Transcript: 

Voiceover: [00:00:00] Welcome to Retirement Unlocked with Larry Heller, Your Life Your Way, unlimited possibilities. Join us as we explore how tailored financial planning and investments can help you navigate life transitions with confidence. Let’s dive into this week’s episode. 

Matt Halloran: Welcome back to Retirement Unlocked with your host Larry Heller.

As we approach the end of the year, it’s a perfect time to talk about taxes and the smart moves you can still make before December 31st for maximizing deductions to taking advantage of last minute opportunities. A little planning now can make a big difference coming. This tax season. Joining Larry today is Jonathan Niyazov, who is a New York based CPA with experience at firms like BDO and Baker Tilly, Jonathan specializes in helping clients reduce tax liabilities and plan strategically for the year ahead.

Together they’ll walk through practical year end tax tips to help you keep more of what you’ve earned and start the new year on the right foot. 

Larry Heller: Larry, take it away. Thanks, Matt. [00:01:00] Thanks Jonathan for joining us today. Uh, we’re gonna talk a little bit about some tax tips as we get close to the end of the year.

So, uh, why don’t we start kind of with that big beautiful tax bell and some of the, you know, kind of overviews. We’re gonna talk about some of the quick overviews. We’re not gonna get, get into everything, and we’re not getting into depth of everything. But let’s talk about some of the, uh. Some of the quick ones.

Why don’t we kind of start with some of the changes that they’ve made to the deduction limits, the personal exemption limits. Why don’t you kind of go through some of those? Jonathan, 

Jonathan Niyazov: of course. I mean, that Bill has was really a site. So many things cover so many changes. Amazing. Uh, I would call it. Um, so my, my, my most favorite change is, um, is the state and local tax deduction.

So. Before it was capped at $10,000. Currently the cap has been raised to $40,000. This will allow residents of states like California and New York to increase their itemized deductions, thereby reducing their tax liability. Sadly, [00:02:00] with, with the good comes to that, uh, a, a new limitation has been applied for tax for itemizes, where the tax deduction will be limited.

Uh, if you have income of 750,000 or more for, for marathoning joint taxpayers. They temporarily brought back the personal exemption for senior citizens, uh, and said at $6,000, which is amazing. Now, they also canceled out the, the personal exemption for all other taxpayers. So we’ll never see. We, we’ll most likely never see the personal exemption come back for individual taxpayers, uh, who are younger than 60, uh, than 65.

Larry Heller: You mentioned a lot of things there with deductions and exemptions. So the state tax, the big issue for a lot of states, as you mentioned, New York and California, is you were limited to $10,000 that you could deduct on your federal, and now they raised it to 40,000, but aren’t there some limit? So even though they raised it, that gonna, they could catch you another way.

Jonathan Niyazov: Of course there’s always limits when it comes to, when it comes to new, uh, legislation. So this particular [00:03:00] deduction is gonna start to, um, phase out at about 500,000. Sadly, this is temporary increase and it will expire in 2030. So we’ll be, we’ll be, we’ll be talking about this again in 20, in 2029, most likely.

Larry Heller: Okay. And the same thing I guess with the personal exemptions. You know, they bring this back for senior citizens. What is it? I think it’s age 60 and older, or age 65 and older. I’m not, I’m not sure. I believe 67. 67, so they’re bringing that back out. But again, it sounds great, but aren’t there phase outs of these as well?

Jonathan Niyazov: So if you have 75,000 or less, you’ll be able to use the full, uh, $6,000 exemption. But after 75,000 or more of income, you will, um, the exemption will start to phase out, right? 

Larry Heller: So, so you hear all these great things they put in the bill, but you, it could be dramatically limited based upon what you, what you earn, correct.

Let, let’s touch on a couple other items, um, such as the, uh, [00:04:00] child tax credit. Again, you know, where, what is that, who is it gonna affect when you give us a little bit more insight into that? 

Jonathan Niyazov: So, the child tax credit has been increased from $2,000 to $2,200, and if you’re married, filing jointly, you will not be limited in the deduction.

Up to $400,000. After $400,000 of income, your deduction will be limited and will decrease accordingly. 

Larry Heller: So again, if you’re in the really high net worth, the high income producer, which I guess you know, coming to, could come into play. I know we’re gonna talk about some tax planning items, but if you’re able to kind of manipulate your income from one year to the other, you may be able to qualify on some of these exemptions in, in one year and not qualify in different years.

So it’s important that you got, you, you get some tax advice such as accounts such as Jonathan, to make sure that you’re planning for, for this. If you can, let’s talk, kind of switch gears a little bit. If you are, if you are a business owner, there’s the qualified [00:05:00] business income deduction. I’m going to explain a little bit about that and may, how that has changed in, in the, in this big beautiful bill.

Jonathan Niyazov: So the qualified business deduction income deduction is actually my favorite of all of the, uh, all of the deductions available for business owners. Uh, what it does is it allows you to take 20% of your business income and actually reduce your taxable income by that 20% on page one of, of the actual, of the tax return.

There are many different types. Of businesses though. So for real estate professionals as well as architecture architects, the, the, there is no limitation to this deduction, sadly, for people that are, that are, uh, attorneys or, or, or, or accountants. Um, the deduction is limited and starts to phase out after $400,000 of income on the married filing, joint tax return.

Larry Heller: Interesting. So Jonathan, you mention a few others and we’re not gonna go into [00:06:00] detail, but a few others of the changes that, that, that are coming with this bill. 

Jonathan Niyazov: Oh, there’s, there’s definitely a ton more to just name a few. We have, um, non-taxable tip income. Up to, up to, with, with limits as, as always, uh, over time pay, not subject to income tax with certain limits in place.

And you’re even able to deduct car loan interest, uh, which in the past has been considered a personal expense. That is a big, that’s a huge one. Correct. Uh, of course it’s limited up to a certain amount, but still being able to deduct the, nonetheless, it’s, it’s, it’s a game changer. 

Larry Heller: Hmm. So, yeah. So a lot of things came in with this.

This, this big beautiful bill. So if you’re not aware of them, you need to reach out to your accountant and find out well, what they are and which ones you may be eligible for, uh, and which ones you may wanna consider. If you can defer some income into, into 2026, you may be better off to qualify for some of these.

So, um, and that’s part of the things that you do, you know, as the year is coming to a close, you know, [00:07:00] what, what can you recommend to individuals for year end tax planning? 

Jonathan Niyazov: The first and most important thing I can recommend is to be aware of the tax changes that stem from the big beautiful bill. I’m saddened to say this, but most of the most sole practitioners and tax preparers out there do not keep up with the changes and oftentimes miss out on large deductions.

I had a client come in last year and this was quite, um, quite shocking to me. So this client came in and, um, they actually. Overpaid their tax by half a million dollars. 500. Whoa. Yes. A big, a big, big amount. 532,000. $165 to be exact. The number is still fresh. ’cause I mean, it, it just stood out to me. Uh, luckily the statute of limitation was not closed on that, and we were able to file amended tax returns, but that is a huge mistake that was over completely overlooked.

And the mistakes stem from the qualified business income deduction as well as the New York State BTET. 

Larry Heller: So that’s a good point. So one of the things you do is [00:08:00] actually look at, I mean, I don’t know how many years, can you go back and look at tax returns and maybe make adjustments, Jonathan? 

Jonathan Niyazov: So you have three years to go back, um, from the date of filing.

So if your tax return, let’s say, was filed on October 15th, let’s say your 2021 tax return was filed on October 15th, 2022. Technically you were able to go back and refile up to three years from October 15th. 

Larry Heller: Hmm. 

Jonathan Niyazov: I’ll make it a little clearer. Prior to October 15th, 2025, you were able to go back and amend 2021.

So currently 2022 is opened. Ing Right. 

Larry Heller: So you, so you were able to take a look at this client and see that they made mistakes. I’m, I’m sure that’s a nice, that that’s a very happy client after you were able to have that conversation with him. 

Jonathan Niyazov: Oh yeah. He was ecstatic. 

Larry Heller: Okay. So what are the, some of the other planning items that you could do, um, for a year end?

Jonathan Niyazov: For stock traders, I would recommend considering to sell lost [00:09:00] positions, uh, to offset capital gains realized in 2025. Um, now I’m not providing financial advice. I’ll leave that up to you, Larry. This is purely from a tax benefit perspective. 2025 has been an amazing year in the market. Hence offsetting any gains would be beneficial, especially if you have some stock that you’ve been holding for years now and you’ve, and it’s in a lost position.

I mean, this is the perfect time to do it. 

Larry Heller: Yeah, and I’ll give you kind of a little tidbit of what we do. We do what’s called tax loss harvesting, that you can actually sell a position. Buy a similar position in case the market goes up. So let’s say you have Coke and you, um, have a gain in it, but you like Pepsi.

You can sell Coke and buy Pepsi the same day, and then you wait 30 days and you can buy the stock, the stock back. Um, and it works. The same thing with, with funds. So looking at. At, at ways of getting a tax savings without getting out of the market. Great. Great strategies for doing so. Thanks for sharing that.

Uh, Jonathan, any other ways [00:10:00] to reduce your liabilities? 

Jonathan Niyazov: Um, another item to consider as people might be seeing reduced tax liabilities this year. Well, this is not to reduce your tax liability, but this is more of a, uh, long-term planning strategy. I, I would, I would call it, so currently because of the new legislation, people will be seeing reduced tax liabilities this year, and what I would recommend is to take four, your 4 0 1 Ks and your IRAs and convert them to a Roth account.

Like I, like mentioned before, there will be additional tax li taxable income on this, but once you pick it up, any future gains in the Roth account will not be taxable to you and will be distributed tax free. So imagine, imagine currently you’re 30, 35 years old and, and you, and you convert from a 401k to a, from a regular IRA or a 401k to a Roth.

Um, you have the next. 24 years to appreciate the value of that account and all of that appreciation will be tax free. [00:11:00] Upon distribution, there will be no tax liability whatsoever. I think that would be a, that’s a great planning tool. 

Larry Heller: Yeah. So you speak it’s music to my ears. We we’re actually spending right now going through every client and see where it makes sense to do some of these conversions.

You gotta be careful about some of the, the rules about, um, uh, penalties and, and, and that, and you gotta look at your tax brackets now. But, uh, we’ve, we’ve done a few different, uh, podcasts on that. Um, so, uh, so you can check out one of the podcasts that we recently did on, uh, on Roth conversions. Why don’t we switch gears and kind of, you know, be remiss to talk about, um, to not talk about, you know, business owners and some of the new changes for, for business owners.

So, any helpful tips for business owners to help them reduce their tax liability for 2025? 

Jonathan Niyazov: The big, beautiful bill, uh, came back with, um, bonus depreciation at a hundred percent and made it permanent. Uh, as, as a, as, as comp, as a comparison. In 2024, you were only able to deduct, deduct 60% of any new [00:12:00] assets, uh, via bonus depreciation.

Currently, they made, uh, they made the a hundred percent bonus depre. Permanent, uh, which, which can technically allow you to deduct any asset that you put into, into service in 2025. So if you were putting off buying new assets because of the bonus depreciation and the, and the fact that you weren’t able to deduct it in 23 or 24, I would probably, um, put forward these plants and, and, and, and buy these assets as, uh, in 2025 before the year end.

That will drastically reduce, uh, taxable income. Yeah. 

Larry Heller: Yeah. A again, something new that you need to be, need to be out there before, uh, before the end of the year to take advantage of that. It’s a big savings. 

Jonathan Niyazov: Uh, another one, which, uh, which is my one, uh, which is, which is a very good one. Um, and if you don’t already.

Have one I would highly consider and, um, getting one would be, uh, would be retirement plans. When, when offering retirement plan plans to employees, not only will it boost up, uh, employee retention, but it would [00:13:00] also provide the company with very nice tax incentives in the forms, in the forms of credits and deductions that wouldn’t otherwise be available.

Uh, Larry, you had assisted me with, uh, with these in the past and, and they have been proven to be effective for my clients. 

Larry Heller: Again, they’re a little complicated trying to figure out what, you know, what qualifies or what doesn’t qualify. But yeah, and the rules have changed on here. But yeah, if you haven’t put a plan in place, and the good thing about retirement plans, now, they change the rules.

You got plenty of time in 2026 to put one in for 2025, although you really shouldn’t. Really shouldn’t wait. 

Jonathan Niyazov: That was one of our issues, uh, last year, I believe, when we were a little rushed. 

Larry Heller: Yep. And what about self-employed folks? You know, they can, they can do this as well, correct? 

Jonathan Niyazov: Correct. For self-employed folks, you have something called a Simplified Employee pension or sep.

Uh, it’s an amazing tool and it reduces your tax liabilities once created, it allows you to contribute to a SEP retirement account about 20% of your taxable [00:14:00] income up to $70,000, and that $70,000 will reduce your taxable income, uh, dollar for dollar. Hmm. 

Larry Heller: Let’s talk about, let’s just finally kind of, let’s talk about credits and why, why is a credit so, so good and, and why are there credits that will allow you to reduce your tax liability?

Jonathan Niyazov: So credits for the most part, um, will actually are, are a little bit better than just a tax deduction because credits will actually reduce your. Your tax bill by the amount of the credit. Uh, one of my most favorite credits and the, the lowest hanging fruit would be the r and d credit. A lot of companies say we, we probably will not be able to qualify for these credits.

Well, for with the r and d credit, as long as you’re spending money to build a new system, develop technology, improve upon current technology to not to name a few, there’s a good chance that you will qualify to take advantage of the r and d credit. Now, this credit. This money has already been spent by these, by, by companies, by entities.

And in order to kind of take [00:15:00] advantage of them, all you need to do is ask your advisor and, and see if they can, if you are, if you qualify. And, and like I said, the threshold for qualifications are very low. 

Larry Heller: You know, these are great tips, great ideas, and I’m sure we’ve, we’ve only touched a few of them.

They’re complicated. They’ve got, uh, different, uh, thresholds, they’ve got different limits, and there’s so many that can help you save your taxes. But you need to make sure that you’re, that you’re, you know, taking care, taking care of them before the end of the year. Jonathan, any final thoughts or ideas on any tax planning before we wrap this up?

Jonathan Niyazov: Of course. I mean, we just touched, touched on the top, but, um, there’s, there’s plenty of stuff out there. One of my most important things that I always recommend when any anybody comes through the door is al always to make sure you have the right structure in place. Um, the right structure will ensure you are paying the least amount of tax and saving the most, the most capital to reinvest back into your business.

Larry Heller: So you mean, [00:16:00] um, the right structure mean LLC versus Scorp versus sole proprietor? That’s what you’re talking about. 

Jonathan Niyazov: Correct. Well, sometimes yes. As a begin, begin, in the beginning, that’s, that’s how you start off. Uh, once you rev up operations, it might be, it might be beneficial to put on additional entities in between to kind or separate types of the different types of income and expenses in order to get to, to the place where you want be.

So let’s say for instance, if you have a C corporation, uh, you’re taking money out, most likely through. Through a, um, W2 as an employee or an officer of the entity. Now, if you have an S corporation, you don’t need to pay yourself such a high salary, and then you have distributions that you can take out in an S corporation.

You’re technically paying less self-employment tax than you would in an LLC. Uh, so this is just a quick 32nd kind of overview of the different structures that that, that are available and kind of, uh, custom tailoring these structure. All these. These entities, entity types, to the actual activity, that’s where the money savings comes [00:17:00] in.

Larry Heller: So if you’re looking for a new account that can kind of help you with all these, um, designs or even checking to make sure that you didn’t overpay your taxes in previous years, uh, reach out to Jonathan. Jonathan, where, where’s the best way? If somebody can get ahold of you? 

Jonathan Niyazov: Um, the best place would be to gimme a call.

Uh, on my, uh, on my office line is 9 2 9 5 2 2 0 6 0 7. 

Larry Heller: Great. Thank you so much, Jonathan, for joining us, uh, US today. 

Jonathan Niyazov: Thank you for having me. It was a pleasure, 

Matt Halloran: and we will make sure that we have Jonathan’s contact information in the show notes. So thanks for joining us on Retirement Unlocked. If this episode helps you gain better understanding of year-end tax strategies, be sure to like, share and subscribe with somebody who could benefit with this before tax season hits.

Wanna make sure you’re maximizing every opportunity before December 31st? Click the episode description for a link to Heller Wealth Management. You’ll find additional resources and the option to schedule a complimentary 20 minute call with our team. Smart Tax Planning starts with Smart decisions, [00:18:00] so let’s start that conversation today.

We’ll see you next time on Retirement Unlocked..