Taxes 101 for Dentists: Build a Year-Round Plan That Works

On the fourth episode of a 5-part tax series of the Dentist Money Show, Tom Whalen, CPA joins Matt to break down why proactive, year-round tax planning is one of the most powerful tools dentists have for reducing stress and maximizing wealth. They explain the difference between playing offense and defense with your taxes, highlighting the common mistakes that lead to surprise bills, cash flow issues, and missed opportunities. Tune in to understand the importance of mastering quarterly tax payments, and why integrating your advisor and CPA can help avoid conflicting guidance. If you missed the last three episodes of the tax series you can find them here!

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Year-End Tax Planning Checklist for Dentists

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Podcast Transcript

Matt Mulcock: Welcome to the Dentist money show where we have Dentist make smart financial decisions. I am a guy named Matt and I’m here with tax extraordinaire, genius expert, Tom Whalen. Tom, how are you? How was that for the intro? Like that intro? ⁓ No, this is fun, man. This is our third episode together. Ryan and I did the intro. This is our episode four of our tax series.

Tom Whalen: Great. How are you? That’s what they’ll call me. Yeah, right. Flowing, flowing. I appreciate it.

Matt Mulcock: That’s something we’re really excited about. We’ve already gotten a ton of responses from people just really like, this was kind of our test, round for these series type approach. Next we’re going to do investing. but we just, so we wanted to round this out. yeah, we’re really excited about this being, episode four. We’ve, we’ve built some solid groundwork, for this. then today. Wanna, you know, this is football season. We’re in the heart of football season, Tom. we weren’t, we’re gonna use a football analogy here. You know, we’ve got NFL playoffs around the corner. got the college playoffs around the corner. We’re going to talk today about kind of the differences of playing defense with your taxes versus playing, playing offense with your taxes. ⁓ this is something I hear all the time, almost, almost weekly, depending on the situation from dentists, but kind of this idea of like, man, like dentists talking to us and saying, I’m so tired of these surprises from my CPA, like They, oftentimes it’s coming, not even at the end of the year, a lot of times it’s coming around tax time. Like they’re getting ready to file and all of sudden they’re getting some surprise notice of, you owe. You know, this $80,000, a hundred thousand dollars lately, Tom, actually, what’s interesting is I’ve been hearing the opposite actually, the couple of dentists lately over the last few weeks where they are saying they overpaid the year prior. And they’re getting some significant return, you know, six figure refund. I’ve heard this, ⁓ probably three times in the last month. And that, although is not as bad necessarily for like feeling wise of like, man, at least I don’t owe money, but they’re equally as frustrated because they’re feeling like they’re just react them. Their CPA is just playing kind of again, playing defense reactionary. And I hear a lot of like, I’m tired of waiting till tax filing season, like beginning of the year and being like,

Tom Whalen: Has six figure refunds, right?

Matt Mulcock: Oh, we screwed up. Here’s this or here, you know, here’s this fat bill or here’s this fat refund. What are your thoughts on that? Just to the, the, the outset of, being kind of surprised and playing more defense.

Tom Whalen: Yeah, I mean, there’s a lot there. I’ll back up just a little bit. Big Vikings fan here. I, it’s tough. It’s been a tough season. ⁓ Yeah, it’s been a brutal season so far, ⁓ but I will do my best to make it through this football analogy late in podcast. Yeah. But yeah, you just kind of brought up two very, I would say two very opposite scenarios, but at the end of the day, it’s the same core concept is that

Matt Mulcock: I’m so sorry. That was a rough weekend Perfect.

Tom Whalen: We’re not planning, not on top of our tax situation as the year goes on. Because if you are, then you’re not having these huge swings in balance to do or taxes paid at the tax time. Now, I want to make it very clear that just because you get a refund or just because you owe a bunch of money, that doesn’t actually change the amount of tax you’re paying. It changes the timing of the tax you’re paying, right? So if you get a huge refund, let’s just say you get a refund of 100 grand, Well, that means you paid too much by $100,000, right? Or if you get a balance due of $100,000, you might have the exact same tax bill throughout the year. It’s just you paid it in June instead of in April of the following year, right? So just all of this comes down to is in that scenario, we’re out $100,000 of cash at some point that we didn’t really know about. Yes, in the refund situation, you’re getting it back, but you were out, you’re without it for, I don’t know, six months or whatever. ⁓ So at the end of the day, it’s just not being on top of your tax situation throughout the year, which again, is kind of damaging or can be damaging. And we hear about that a ton, where it’s just like, we have a meeting in December, and they told me I’m going to owe 80 grand. Or like you said, too, we’re maybe not even having that meeting. And then we hear in April that we owe the 80 grand or the 100 grand or whatever the case may be. ⁓ There’s a lot of ways around that. ⁓ We’re having these calls all year, having these meetings all year. And again, it doesn’t necessarily change the amount of tax you’re going to pay, but it does help with cash flow planning, is super, super important always and forever.

Matt Mulcock: Yeah, I love that you brought that up in such a good explanation to basically summarize, ⁓ or to explain in summary, which is there’s a huge difference between planning tax planning. And I like that you brought up the overall term of cashflow planning. Cause versus reporting. I think if you take nothing else away from this, it’s is your CPA, your tax team just reporting, ⁓ at the end of the year or beginning of the following year, ⁓ or are they actually helping you plan? And I think. I think a key distinction here is I think a lot of dentists think planning means that you’re going to have these secrets for me. Like that’s what I think a lot of dentists think about when it comes to tax, like to tax planning is like, you guys have these special things in the back that no one else knows about, but make it exactly, make it go away. But I love that you brought up cashflow planning because I think after years and like, think what I noticed with dentists, especially, you know, practice owners after a while, and they kind of get the

Tom Whalen: Yeah, make it go away, right?

Matt Mulcock: They kind of understand the actual game. They start to realize like it’s, it’s actually far simpler than what a lot of people online are talking about. It’s just not easy, but they start to realize like, man, again, even in the situation where I get a big refund, it sucks. It’s like, I don’t even know what is going on with like, with my cashflow, with my taxes. Am I going to get a refund? Am I not? And just not knowing what’s going on. think a lot of times dentists at the end of the day, after multiple years, they’re realizing Dude, I don’t care what it is. I just want to know what’s going on throughout the year.

Tom Whalen: Yeah, no surprises. Yeah. Nobody likes surprises in the tax world. And we’ve had a few of these prospect meetings lately where they say, hey, what’s going on here? Well, it’s like wild swings in cash flow because of the tax situation. And some people might say, hey, you owe this fourth quarter estimated tax payment of $100,000. And then all of sudden in April, they get a refund of $90,000. They’re like, well, why did I pay that $100,000? I was stressing out. And I really only need to pay 10, right, to get me at zero. And now I’m freaking out about this hundred and I’m just going to get it all back anyway. But now I’m without that cash for the next three, four months or whatever. ⁓ That’s yeah, it’s the same thing as owing the hundred grand in April or whatever the case may be. But it just really can screw with your cash flow for months or, you know, maybe even longer if we’re in that balance owed situation. And I ended up buying a boat instead. And now I don’t have the cash. It’s like things can really get out of whack.

Matt Mulcock: Yeah. And we, so from episode three, we talked about, I think it was episode three, we talked about the ultimate goal being not necessarily reducing taxes, but maximizing after-tax wealth. And that’s what this kind of comes down to again, as we talk about, again, today we’re going to talk more about again, playing offense rather than defense and getting more proactive, but it still comes back to that idea. And to your point, even if you end up getting a fat refund, six figures, at the beginning of the next year, that still has a massive impact on your after-tax wealth because if you just look at, again, if we’re just looking at the basics of what you could have done with that cash for that six or eight months or whatever it was, not only like you said, buying a boat or whatever, but also investing and how you plan for everything else or the ripple effects of that is huge when it comes to after-tax wealth.

Tom Whalen: Yep, absolutely. And I do have, I think it’s really important to kind of look in the mirror and understand you, like understand yourself. And I have a, like a shining example. I have a client who he’s like, I need, I don’t need, needs a strong firm, but he really, really, really prefers to have massive refunds. I’m talking six figures every year. And we say, okay, we can do that. We’re just going to have you pay a bunch more throughout the year. But the thought there is, and I always ask him why, I’m like, would you just rather have this cash along the way and then you can, you know, it’s not tied up with the government for six months or whatever. And he said something to me and it was really, really, was just a really great example of self-awareness. And he said, if I have an extra few grand a month, five, six, seven grand a month, I can burn through that. No problem. I can find a way to spend that. I’ll get a new car. He’s a, he is a spender, but if he gets a six figure refund, he’s like, I feel like that’s too much money for me to blow. So he’s like, if I get $100,000 all at once, I’m going to be smart with it. I will invest it, I will be smart with it. But if I get eight grand in a single month, I can find a way to burn that up. And I’m like, maybe not the absolute best way to go about things, but for him it is, right? So.

Matt Mulcock: Hmm. Yeah. Yeah.

Tom Whalen: Some people are like that. Now there are those other people where it’s like, hey, I want to pay the absolute minimum. I know I’m going to have a balance due, but I just want to avoid penalties and interest. And then I’ll pay the balance at tax time. I’ve got the cash squirreled away. We’re good to go. I just need to know the amounts. And there’s those people in the middle that are just like, hey, just get me close to zero. ⁓ But I do think having that kind of understanding your

Matt Mulcock: Yeah.

Tom Whalen: Habits as a spender and just kind of understanding what your preferences are from the tax perspective is really important. Again, not that it changes anything. It’s just if you got a hole in your pocket, maybe having a couple grand every month isn’t the right way to go about things. And maybe you should get a refund so that you can deploy it all at once and not do something crazy with it. But ⁓ yeah, like we’ve been saying, the cash flow for this episode anyway is the biggest piece here. ⁓ And I will say, do think

Matt Mulcock: Sure.

Tom Whalen: I’m going to say it every episode. I think it makes sense to go back. If you haven’t listened to any of these, start from the beginning or at least go back and listen to them after this. I do think there’s some good information that builds up to this. So that’s the pitch.

Matt Mulcock: Yeah. Yeah. I like it. And I want to come back to that, that story. think it’s super interesting. A I think it’s cool that he at least is willing to acknowledge his issues and say, got to do something. And there he is employed. He is employing a tactic. talk about all the time, which is, ⁓ a, again, being honest with yourself and what your issues are, but then B building a system or, you know, embracing a system to help kind of work around that. I would just argue that it’s an inefficient system. If you’re using the government as that, there’s other ways to do that. They will talk about, can talk about, we’ve talked about in past episodes. We can talk about today, but I love what he’s saying is just like, I know myself. I know that I’ll be in trouble if I do this, like death by a thousand cuts versus like, get this big chunk. I’m, know, so that’s good. I’m glad he did that. I was doing that at least, but again, there’s better ways to do it. Um, but yeah, it’s a, it’s a really good way look at that. Um, so

Tom Whalen: Only agree, yeah, only agree. Totally.

Matt Mulcock: ⁓ we’ve again, just to kind of summarize. So kind of the context of this, think too many dentists are treating, ⁓ treating taxes as a one-time event, as opposed to a ⁓ overall kind of ongoing yearly process. We’re going to talk about that. We’re going to talk about how, ⁓ planning requires foresight. requires actually like looking ahead. It requires a proactive team in it, you know, to be able to make adjustments as your practice, your business changes as your life changes. ⁓ and again, as we’ve talked about before, this is not just about minimizing taxes. You said it, Tom, the taxes, there’s only so much you can do to reduce taxes. And so this isn’t this whole series is not just about like this how to guide have reduced your taxes. Sorry to disappoint everybody. ⁓ but this is about being proactive about, ⁓ having an actual tax strategy that takes into account. Your entire plan. You’ve said it many times. We’ve said it, your cashflow plan, your savings, your goals for financial freedom. This takes a lot of work and it’s not just about the simple tactics of like, how do I reduce my taxes?

Tom Whalen: Sure, yeah, this is just like a piece of the overall puzzle, right? And we talked about it a little bit so far, but I think there’s, just as an accountant tax guy, what’d you say, tax guru or something like that? something like that. To me, I think there’s kind of three phases throughout the year, or three distinct buckets of what you wanna call it. There’s the compliance work or reporting or preparation, whatever you wanna call it, right? We’re filing our taxes. That is what we just call, that’s compliance work. Getting the forms done.

Matt Mulcock: Text genius guru expert. Something like that.

Tom Whalen: On time to the government. That’s a one and done thing, right? Then there’s projections. And really to me, what a projection is, like, if you made 100 grand in the first quarter, then you’re on track to make 400 grand this year. That’s just projecting out your income. And then from there, we can project out what the taxes look like. We need to do that in order to plan. So we do projections first, then we do planning second. Hey, what does your overall tax situation look like? Do we have any large expenditures coming up? Can we push those from year to year? Is there any depreciation we can take advantage of? Are there any tax credits that are available? Are the kids on payroll, et cetera, et cetera? But again, we’ve got to do projections first, and then we can do our planning from there. So if all somebody is doing is saying, hey, you’re expected to make 400 grand, and here’s your tax bill, that’s not a plan. That’s just a projection. So we need projections to do the plan. But they are separate and distinct items. So projections, planning, and compliance are the three phases that we kind of say in the biz, if you will. ⁓ But we’ll get into more of that as we go on here.

Matt Mulcock: Yeah, I think it’s a really good distinction because I just think it’s this is convoluted. It’s complicated. Dentists don’t fully dentists all know like I need a CPA to file my taxes, but then all kind of feels under it’s kind of all falling into this one big category of just taxes. So that’s a really good distinction that we continue to make throughout this entire series that we hope drives is driven home for people of it. There’s just this, these differences actually do matter. ⁓ so let’s talk about to set this up as we talk about kind of okay. What what does planning actually look like on a regular basis? Let’s talk or do maybe just clarify and summarize no common mistakes that we see around taxes. We’ve already highlighted a bunch of them, but the one I’ll come back to is The number one issue just to summarize is Again dentists treating this like a one-time event not putting any thought into this Throughout the year And just waiting, again, the epitome of just playing defense and being reactionary of being like, just wait till next year and kind of see what happens. ⁓ it’s crazy how many dentists I ask, like, Hey, have you talked to your C you know, we’re doing year end meetings right now, as this is being recorded with our clients. And one of the biggest things we ask during that meeting is what proactive planning are you doing with your CPA? to know what’s going on, like to close out this year from a tax perspective. And it impacts what we do on our side as well. And it’s amazing to me how many dentists are like, yeah, I probably should reach out. I don’t know. actually haven’t talked to my CPA. It’s like November 15th. It’s like, you should be doing this.

Tom Whalen: Absolutely. ⁓ We actually just before before we started recording this, I just got off call with another client and his wife is the dentist. But he kind of he’s like a de facto office manager, if you will. ⁓ So he’s kind of got a beat on all the finances and everything like that. And there are some building repairs that need to happen to the tune of 50 to 75 grand. So some there’s some work going on there. And we’re talking about he’s like, hey, we got the cash. Just kind of want to get this done. I can get the people on the books before your end. ⁓ what do you think? And I’m like, well, remember his wife, she was on maternity leave this year. So she missed three months or whatever. And they are, she’s a really high producer. Their income is not seven figures, but not far off of that. So it’s this year, it’s down big time. I’m like, Hey, the tax deductions this year at 75 grand are not going to be the same wallop as it would in 2026. So if you can delay these things and spend that cash, even if it’s in January, like it’s going to sit, you know, the difference is going to be 15, 20 grand difference based on the tax rate play. And that’s just a simple conversation. Like, like that’s the type of thing that you do during the planning is like, hey, what, what’s what’s going on now? What’s happening next year? What’s happening in two years? Does this need to happen today? Can we push this off? Or conversely, if she was pregnant, having a kid in 26, I’d be like, get this on the books now ⁓ so we can we can flip that script, those are huge, just big ticket items that, know, if he, if it was, if we didn’t have that conversation, he was just going to do it. And he was fine, but you’re just leaving, you’re just leaving some, some meat on the bone. If you don’t, those conversations.

Matt Mulcock: Yeah. Yeah. Yeah, totally. that’s like, as long as you trust your builder, maybe even start getting the work done, but just be like, I’m not going to pay you till January. Like, I’m not going to write that check till January. Like again, minor things, like these, again, these turn on the dial one way or the other little tactical things only those are consequences of proper planning and projections to your point. Um, another aspect of this is we go through this, another mistake we see a lot.

Tom Whalen: Bingo, 100%. Absolutely. you Bingo.

Matt Mulcock: When you’re again, when you’re not proactive is not syncing up your team. Right? So not, not talking to your CPA in conjunction with your advisor or vice versa and kind of having them on separate islands. We try and we’ve taken this even further this year is as we’ve talked about now and we are shouting from the rooftops at this point is the main reason we have integrated with you, Tom and your team and brought this all kind of quote unquote in house at Dentist advisors with you guys. is, ⁓ is because we’re, this is such a challenge for dentists of, man, I got to talk to multiple people. Wires are always getting crossed. I got to send multiple different emails and I just hope that everyone’s kind of synced up or they’re just not doing it at all. And there’s a lot of things that can be messed up. There are opportunities that are missed.

Tom Whalen: Right. Bingo. And what I found, and maybe you would agree or disagree, but we’ve got four different team members. Oftentimes, people are just going to gravitate to the one of the four that they just connect the best with. It’s like, well, that might be unfair for that one person, because they might not be the tax person, or they might not be the financial advisor, or the attorney, or whatever the case may be. So when you’ve got your different items spread across a lot of people, like Maybe you can save some costs there, but there’s not gonna be that cohesion. ⁓ Now if you can get it like that where everybody’s jiving and talking together, that’s great. But we do see that a lot where it’s like financial advisors on one page, CPAs on a different page, dentists on a different page, and it’s a disaster to try to get everybody together. ⁓ again, there can be some screwy cashflow issues going on there.

Matt Mulcock: Yeah. Well, and to this point, ⁓ this is what we see a lot when you’re failing to connect the team, right? You’re failing to like bring everyone together. We’ve talked about this before, Tom, where the default, the default setting for CPAs is how do I minimize your taxes this year? Just so you don’t hate me and I can keep kicking the can down the road, right? Whether depreciation deductions, whatever it is, right?

Tom Whalen: Yeah, absolutely.

Matt Mulcock: So buy that car, buy that equipment just cause so I can, you know, take that 179 with no forethought. This is the default setting of CPAs. ⁓ and I’m saying this to a CPA, you, you, you and I’ve had so many conversations about this. problem with that is that creates a lot of conflicting advice and can add more stress to the end client. When the planner over here is like, hold up. You’re in year two of a startup. we’re going to project like I’m projecting out your income to be a lot bigger than next three, four, five, six plus years. Why are we taking 179 and electing S-corporate in the same year? Like, what are we doing here? So that then creates tension. Like, well, I don’t know. I gotta get, talk to my CPA and it creates an adversarial, like again, conflict and tension that just shouldn’t be there when you have a cohesive team that’s all in communication with each other.

Tom Whalen: Absolutely. Very, very well said. I’ve got nothing to add to that. Good job. Nailed it. Absolutely. Yeah. All right.

Matt Mulcock: Nailed it. Oh my gosh. That makes me, we can just end this right here mistake. So another mistake we see is failing to set aside quarterly taxes or planning for the quarterly. And I think to add a little bit more nuance to this, think would, I would kind of add to this again from episode three, I think it was episode three. This kind of goes along with your W2 salary, having the right entity structure. But once you have all that set aside, paying I guess just getting your thoughts, Tom, about the quarterly payments and kind of that might seem simple, but like, what does that require and the mistakes that you see there?

Tom Whalen: Yeah, so you can kind of go about it a couple different ways to pay your taxes. There’s the quarterly payments. You just pay online through the IRS website, send a check, whatever. Like the one time, once a quarter chunk. The other way to pay taxes is off of your W-2, via your W-2 through withholding. ⁓ A lot of my clients, I like to have essentially all of their salary go to withholding. So we don’t have to pay the quarterlies because then it just eliminates a step that the client has to do. If I know that your tax liability, and when I say liability, you don’t mean balance due, I just mean total tax generated throughout the year. If I know it’s gonna be $100,000, I might just set your federal withholding to be $100,000 so that you’re covered, we’re gonna put you right around zero. We’ll still do the projections and the planning to see if there’s anything we can do, but that eliminates the need for you to make quarterly payments. I really like doing that. Now sometimes people have… too large of a tax liability to make that make sense. Like if your tax liability is gonna be half a million dollars, well don’t wanna have to set your salary at 600 grand to be able to withhold that much because then now we’re paying too much in payroll taxes, right? So there are those, of course every situation is different, but if possible I like to set a salary again at a reasonable level but not too high so we’re not paying too much in payroll taxes. But then just have it all go to withholding in 401k. And then you don’t have to take

Matt Mulcock: Yeah, yeah, yeah.

Tom Whalen: You don’t have to take ⁓ money out for quarterlies. And obviously you need some cash flow and then it’s like, all right, we’ll just transfer 10 grand a month or whatever number you need for distributions or S corp draws or whatever the case may be. But if for whatever reason this just isn’t gonna work and we’re gonna do the quarterlies, yeah, we’re just chipping away at your overall tax liability every quarter. And I wanna be clear, it’s not like tax quarters are not calendar quarters. The first quarter for tax purposes is March 31st, which is the same as the calendar quarter, but then Q2 ends May 31st. So it’s a two month quarter. Yeah, the IRS wants more money sooner, because they have cash flow issues too, Exactly, so that’s why the Q2 payments due in June, we might think, oh, Q2 ends June 30th, July would be the, nope, it’s March, then May, and then the next quarter ends in August.

Matt Mulcock: Reel me that. Yeah, yes they do.

Tom Whalen: So that’s a three month quarter. And then the next one ends at end of the year. So you’ve got a three, two, three, four is the months for each quarter from tax purposes. So this, I think that’s important just so that you’re not late on your payments. But anyway, the quarterlies, like we said, are just chipping away your overall tax liability throughout the year. ⁓ Again, we like to at least pay the minimum, the minimum being enough to just avoid penalties and interest. And that’s typically based on your prior year taxes.

Matt Mulcock: Yeah. That’s the whole safe harbor. Yep.

Tom Whalen: Exactly, yep. So if you kind of pay in enough to cover like 110 % of your prior year liability, no matter how much you owe this year, you’re still safe. So if I made a hundred grand last year, my taxes were very low and I pay in based on that level. And this year I make a million. Yeah, I’m gonna have a huge balance due, but I’m not gonna owe any penalties and interest because I paid enough to cover that prior year safe harbor amount. And it’s really important to understand when you have a growing practice. It seems like… Like your taxes are going to go up every year and hell, every year I owe a balance due. Well, if you’re just paying to satisfy last year’s obligation, this year you’re growing. Like, yeah, it’s going to be a balance due. On the flip side, if you had the best year of your life and it was because you’ve, I don’t know, you won a lottery for a million bucks and that’s not going to happen again, well, you wouldn’t want to base it off a prior year, right? So that’s where this, again, getting back into the planning and the projecting and whatnot. It’s like we don’t want to tie up a bunch of our cash and now have a six figure refund. ⁓ But yeah, these quarterlies again are just taking, chunking away at your overall tax liability. It’s just kind of like get deposit on your account. Essentially they get squared up or trued up when we file taxes.

Matt Mulcock: Yeah. again, great example you gave of systematizing this in a way, again, general advice here, not saying that any, like every single person is different, but coming back to this idea and, and to the example you gave prior to that, to your, to the one client, same thing here when you’re saying as opposed to like knowing personality, I’m sure, and knowing cashflow and knowing what your tax bill is going to be. And again, required planning, but all else being equal being like, Hey, can we just like not

Matt Mulcock: Worry about quarterlies by just run it through W2.

Tom Whalen: We just run this through your W-2. Now people think, a lot of times people might say, well, I’m getting taxed so, so, so high on my W-2. It’s like, that’s not the case. We’re just paying taxes against your W-2 income plus your S-corp practice income. So if all you did was look at a W-2, you might be like, wow, they’re withholding 70 % of their income. It’s like, well, yeah, but that’s covering S-corp income.

Matt Mulcock: Yeah. All. And at the end the, this is actually, I’m so glad you brought this up because this is something Dentist really confused. And I don’t, I say this truly, like we, we get it. This is all confusing stuff, but still to this day, it’s crazy how many dentists separate out in their mind. Like where, like income sources and like it being treated differently from a tax perspective, from an income, ordinary income tax FICA tax is separate, but from an income tax perspective. at the end of the year or throughout the year, you’re accumulating profits in your business. Hopefully it’s going to be taxed. Whether you take it or not, it’s going to be taxed. Like it’s a cashflow. It’s like, always tell clients it’s, is a P and L issue, not necessarily a balance sheet issue. Like if at the end of the year, your balance sheet shows a million dollars, you’ve piled up in cash and it’s sitting in your account at your, you know, in your practice account, your business account.

Tom Whalen: Yep. Whether you take it or not.

Matt Mulcock: versus your personal account, it doesn’t matter. The P and L is what impacts what cashflow or what that looks like. So I front your tax bill. So that I’m glad you brought that up. Cause I think just even a dentist thinking, I want to check my W2 tax. That feels weird to me. It feels like I’m paying more tax. It’s like, no, you’re paying the same tax at the end of the year, no matter.

Tom Whalen: Yeah. Yeah, and we do have clients too where they’re multi-owner groups. So we have to do, they have different compensation formulas for different practice groups and that’s all good and well. But I’ve got a client in my mind where they withhold very, very low on their salary. But then every quarter when we do the profit distribution, they’re like, hey, whatever my bonus is, let’s just put it all the tax. And that’s totally cool. ⁓ I don’t really care. It’s just as long as we have the cashflow, as long as it’s getting paid. That’s what I care about, obviously. ⁓

Matt Mulcock: Yeah, yeah.

Tom Whalen: There’s ways to go about it, but at end of the day, the only two ways to pay your tax are going to be through these quarterly estimates or through your W-2 withholding. So if there’s a way, again, this is just my personal philosophy. If there is a way to eliminate a step and not have to pay these quarterlies just by bumping up your W-2 withholding, I’m all for it because I don’t know, people tend to not like taking the extra step. And it’s like if it’s every two weeks and it’s a a couple grand every two weeks rather than 15, 20 grand in a quarter, it might be the exact same number, but there’s just this mental block about separately paying the government, which makes discussions easier, I guess. But at the end of the day, whether you pay quarterly or through withholding, that number doesn’t change how much your overall tax bill is gonna be at the end of the year.

Matt Mulcock: Yeah. Well, it’s like saving and investing, right? The more automatic you can make it, the more out of sight, out of mind you can make it again, assuming again, every situation is different, but the more you can do that and just say like every two weeks, it’s I got money or every month I’ve got money going to a brokerage account. Like that’s what I was going to say about the example you gave earlier, but to the guy who was saying he’d rather just have the fat refund to like protect himself. like, well, we can protect you by doing automatic transfers from your business checking account into a brokerage account that’s at a for, know, ⁓ totally separate institution with an advisor sitting between you and your money. Like that is a huge value add of having an advisor. We hear this all the time. Dentists who want to be like you’re the guy you mentioned earlier. They’ll want to be honest with themselves of like, I need someone like, like a troll defending a cave. Like in

Tom Whalen: Protect me from me, right? Yeah.

Matt Mulcock: Exactly. Like protect me from me and I want to just transfer this money out. I’m to have you guys invest it. And I, the biggest thing is behaviorally. I just don’t want to be able, like, I want to think that money is, is gone. And it’s actually crazy. This is a total side quest for a moment, Tom, cause we’re doing these year end reviews. Obviously we’ve had a three year incredible run in the markets. It is wild to see just this year. What our clients who have set up automatic systematized plans of investing to see what they’ve added to their net worth again in a crazy great year and a really a great three year run. But it’s amazing to see when clients see that and they’re like, a, how much money they’ve just put away themselves and then B, what it’s actually grown to. is like, it’s amazing to see like multiple, multiple six figures. It’s crazy total side quest.

Tom Whalen: Yeah, total, right. But worthwhile. ⁓ Back to actually paying, the mechanism you use to pay your tax, it doesn’t change the actual tax amount, whatever. But I wanna be clear, very clear that even if we’re, I guess when we’re doing the quarterlies, it makes sense. think just conceptually it makes sense. we would have a meeting, we would discuss the amount of the payment. ⁓ You tell me how much we’re gonna owe this quarter, what’s the projection looking like, what does the plan look like, et cetera, et cetera. There’s just a really specific point in time that we’re convening on this. If you’re doing it through the W-2, you still should be having these meetings, right? You might say, well, they’re taken care of. I don’t have to worry about quarterlies. we don’t, it’s like, no, you still should be meeting and still should be projecting and planning and all that stuff. Just because you’re paying it through wages doesn’t mean you shouldn’t be doing the exact same.

Matt Mulcock: Make an adjusting along the way. Yep.

Tom Whalen: Exactly 100%. It’s like we might have a meeting saying, hey, your withholding is perfectly on track. You’re going to come out right around break even. But is there anything we can do to maybe lower the overall tax obligation or what are things looking like for the next couple of years, et cetera? It’s the exact same thing. It’s just that instead of cutting a check once a quarter, it’s just coming through payroll every two weeks.

Matt Mulcock: Yeah, it’s really good distinction. ⁓ with that being said, let’s talk about, ⁓ again, we’re going to continue with this, football analogy. kind of thinking about, a playbook, a year round tax playbook. The one thing that I want to emphasize here is some people and Tom, you can speak to this. you don’t meet with every client quarterly, right? Like it’s not like clockwork.

Tom Whalen: Yeah, because, yep, exactly. So like, again, I’m not speaking on behalf of the CPA industry here, but this is just me. ⁓ Every client is different, right? Every single client is different. We got somebody who buys a practice in July, and they are adding 300 % to the top line compared to the seller. That’s a totally different scenario than somebody who’s 52 years old has owned this practice for 20 years. And they’ve been at a million three of collections for the last 10 years, right? They are way more dialed in, way more stable. We know a lot more what to expect. They know a lot more what to expect. That’s a totally different scenario than the first one I mentioned. So that first scenario, it just requires more handholding. So yeah, we might have maybe more frequently than quarterly with that person versus the second scenario might be a mid-year and end of year. some people, again, behavioral preferences matter too. Some people are like, I don’t want to meet with my CPA every quarter. I just want to give a once if things are way off base, let me know. But otherwise, let’s just check in and Q4 and make sure that we’ve got enough time to implement any planning items. So yeah, to answer your question, it can be very, very different depending on the individual and their situation.

Matt Mulcock: Yeah. Yeah. And I’m glad I, that’s why I wanted to bring that up is cause we don’t, again, we’re not speaking for the whole, you know, every CPA out there or every dentist. But what I’ll say is we’re going to talk about. So the reason I, we set that up is because this tax playbook, we’re assuming that you’re doing something every quarter, but for your situation, just think, am I doing something on a regular basis? Am I communicating with my CPA or tax team on a regular basis? That could be via a quarterly meeting that could be via email, a quick phone call, but we want to set this up of saying in general, if you’re trying to follow more of a proactive offensive year round playbook, this is kind of what this could look like. So early in the year, ⁓ Thomas has taught, I, again, I kind of want to rely on your expertise here of if someone’s just following a regular process here, kind of. early in the year meeting or phone call or email, let’s say whatever it is, some communication upsetting the foundation. What does that look like for, for what should that look like?

Tom Whalen: Yeah. So oftentimes, like if we’re, if we’re meeting in, let’s just say the first month or two of the year, it’s kind of like a recap of the prior year, generally speaking. ⁓ how do we finish up? Yeah. We haven’t filed taxes yet. Is there anything we can do? Typically it’s just depreciation or profit sharing that we can do after the end of the year. ⁓ you need to have already purchased the equipment, but you don’t have to actually make the decision until you file taxes. So that’s kind of what a meeting looks like in the first month or two of the year. How did last year go? What were the metrics looking like? Just operationally, was anything out of whack? And this is not a tax discussion. This is just a total overall practice kind of operational discussion. Of course, that will bleed into a tax discussion, but that’s kind of how it looks is, how did we do? Were there any changes that we could make financially, operationally, et cetera? Now we’re getting into tax season. What are we looking like? How’s cash flow looking like? How’s this year kind of look, how’s, we’ll say, pretend we’re meeting in the first couple months of 26. How does 2026 look? Is there a reason why we would want to preserve some cash and take some depreciation that we maybe wouldn’t because we need cash for some reason in 26? again, wrapping up last year, getting into filing taxes for last year and just kind of setting the foundation for the upcoming year. I think that’s like a baseline, really good start for a conversation.

Matt Mulcock: Yeah, I think that’s great. And if you’re, if you’re doing this in conjunction, hopefully again, as with a unified team, whether that be, it doesn’t have to be under one roof. could just hopefully be, you’ve got communication with your CPA, you’ve got communication with your advisor, they’re synced up. And I can tell you from our standpoint, what we do at the beginning of the year, very, very similar. Uh, we’re reviewing year prior. How did we close out the year from a, from a overall growth in the business from an overall. Did we make sure we maxed out everything? And then going forward, what does this year look like as far as business goals, projecting out business growth in conjunction with your CPA? What are things that we need to be doing, finalizing taxes from last year? And then going into the next phase, this could be broken up into, again, kind of how we phrase this is like Q1, Q2, Q3, Q4. But it really, I think the middle part of this could just probably be one either meeting or communication. If you want to break it up into two, that’s great. But at some point after that set the foundation type communication meeting call, whatever there needs to be some followup. There needs to be some adjustments made or check in around. I’ll say two things and I want to get your thoughts on this, Tom, but making sure we’re optimizing cashflow. We’re understanding what that looks like now that we’ve kind of again had that initial meeting. We’re into the year now, let’s say at least a few months, maybe we’re a mid year and then refining and adjusting the plan based on what’s happening that year. What are your thoughts of like a mid year review or just checking in after that kind of initial meeting to start the year?

Tom Whalen: Yeah, I mean, I’m all for it. We always tell our clients, us, right? We’re here to help. But a lot of time, if you just meet in the beginning of the year, or even if you just meet right around tax time, say March, April, and you wait till Q4, there’s a lot that can happen in six, seven, eight months, right? There’s a lot of things that go on. So we do like to have a mid-year check-in, maybe June, July, August, whatever, sometime in the summer. It’s a different vibe in the summer than it is. Everyone’s on vacation, right? And like, if you wait till the fall, like kids are getting back into school and things can get busy there. So you could maybe miss a meeting or something like that, or you don’t really want to be meeting when school activities are flaring back up. having a just, even if it’s once in the middle, perfectly in the middle of the summer, review the first half of the year, how did it go? How are we looking for the next half of the year? Pair that with like, how did, again, how did we finish up last year? Just what are the trends of the practice look like?

Matt Mulcock: Yeah, because everyone’s on vacation.

Tom Whalen: You’ve mentioned optimizing cashflow. Like a lot of buzzwords in there, but they’re all good words, right? Optimizing cashflow, good things, but just being intentional about where we’re going the rest of the year. Have we funded retirement? How do we plan to get there? Are our tax withholdings okay? Do we have money squirreled away for the quarterlies if we’re doing those? Just totally, totally think it’s a great idea. And again, not just a tax conversation, but how is the actual practice doing? What are the metrics looking like? What’s our hygiene team looking like? Are we short staffed? do we need another doctor coming on? Just a lot of, again, operational type discussions that need to happen as well.

Matt Mulcock: Yeah, it’s interesting when you say that, Tom, it’s this kind of like underlying, you know, this whole idea of like what gets measured improves, right? And part, I think part of this is you were going through that. just think such a simple value add of having like having these meetings on a regular basis or having a team you’re interacting with on a regular basis at the very least is a forcing mechanism for you to be thinking about your practice as an actual business. I think a huge underlying mistake that we see dentists make is just they have a high income job as opposed to a business. And just this idea of like, okay, I’ve got my team. We meet regularly and you’ve said it a couple of times, like at the very least, let’s just check in on the business. What’s happening in the business and are we making the progress we want to make? Otherwise we’re just kind of floating out there again, just reacting to what happens.

Tom Whalen: And to be clear too, these don’t have to be grand, elaborate, four or five hour meetings. They can certainly be, hey, your P &L looks good, all the metrics are looking great, your cash is looking great, taxes are covered. Anything I need to know about for the next four, five, six months that’s gonna change our planning thought process. No, you’re good, we’re good, sweet. Talk to you again in a few months, right? It can be as simple as that.

Matt Mulcock: Anything on your mind right now? Yeah.

Tom Whalen: Rarely is just because the more you talk to somebody the more it’s like, yeah, we uncovered that. But ⁓ just these check-ins are just, they can be very, very just surface level type things that don’t require a ton of effort. But in addition to that, they can uncover some stuff too. So it’s just worth checking, at the very, very least, check in how’s it going, what’s new, right?

Matt Mulcock: Yep. Yep. Totally love that. ⁓ before we get to the last kind of meeting that should be happening, and if you’re listening to this, I think this will come out December of 2025. ⁓ you should have already, or should be having these meetings. But before we go to that, I wanted to mention one other thing for the beginning of the year meeting. you said something that kind of, made me think of this, from a cashflow planning situation, ideally, Ideally you’re in a situation that you’re able to, at the beginning of the year, have conversations with your advisor and tax team to max out retirement plans as soon as you possibly can. So running a special payroll through for four. Now again, this is all saying, assuming you can do this from a cashflow perspective, but maxing out IRAs or back to Roth conversions and maxing out ⁓ a 401k to start the year as much as you possibly can. The other thing that you’re going to be doing at that first of the year, just tactically, if, you are in this category is having profit sharing conversations and maxing your profit sharing. That always has to happen after the calendar year turns for the year prior. So that’s something you’d be having a conversation about as well.

Tom Whalen: For sure and that’s obviously like that leaks into the tax planning conversation. It’s this whole like investing and cash flow and tax conversation that is all wrapped into one. There’s multiple people involved but that’s a huge part of it. And we do with a lot of our clients, I’m not gonna talk about profit sharing. This is specific just to the deferral, the 23, 24 grand or whatever it is. A lot of people just say, divide it evenly over my 26 payrolls. Every two weeks just take. 126 of the number, but then that’s, you just gotta make sure you update that in the beginning of the year, right? So if the limit changes, it goes 23 to 24, fine, we gotta make our numbers a little bit higher. Or on a different topic but similar concept is if we know that hey, our tax obligation was 100 grand last year, now we expect it be 120, and we’re doing it all through payroll, okay, update that withholding to now cover that. that little difference so that we’re not getting caught short in having to pay the quarterlies, which again, it’s not a problem. It’s just, you know, you don’t want to be, you don’t want to owe it and not know you owe it, like at the end of the day. So yeah, just updating withholdings, updating retirement plan deductions, et cetera. But yeah, if you’re going to refund Roth IRAs or back or Roth or whatever, or profit sharing, like that’s a lot of times that happens right away in the beginning of the year too.

Matt Mulcock: Yeah, it should. hopefully you’re doing that. So we’ve said, okay, set the foundation, some type of a check-in or review or fine, you know, adjust mid-year sometime. And then end of the year would be kind of like closing it out, right? Again, if you’re listening to this end of 2025, you should have already, you you should, I would imagine December of 2025 have already had this conversation or had this meeting. If not.

Tom Whalen: There’s some semblance of it, right? Like we might not have final numbers, but like we should have had these, some of these, a similar conversation as the year has progressed so that hopefully in December of 2025, it’s not a complete just blindside. Yep, go ahead.

Matt Mulcock: Something some. Yep. You gave a great example earlier of ⁓ investments in the practice that hopefully is business led. Like I need this in the business, but like tactically at the end of the year, if it’s anywhere close, that’d be an example of something you should be reviewing at the end of the year of like, do we like actually do this looking forward to next year? Another one that I’ll mention here that I’m having a lot of conversations about near the end of the year, especially in the year like this year is being strategic with charitable giving. And are we using a donor advice fund? Are we going to be what we’d call like deduction clumping this year and putting, you know, paying multiple years of charitable giving, whether it in my church or whatever this year, because of something happening in my life. Maybe we had a massive year and we need to maximize our deductions, whatever it is. But again, these conversations should be had at the end of the year.

Tom Whalen: Yeah. Yeah, absolutely. also, like, of course, we have we like to have these conversations along the way. But there are times where we kind of need to be reactionary, right? Like, ⁓ three chairs went out last week and it’s November 10. Like, we wouldn’t have known about that prior to November 10. Right. So there is like life happens and it can certainly happen in the fourth quarter. Right. ⁓ But the hope is that we kind of again, we have a foundation that’s we And it’s not just the beginning of the year, but it’s throughout the year and it’s just kind of ongoing, right? We’re just constantly refining, constantly tweaking. ⁓ But yeah, at the end of the year, it’s kind of like, hey, now let’s finalize or let’s really, really hone in on these things. ⁓ And the thing too is as we do these projections and plans along the way, they just continue to get more accurate. Because if we think about it, if we wait until first quarter is over, we know three months of data and we’re guessing on nine months versus if we wait till Q2, it’s like we know six and we’re guessing on six. Q3, we know nine, we’re guessing on three. So the guesswork shrinks every single quarter that we have these conversations. So it’s really, really important to just keep having them so we can narrow in on our estimates and the plan gets more and more, just more and more accurate as the year goes on. So that’s a lot of times it’s like, hey, here’s the plan. Assuming things go to plan, this is when we’re gonna deploy the cache. But let’s not do it until we have to because things may change, right? If we plan that something’s going to happen, if we plan that Q1 is going to be the exact same for all four quarters, and that goes to plan great, then we could have spent the money in March or whatever the case may be. But oftentimes it’s like, hey, we had a great Q1, but Q2 and Q3 were just kind of back to average. So it’s not that we’re having the best year ever. It’s just that we had a really good quarter and now things are leveling leveling out. we don’t want to just assume that we’re going to have all this cash flow coming in forever. Or conversely, we don’t want to just assume that this down quarter is what we’re going to have forever. So we try to hold off on dropping the cash until we actually need to, or until we have a much better understanding of what the actual outcome is going to look like. But again, we hone in, we refine every single time we have these conversations throughout the year.

Matt Mulcock: Yeah, I think it’s a great point. I’m really glad you brought up that like, we’re not saying there’s never going to be any reactionary aspects of this. Of course there will be, but again, by going through this, I’m not going to base this. It’ll make it hopefully a little bit less than, than usual. So I’m really glad you brought that up.

Tom Whalen: Bingo. Yeah, and real quick on your, you when you talk about like, you said, like clumping charitable donations or donor advice funds or whatever the case may be. That’s a really big part of what we deal with. we’ve again, just all these stories as client. Hey, I committed to 200 grand to the local YMCA said it’d be over any time in the next five years. He’s like, I was thinking I should do it for, you know, 50 grand a year or 40 grand a year for the next five. Like that’s that’d be the worst possible. Scenario just strictly from a tax perspective that would be the worst thing you could do because just again with how Itemized deductions and the standard deduction play out like you would lose a ton of a ton of the bang for your buck By doing it evenly over the five years now if you have the cash flow to do it all in one That’s what I would vote from from the the tax side of things of course not everybody just has 200 grand sitting around ready to go this guy did and Of course he had an appreciated stock that he was gonna

Matt Mulcock: Even bigger.

Tom Whalen: Maybe liquidate, like there was just a lot of things that he could have just popped 40 grand a year and said, hey, I just gave 40 grand to the Y. Okay, great. Well, had we not discussed it, and he did that, I mean, he’s losing a lot of deduction. mean, maybe by year two, year three, I’d be like, geez, why don’t you start clumping these? But the fact that we had the conversation way ahead of time saved him a ton of money in taxes.

Matt Mulcock: Yeah, such a good example. We see this a ton again, especially at the end of this year, end of 2025, huge year, third year in a row. So many clients have appreciated stock. Again, this is something that we, hopefully if you’re out there listening, you’ve, if you’re giving to charities or giving to your church, whatever it is that you’ve practically thought of this with your advisor team ⁓ of planning to set aside that cash. Not donating it yet. And at the end of the year, giving yourself the option of understanding, should I do with appreciated stock or should I do it with cash to your point? Do I clump this all together? Do I not like again, there’s some strategy there and we’re not saying that charitable giving should be led by tax strategy, right? But it’s like, if you’re doing it anyway, which many, many of our clients are already doing it. We want to be at least thoughtful and smart about how we’re doing it.

Tom Whalen: Totally. 100 % and it’s the same thing. It’s in a different episode, but same thing with equipment investments. It’s like we’re not leading the discussion with taxes. We’re leading it because it’s the right thing to do. It’s what we need to do for the business. And then once we have that factored in or figured out, now we’ll deal with the tax aspect of it and we’re going to have it be the best possible outcome from a tax aspect. That’s the same thing with charitable giving. Like you’re doing it anyway. Okay, now let’s figure out how we can do it the most efficiently from a tax.

Matt Mulcock: Yeah, yeah, totally. ⁓ Okay, I want to, this is so good, Tom, there’s so much here. We’ve kind of set the stage, I think, plenty. We’ve given sort of a general playbook should people should be thinking about. ⁓ I want to, well, I want to maybe finish with people often, again, we mentioned it earlier, they want, they’re like, okay, cool, I hear you planning. Healthy lifestyle guys, cool. But also like, what are like some actual tactics or things I should be doing? Like what’s the, what’s the pill? me, know, healthy lifestyle. Cool. We hear you, but like, what’s the pill? I wanted to finish this with listing. say generally and probably, also caveat, talk to your tax advisor. But I did want to list a few things here tactically that we see a lot that will or that can proactively reduce your tax bill. ⁓ and so I want to go through this, Tom, and just get your thoughts. I’ll just list them and then you pick out anyone that you want to talk about. ⁓ so number one, we’ve talked about maxing out your retirement plans, having a proper plan in place when it comes to a properly designed 401k, profit sharing, cash balance plan, IRAs, HSAs. I’ve kind of put those all, we’ll just call those qualified retirement accounts or qualified tax accounts. Yep.

Tom Whalen: But yeah, it’s like a non-negotiable item for me. It’s like a, if we’re not willing to get past that hurdle, like that is the absolute lowest hanging fruit. It’s a guaranteed tax deduction every single year. It’s going into your account. So you’re not actually out the money. Yeah, you’re delaying it, but it’s still your money. I have a hard time trying to go deeper on a tax planning basis if we’re not doing that already.

Matt Mulcock: Yeah. Yeah. Super proactive table stakes have to have that in place. Yep. Totally agree. ⁓ the, the, that, so that one for sure. The, another one we hear a lot and we employ, we’ve talked to tons of clients about this. We as advisors, you know, before we partnered up with you guys, Tom, we’d say, Hey, over here, not a tax advisor, but we see this a lot and think it actually works really well for the right situation, but being the Augusta rule.

Tom Whalen: Non-negotiable, gotta do that if you’re a lawyer. Yep, absolutely. Yep, mean the Augusta rule renting out your personal residence less than 14 days or whatever a year, whether it’s having the Christmas party there or a summer party or a business meeting or whatever the case may be, just be smart about it. This one’s nice because it’s, whereas the retirement funds are maybe delayed for 30 years, the Augusta rules, you still get the cash now. It’s just kind of creating this tax deduction. Of course, we want you to be smart about documentation and this and that and don’t be egregious with the amounts, but that’s a really, really nice one. It’s not gonna be crazy dollars, but it’s just a nice little shot in the arm, as we say. Yeah, talk to your CPA about that, amounts, documentation needs, et cetera, but that’s a good one.

Matt Mulcock: Yeah, this next one too. it’s funny you said that because these first three, ⁓ so the third one I’ll mention is kids on payroll. We’ll get to this in a sec, but, ⁓ retirement accounts, Augusta rule and kids on payroll to your point. ⁓ although the retirement accounts, yes, you usually can’t use the money for a long time, but these are all three things that you get a deduction or reduction of tax in some way. ⁓ but you still get to keep the money either as a family or for your future self.

Tom Whalen: Bingo. The kids on payroll thing is like you can do a whole episode about that. That’s a crazy one. of course we want like if you’re if you’re not doing well, if your practice is struggling and your income is pretty low to begin with, we don’t we don’t do this because you’re not in a high enough tax bracket where it would make sense. And then we’re now generating maybe some payroll taxes that we wouldn’t need to otherwise generate. So this is for a practice that’s probably already doing pretty well.

Matt Mulcock: Just huge.

Tom Whalen: But yeah, if you can do that and you can take it a step further and now pump money into the kids Roth IRAs or start an investment account for them in addition to the Roth IRA, again, you fast forward this out 30 years, do the time value money thing. It’s just astronomical wealth building for not a crazy, crazy high cost of entry. It’s just getting them started young is so, so important. And if we’ve got the capital to do it, it’s like, man, it’s yes, you save taxes along the way.

Matt Mulcock: Huge.

Tom Whalen: But the true, true value and benefit is this tax deferred or tax free growth, depending on how we do it. Like massive, massive amounts if you’re willing to cash flow that. Some people are like, I don’t want to put money in my kids’ Roth. I just want to pay them the 15 grand a year and deduct it and be done with it. And that’s OK, because you save some money for taxes. ⁓ But the biggest bang for your buck is taking it a step further, pumping it into the Roth IRA as well.

Matt Mulcock: Yeah. Yeah. Yeah. I always ask clients, ⁓ are you, do you have any goals or desires to save for your kids future? If the answer to that is yes, and they’re practice owners, of course, it’s always like, here are the options, but kids on payroll, generally speaking, consult with your CPA is, is always the first place I would look and at least most efficient.

Tom Whalen: It’s gonna be the most efficient because they have the longest time horizon. If you’re at age 40 and you’re just starting to save for your kid and you might only work for another 20 years, and sure, you can put aside some money for them for 20 years, but I don’t know, it just takes longer because you don’t have the timeline, because you’re gonna be starting to draw in 20 years, whereas they might not start to draw for 50 years, right, or 60 years or whatever.

Matt Mulcock: Yeah, totally, totally true. It’s a huge, very efficient way to do it. The last two I’ll mention, they’re kind of together. We already mentioned one being strategic with charitable giving. ⁓ And also I’ll actually expand this charitable giving and just deduction taking in general, like just being strategic with how you take deductions.

Tom Whalen: Yeah, yeah. And like with the with the salt, the state and local tax limit being bumped up, we used to we used to play this game of paying real estate taxes twice in a year. Like I’ll pay this year’s in December or in January of next year, then I’ll pay next year’s in December. So I’ve got a clump of two years and one and then I’ll go zero. And so we call it like doubling up. But that used to be a big thing. And then it went away when the salt, the state and local tax limit went down to the ten thousand dollar limit now that it’s increased a bunch.

Matt Mulcock: Back up to 40 now. Yeah.

Tom Whalen: Or yeah, there’s phase outs and this and that, that strategy’s gonna come back into play. But it’s the same concept as the charitable giving or reclustering deductions into a single year to get over that itemized deduction threshold, or standard deduction threshold I should say, but same concept there.

Matt Mulcock: Yeah. Yeah, that’s great. And then last one that we’ll all mention, shout out to Robbie, our guy, you hear him on two cents. know him and love them, but tax laws harvesting. ⁓ and this should be happening again throughout the year and all this come. go ahead.

Tom Whalen: Yeah, I don’t know what episode it is, but there was a, you guys did an episode about like, what is tax loss harvesting and why would I want to take a loss? And I think that’s a really, really good episode to listen to. ⁓ I’m not the expert in that. I’ll let you speak on it. But the one thing I will say is that we get a lot of clients who don’t even really know they have gains inside their portfolio, like whether capital gain distributions that at the end of the year, I get their brokerage statement or whatever the case may be. And it’s like, yeah, you had a hundred grand of capital gain distribution. Well, we didn’t touch any money. It’s like, understand that. But that’s just not exactly how it works. But having a good, know, free flowing communication with your tax person and your advisor, we can say, hey, here’s what the estimated cap gain distribution is going to look like. we’ve got these losses built up inside the portfolio. Maybe we can offset some of that cap gain distribution and not substantially change our positioning. So huge, huge, hugely impactful. the actual like

Matt Mulcock: Yep. Yep, yep.

Tom Whalen: Strategy behind the loss harvesting that’s for you to try.

Matt Mulcock: Yeah. No, think, I mean, you, you hit it on the head. It’s funny. We go through this. like, there’s so much here that like every offshoot we go, like this, like you said, this could be a whole other episode. Yeah. Or like, or this is planning, right? It’s like understanding your specific situation, tactic, big picture, and then tactically understanding, um, how, as you’re going through that, I’m like, all this comes down to like what we, what we call it, what financial advisor nerds would call asset location.

Tom Whalen: New episode, new episode, new episode.

Matt Mulcock: Am I locating the right assets in the right accounts? cause you should never in a mid career or late career dentist have massive either dividend or capital gains, payouts, in a brokerage account that at the end of the year, you’re like, what the heck, where’d that money go? Well, it probably got reinvested because you’ve got inefficient investments sitting in your brokerage account. That should never be happening. and it shouldn’t happen, if you’ve got a quality team in place that you’re like actually syncing up with your CPA, but as you’re going through that time, like, holy cow, there’s just so much here of like these little offshoot. You could, we’re going to do it. We’re going to just this, we’re creating our list in real time. ⁓ okay. I’m going to say this and I want to give you last word. this is first of all, if you’re still here, you’re one of the cool ones. We appreciate you and hopefully this is valuable. I would just say again, there’s a huge difference between reporting and planning.

Tom Whalen: You can just have final lists, like you could have three new episodes. It’s just so.

Matt Mulcock: And the result is often not having just minimizing or maximizing your tax savings, but oftentimes it’s just a peace of mind. It’s a control, a feeling of control. It’s not being surprised. And, um, I think that goes a long way and then maximizing your after-tax wealth is just huge, but it requires this planning, this effort and proactive team with that’s going to be communicating with you on a regular basis. So I just appreciate you, Tom and your team and what we’re doing here to be able to provide this, but I want to give you last word, last words of wisdom on what we’ve talked about here, just anything else that’s coming up for you that you want to share.

Tom Whalen: Yeah, I mean, I think a couple of things here. One, like I mentioned earlier, but I want to reiterate here at the end is this doesn’t need to take up all your time. Like we’re not trying to change you into, you from a dentist to a CPA. This doesn’t need to be some grand grand scheme here throughout the year. It’s like, hey, let’s touch base every few three, four, five months, whatever. Maybe 15 to 30 minutes at a crack. Let’s just make sure we’re on track. It doesn’t need to be much more than that. So it. doesn’t need to be scary, guess is what I’m saying. And we don’t need to turn you into a tax expert. Like, let’s just be present and be in communication with each other. Another thing is that I always say like these projections are they are just that they are projections. They’re not the gospel truth. They are they’re not going to be accurate down to the penny. But it’s so much better to kind of have a ballpark figure to where we’re going to be and be able to not just from a tax perspective, but operationally. just know where we’re at from a cashflow perspective. again, if you’ve got 500 grand in the bank, but you’re like, I don’t know how much of this is mine. So I’m just going to leave it all there. It’s like you’re making decisions differently, very differently if you know you have all that and it’s free and clear of taxes versus, I don’t know, maybe 300 of it I need for taxes. So again, peace of mind, but also just operationally knowing where your cashflow stands and net of taxes. You just operate so differently when you know where things stand. And then again, just peace of mind. And obviously you don’t want to be behind the eight ball, paying company and interest and stuff.

Matt Mulcock: Yeah. Huge. Love it. We’re gonna leave it there. Um, if you’re out there listening and thinking, cool, I need help with this, or I’m not getting this from, from my current team or who I’m working with. We’d love to talk to you. Um, and also we have, uh, if you’re listening to this end of 2025, should be looking at our 2025 year end tax planning checklist. Every dentist should have this in their hands. Uh, you can go to dentistadvisors.com/2025. And get the year end checklist and just making sure that you’re checking all the boxes, all the tactical things, and you’re having a, you have a, again, this is kind of step one of getting you more proactive with your taxes. So dentistadvisors.com/2025 down there at the bottom of that, there’s a yellow button that says meet our accounting and tax team. If you want to talk to us and be able to have these conversations and see how we can help, we would love to talk to you for now. Tom, thanks for being here, sharing your words of wisdom. Everyone. Thanks for listening. Until next time, take care. Bye bye.

Tom Whalen: Adios.

Keywords: tax strategies, cash flow, proactive tax management, tax planning, dentists, financial team, quarterly taxes, tax mistakes, year-end strategies, tax reduction.

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