The Ultimate Tax Optimization Guide | The Wealthy Accountant

On today's episode, Cody and Justin are joined by Kieth aka The Wealthy Accountant who went from a small town farmer to a multi-millionaire tax professional. Want to know how good he is? Well he's good enough to have been selected by Mr. Money Mustache to do his taxes. That's a heck of an endorsement.

Keith's story is truly amazing. The way he self educated himself is as relevant today as ever with the access to training and the changing job landscape.

Hear how he started his business and became financially independent way before that was even a common phrase.
Episode Summary

* Keith grew up in a farming family in small town Wisconsin
* They didn’t really have anything to spend money on so they lived frugally
* The family farm ended up going into bankruptcy when he was 18
* In high school he started studying the stock market crash of 1929 and became really passionate about investing and he started investing at 18
* He also started doing the books on his dad’s agricultural repair business
* That eventually turned into fellow employees asking him to do their taxes
* Before long he had 50 clients with no overhead
* We talk about how different the interest landscape was in the 80’s
* He talks about how excited he was to get a 10% mortgage
* In totality he’s only ever worked for someone 14 months
* At about 32 he realized he had accumulated $1M and he was married at this time
* This being the late 80’s he had a $540/mo house payment and they lived on less than $10k
* He spent all day outside of tax season just sitting around reading books and learning
* In reality he never got a college degree but didn’t need one
* Even though he didn’t have a degree he spent a decade just pouring over books
* He was a financial independence guru before FIRE was even a term
* The first blogger he really ran across was Mr. Money Mustache
* In fact he even did Mr. Money Mustache’s taxes!
* He points out that before you get to stressed out over tax loop holes and maximizing everything, to stop and realize you’re probably always going to make some kind of income and if you’re serious about this path you’ll likely end up with more money than you’ll ever need
* We then swap this discussion to the tax specific tips
* He talks through standard 401ks, backdoor roth 401ks and mega backdoor roths
* We also get into things like Cash Balance accounts available to self-employed members
* Keith also mentions that standard brokerage accounts get a bad rap and shouldn’t be overlooked but still recommends filling up your 401k and IRA
* When coming up with a tax strategy for someone he talks about how important it is to look at a person’s scenario on a long term view and not just year to year
* You won’t want to miss the deep dives into the mechanisms behind the different IRA contributions, cash balances, and profit sharing which can take you to many times the $19k 401k and $6k IRA limits
* Then we get into the discussion of tax moves you can make with non-qualified accounts like your standard stock market account that’s not a 401k or a IRA
* One thing Keith points out is that these non-qualified accounts are tax advantage in a way because when you die, you’re beneficiaries won’t have to pay capital gains tax on all those earnings. Your kids get to take over those shares at the price listed on date of death and all those gains are forgiven from any tax burden
* From Keith’s standpoint most tax loss harvesting is ok but not worth paying for
* On the flipside, he’s a huge fan of harvesting gains
* Harvesting gains is when you’re in the 0% tax bracket and have some room to give so you purposefully sell some shares for a profit and capture those gains without...