Bonus Content for Episode 10
Save on your tax bill (next year 🤣) with these tips from Meg Wheeler of the Equitable Money Project
This week’s episode of Feminist Founders podcast features my bomb-ass friend, Meg Wheeler (she/her), founder of The Equitable Money Project. Website | Instagram | TikTok
Meg’s company offers financial education and done-for-you tax preparation, bookkeeping, and CFO services to primarily marginalized business owners.
Meg is a licensed CPA and financial literacy educator. In this bonus contest for Feminist Founders subscribers, she shares 3 tips for reducing your tax bill next year.
(Psst…pay attention to this space because she and I are cooking up an amazing debt-pay-down group accountability program!)
Watch our 6-minute conversation or read the summary below.
Becky Mollenkamp: Meg, thank you for sharing tips to reduce your tax bill. This time of year, everyone is thinking about taxes but, if you're paying your quarterly taxes, then you're thinking about taxes all year long as a business owner. I think we’d all love to know how to reduce those bills. What's your first tip?
Meg Wheeler: Educate yourself. This could be working with a qualified accountant or by finding an organization like the Equitable Money Project that provides education. This will make everyone groan, but understanding the tax system will help demystify and give you a better understanding of what things can have a tax benefit.Â
I want to say one thing about accountants. Be very mindful when choosing someone. Work with someone who really understands your business and your industry. Don't just hire somebody at the local place that does taxes in an hour. Work with somebody who understands what you do and who will work with you throughout the year to provide strategy and planning on your specific circumstances.
Becky Mollenkamp: The tax law is ridiculously large, so understanding it is the CPA job. But for a high-level overview, you offer the free Biz Money Library with tons of resources. What’s your second tip?
Meg Wheeler: Number two will probably frustrate people because it's not going to save you on taxes today. That is to understand that there are two types of income, and that those types are taxed differently.Â
There's ordinary income, which is what we earn in a job or in our businesses. There is also passive or unearned income, also called capital gains. People use different words. The latter income is taxed at lower tax rates than ordinary earned income. When people say to me,Â
‘I'm making good money, but I don’t feel wealthy’ it’s because 100% of their income is ordinary earned income so they’re paying a pretty big tax bill.Â
The trick for long-term tax savings is to turn as much of your money into unearned income as you can. When you earn money, put it into investments, into real estate, into businesses that are structured in a way that you get that money back as unearned income. For the wealthiest people, that’s where their income comes from, not a paycheck. It's the unearned income activities that are taxed at lower tax rates, in some 0%. If you can have a long view, that is really important.
Becky Mollenkamp: To be clear, passive income is not what online business folks mean by a course or something that makes money while you sleep. This is the tax code for passive or unearned income, which is different. Okay, so far you've made us groan and feel frustrated. Do you have a tip that won't give us all those feelings?
Meg Wheeler: Hopefully. The people who get the most tax deductions or have the least stressful tax time are those who track their numbers and don't bury their head in the sand during the year and then dig through shoe boxes in April. We have a lot of resources in our Biz Money Library to help, so don't feel overwhelmed.Â
If you have a business, get an accounting system set up that's easy to use so that every expense gets tracked. I always tell my folks, if you're not sure, put it in there anyway, and we can talk about it. Same thing on the personal side too, whether it's your medical expenses, you buy a new car, do improvements on your house. There might be benefits for those things, too.
Keeping good records is the best way to potentially get a tax deduction. And it has the added benefit of reducing stress at tax season.
Becky Mollenkamp: If you’re still a shoebox person, and I've been there, no shame. Any time you can begin facing those things. Thank you so much, Meg, for this bonus content.
Meg Wheeler: Thank you.