s important to check the tax laws on a state-by-state basis as different states might have their distinct regulations regarding estate and inheritance taxes.

The federal estate tax limit can vary based on changes in legislation, such as new administrations or shifts in Congress. It’s advisable to stay informed about the evolving federal and state tax laws as these thresholds can change over time.

What tax benefits does real estate offer?

Real estate investment can provide various tax benefits. When purchasing property, depreciation often becomes a key aspect.

For example, on a million-dollar property, depreciation can be applied over time, offsetting income and generating losses on paper while still cash flowing positively. These losses due to depreciation often help to offset the income derived from real estate.

If one qualifies as a real estate professional, there’s an opportunity to leverage real estate losses to offset other forms of income, not just real estate income, thereby reducing tax liabilities on other income sources.

This tax-saving strategy is often used to decrease overall tax bills and make the most of real estate investment.

What are the rules for active participation to qualify as a real estate professional?

The rules for qualifying as a real estate professional involve several criteria. To qualify, you must actively invest a minimum of 750 hours into real estate activities. Additionally, you must demonstrate more involvement in real estate activities than in any other job.

Attempting to meet these criteria while holding a high-income W-2 job might prove challenging. To further complicate matters, there are specific requirements regarding active participation and certain grouping rules to consider.

Gaining the status of a real estate professional isn’t simply a matter of declaring yourself as one; it requires a substantial time commitment and adherence to multiple qualifying factors.

How can I maximize tax advantages in retirement planning with my HSA?

To maximize tax advantages in retirement planning with a Health Savings Account (HSA), we emphasize the significance of contributing the maximum allowed amount to your HSA.

Even if you consider yourself healthy and do not anticipate using the HSA funds immediately, contributing the maximum is highly beneficial. The HSA is more than just a health savings tool.

It operates as a unique retirement account, offering pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. It can be especially helpful for W2 earners.

Thinking about the HSA as a long-term retirement account, considering future medical costs and the tax-free nature of withdrawing funds for medical expenses later in life can be advantageous.


To learn more about saving money on taxes over your lifetime, check out the resources below!

If you have any questions, feel free to contact us or our guest, Mike Jesowshek, using the contact information provided below!


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About Our Guest:

Mike Jesowshek, CPA, is the Founder of TaxElm and Host of the Small Business Tax Savings Podcast. Mike has spent his entire career as an entrepreneur. He was CFO and co-founded several companies. Throughout that journey, he has experienced all business stages, from the good to the bad. Mike’s mission is to help hard-working business owners overcome complex IRS rules and over-inflated tax bills so they can enjoy the fruits of their labor. This is how the Small Business TaxSavings Podcast was born. Mike earned his Bachelor’s degree in Business Administration and Master’s degree in Accounting. He is a licensed CPA.



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