Daniel Kopp, MA, MS, CFP ®, MQFP ®

Don't be a doomer: more Americans are breaking into the upper middle class In 2024, about 31% of Americans were part of the upper middle class, up from about 10% in 1979 More than 80% of people in the upper middle class and rich categories were in married or cohabitating households Despite education and healthcare costs, the American Dream is still alive and well wsj.com/economy/more-a…

I post a lot about the people I shadow Never posted about someone who shadows me He's there every morning before I log on Every late night when I'm the last one in the building He doesn't cc leadership when I mess up Just quietly covers the balance Every quarter I've come up short, he absorbs the liability himself Never once asked for anything in return So I finally looked at the terms The buyer acquired 100% of the liability The seller brought nothing to the table And the buyer still closed Unconditional Turns out he signed it before I even knew there was a deal My analyst tried to model the return Said it doesn't work on a spreadsheet Said the whole thesis is based on something he can't quantify Told him welcome to the deal Happy Easter

If I see one more post or article about a "loophole" in the tax code that "allows you to save tens of thousands of dollars on your tax bill," that ends up being about Bonus Depreciation or a Section 179 Deduction, I am going to absolutely lose my mind. Now, don't get me wrong; for the right business owner in the right situation, these accelerated depreciation methods are pretty awesome. And it's entirely true that, compared to regular straight-line depreciation, electing to use Bonus depreciation and/or a Section 179 Deduction can lower your taxes in a meaningful way. But... First of all, these aren't loopholes. They're straightforward applications of the tax code being used exactly as intended. Second, almost none of these posts/articles mention that the increased tax deductions/lower taxes today come, all things equal, at the expense of lower tax deductions/higher taxes in the future. So, in many circumstances, accelerated depreciation is really more a time-value-of-money play than anything (which, of course, has value, but not AS much as getting a tax break that would otherwise never be available). Third, and most importantly, on their own, accelerated depreciation methods don't allow individuals to "save" anything, because to use them, they require the PURCHASE of a qualifying asset. The cost of buying that asset will exceed any potential tax savings from Bonus Depreciation/179 Deduction. In the end, accelerated depreciation methods are probably best thought of in a manner similar to that of a sale at the store. If you were planning to buy something already, or were on the fence, then the sale can make now a pretty compelling time to make your purchase. But if you weren't already thinking about the purchase, you probably shouldn't let the fact that it's on sale change your decision. I mean, even if I see cat food on sale for 90% off, I'm not buying it. I don't have a cat. Thank you for coming to my Ted Talk.

@wiens1959 @ServoWealth Yes. DFAW

@ServoWealth Wondering if dimensional has a all in one fund that does all the diversification and rebalancing for you.

The investing story has completely flipped in just 12 months from “why hold anything but the S&P 500” to “why even bother with the S&P 500 when every other asset class/factor globally has done so much better?” (last 12mo S&P 500 = +13.2%)

GOV: We have a housing crisis. Prices are too high. ME: I agree. Supply is too low. GOV: So we have a plan. We’re going to subsidize demand. ME: …What does that mean? GOV: We’re going to give people money to buy houses. ME: But there aren't enough houses. GOV: Right. So we’ll help them bid harder. ME: If you have 10 people fighting for 1 house, and you give them all cash... the price just goes up. GOV: Then we’ll give them more cash. ME: That’s not a solution. That’s inflation. GOV: It’s "First Time Homebuyer Assistance." ME: Okay, let’s back up. Why are houses so expensive in the first place? GOV: Because we made them the perfect investment vehicle. ME: How? GOV: First, the 30-year fixed mortgage. ME: That’s standard, right? GOV: Only in America. In other countries, rates float. Here, you can lock in a low rate for three decades. ME: Why would a bank take that risk? If inflation goes up, they lose money. GOV: Banks don’t take the risk. They sell the loan to us. ME: To the government? GOV: To Fannie Mae and Freddie Mac. We guarantee the liquidity. ME: So the taxpayer subsidizes the risk so I can have cheap leverage? GOV: Correct. ME: And then I get to deduct the interest? GOV: Only on the first $750,000 of debt. ME: That seems... high. GOV: It used to be a million. We trimmed it. ME: But wait. If I rent, can I deduct my rent? GOV: No. ME: If I buy a small business, can I deduct the interest on the loan? GOV: It’s complicated. ME: But if I buy a giant house, I definitely can? GOV: Absolutely. We wrote it into the tax code. ME: So you’re paying me to borrow money to buy a bigger house than I need. GOV: We’re "incentivizing ownership." ME: What happens when I sell? GOV: The Capital Gains Exclusion! ME: How does that work? GOV: If you sell a stock for a $500,000 profit, you pay taxes. ME: Roughly 20%. GOV: If you sell your house for a $500,000 profit? ME: What do I pay? GOV: Zero. ME: Zero tax? GOV: As long as you lived there for two years. ME: So housing is the only asset class where I get subsidized 30-year leverage and tax-free profits? GOV: Pretty sweet deal, right? ME: So you turned shelter into a speculative financial asset. GOV: We call it "Generational Wealth." ME: Okay, so demand is juiced to the moon. Can we at least build more supply to bring prices down? GOV: Oh, absolutely not. ME: Why? GOV: Zoning. ME: I own land. Can I build a duplex? GOV: Illegal. Single-family only. ME: Can I build a granny flat? GOV: Only if you provide two parking spots and pass a shadow study. ME: So you made it illegal to build cheaper housing? GOV: We protect "Neighborhood Character." ME: But you spend billions on roads and utilities for the suburbs. GOV: Infrastructure investment. ME: So you subsidize the expensive sprawl, but ban the cheap density? GOV: Now you’re getting it. ME: This system seems designed to keep prices high. GOV: It is. ME: But you started this conversation by saying we have an "Affordability Crisis." GOV: We do. Prices are too high! ME: So we should lower them? GOV: No! We can’t lower prices. ME: Why not? GOV: Because then the voters lose their "Generational Wealth." ME: So we need high prices for the voters... and low prices for the buyers? GOV: Exactly. ME: That’s a paradox. GOV: It’s politics. ME: So what is your actual plan? GOV: We’re going to give first-time buyers $25,000. ME: Okay. I’m a seller. I list my house for $400,000. GOV: Uh huh. ME: I know every buyer just got a free $25,000 from the government. GOV: Right. ME: What do I do? GOV: You... keep the price the same? ME: I raise the price to $425,000. GOV: You wouldn't. ME: I absolutely would. The buyer can afford it now. GOV: But that just transfers the subsidy from the poor buyer to the rich seller! ME: Econ 101. GOV: We don’t think that will happen. ME: Just like you didn’t think $7,500 EV credits would make Ford raise the price of the F-150 Lightning by exactly $7,500? GOV: That was a coincidence. ME: You are trapping us in a box. GOV: It’s not a box. ME: What is it? GOV: It’s a Single Family Home with a 2.5% mortgage rate that you can never afford to sell. ME: ... GOV: Welcome to the American Dream.

TAX MAN: Hey you! Your W-2 is ready. Pumped for tax season. ME: Awesome, so I can file my taxes now? TAX MAN: Nope, your wife’s W2 isn’t ready yet. ME: Cool. I'll see if she knows her ADP login. TAX MAN: Hey. Your 1098 is ready. ME: Great, that’s my mortgage interest right? TAX MAN: Yep. But your loan got sold last year haha. So you’ll get two 1098s, one from each bank. ME: Yea I remember getting a letter about that at some point…that's like the 3rd time our mortgage has been sold. TAX MAN: Btw only 1 of your 1098s is ready. The other isn't. ME: Cool, so I still can't really file yet. TAX MAN: Yep. But your brokerage account 1099s will come out in mid-Feb. TAX MAN: Go look for a Consolidated 1099, or separate 1099-INT, 1099-DIV, 1099-B, 1099-R. ME: I thought 1099s were for people who were contract-based employees or gig workers? TAX MAN: Nah, 1099s are for so many things man. TAX MAN: Did you sell RSUs last year? If so, you'll get a 1099-B that shows $0 basis, so you'll want to go get a Supplemental Information document from your broker. ME: Cool, thanks for the heads up. Someone will tell me that explicitly, right? TAX MAN: Not at all. ME: Cool. What’s the difference between 1099-MISC and 1099-NEC? TAX MAN: 1099-NEC (Non-Employee Compensation) reports payments to contractors. 1099-MISC (Miscellaneous) reports other types of payments like rent, royalties, and prizes, etc. TAX MAN: They changed it a few years ago but didn't really tell anyone. ME: Why are you the way you are? TAX MAN: Nobody knows. ME: Looks like I got a 1099-K this year? TAX MAN: Did you sell something online? ME: I sold a couch on Facebook Marketplace TAX MAN: For how much? ME: $600... TAX MAN: Congratulations, you’re a business now. ME: Okay I have all my 1099s, I’m ready to file. TAX MAN: Did you check for corrected forms? ME: What? TAX MAN: Sometimes they prepare a corrected one to recharacterize income or fix mistakes. TAX MAN: They come like a few weeks later. ME: So should I wait? TAX MAN: Up to you man. TAX MAN: File now and maybe amend later? TAX MAN: Or wait, and maybe it never comes. ME: Cool. ME: Oh btw, I invested in a private company last year. TAX MAN: Ah, you’ll be getting a K-1 now LOL. ME: Great, when? TAX MAN: LOL. ME: Taxes are due in a couple months... TAX MAN: Right. ME: But the form comes in October? TAX MAN: Sometimes September if you’re lucky! ME: So what do I do? TAX MAN: File an extension and make a payment. ME: I filed an extension, but I think we owe money. TAX MAN: Yeah you'll need to pay that by 4/15. ME: But I don’t know how much I owe? ME: Because I don’t have all my forms... TAX MAN: You estimate. 100% of last year's tax or 90% of this year's tax....or else you get slapped with thousands in underpayment penalties/interest. ME: What if I make over $150,000? TAX MAN: Then you have to pay in 110% of last year's tax....or 90% of this year's tax. ME: What if I estimate wrong? TAX MAN: Penalty. ME: What if I overpay? TAX MAN: They’ll refund it eventually. ME: With interest? TAX MAN: LOL no. ME: I did everything right. ME: I have all my forms ME: I filed on time ME: I’m getting a refund TAX MAN: Congratulations ME: When will I get it? TAX MAN: The IRS says 21 days TAX MAN: It’s been 12 weeks TAX MAN: Your return is “still being processed”. ME: Can I call someone? TAX MAN: You can try. TAX MAN: They’re experiencing higher than normal call volume. ME: For how long? TAX MAN: Since 2019. ME: What if I just don’t file? TAX MAN: Prison. ME: What if I file wrong? TAX MAN: Also prison, but less likely. ME: What if my accountant files wrong? TAX MAN: Still your fault. ME: Can I just move somewhere with no income tax? TAX MAN: You can try! ME: What if I leave the country? TAX MAN: You still have to file. TAX MAN: For ten years after you renounce citizenship. ME: This is tyranny. TAX MAN: That's funny because that's actually how this whole thing started.

@LoganGrafTax Realtors?

Which profession do you think commits the most tax fraud?

@markcecchini Our son had it quite bad early on. Now at 3, we’ve learned he had a dairy allergy so cutting that out has also dramatically improved the eczema. Not fun - hang in there and keep trying things!

Ok, we’re getting a bit desperate Our daughter has terrible eczema (especially on her feet), to the point where she rubs them constantly to itch them and sometimes bleeds We’ve tried many lotions, seen the dermatologist, etc Has anyone ever experienced this with their kid?

@FortWayneCPA Magai allows you to use all of those LLMs and build your own internal workspaces and personas to customize for the task. Definitely check it out.

What AI platforms are you using? At our CPA firm we use paid ChatGPT and will try out free trials for Perplexity and BlueJ in the next month. Personally I tend to use CoPilot at home and may try Grok.

@CPAPlanner My hero - thanks Jeff!

1/ 🚨Breaking News🚨 The One Big Beautiful Bill (OBBB) Act has just been passed by the House, and is now on its way to the President's desk, where it will be signed into law. With that in mind, it's time to break it down... To read it for yourself: congress.gov/bill/119th-con…

@DrDanielYerger Still surprises me every time this happens! What a privilege this work is!

A keen privilege of being a financial planner: Finding out your clients are expecting. *Weeks* before their family.

@zachary_ashburn incredible!

I wanted to test Google's new Veo 3 So I made an entire commercial for my wealth management firm There has never been more leverage for the little guys than there is right now

@CPAPlanner Love it Jeff - thank you!

1/ 🚨NEW Breaking Tax News🚨 After releasing 29 pages of prop legislation Friday, the House Ways and Means Committee just dropped another 350+ pages of prop legislation. Today's text is a LOT more intriguing than Friday's release. Follow along as I break it down, live...

@CPAPlanner Thanks so much Jeff! Amazingly helpful as always!!

1/ x 🚨Breaking Tax News!🚨 The House Ways and Means Committee just released draft tax legislation that will be "marked up" soon! Are you as excited as I am? (Hint... probably not😉) Here's a link to the text: docs.house.gov/meetings/WM/WM… Now, let's break it down...

@FortWayneCPA Less than a zero percent chance of this actually happening

Question for Financial Planners regarding Roth accounts. President Trump is now talking about abolishing the Federal income tax. Do you take this seriously enough that you are changing your advice regarding whether clients should contribute to a traditional or a Roth?

AirPower!