Summary

In this podcast episode, Paul Allen from PIM Tax Services shares his journey into the tax preparation business, focusing on the unique tax needs of military families. He discusses the differences between tax planning and tax preparation, common mistakes made by military members, and key considerations for those approaching retirement. Paul also provides advice on responding to IRS notices and offers insights for those interested in pursuing a career in tax preparation.

Chapters

00:00 Introduction to Tax Services for Military Families

03:42 Paul Allen’s Journey into Tax Preparation

06:19 Understanding PIM Tax Services

09:25 Tax Planning vs. Tax Preparation

12:22 The Importance of Tax Planning for Clients

15:25 Common Tax Mistakes Among Military Families

18:05 State Tax Residency Rules for Military Families

20:51 Key Tax Considerations for Military Retirement

23:46 Responding to IRS Notices

26:40 Advice for Aspiring Tax Preparers

Takeaways

• Paul Allen transitioned from a Navy career to tax preparation after dissatisfaction with a CPA’s service.
• PIM Tax Services primarily serves military families but also accepts local non-military clients.
  
  Tax preparation focuses on past income, while tax planning looks forward to minimize future tax burdens.
• Clients who engage in tax planning often save significantly compared to those who do not.
• Common mistakes in self-prepared returns include missing depreciation and misclassifying expenses.
• Military families may not need to pay state taxes under certain conditions, but many do so mistakenly.
• Retirement can lead to unexpected tax burdens due to increased income and withholding issues.
• Military members can deduct unreimbursed moving expenses, a benefit not available to civilians.
• Responding promptly to IRS notices is crucial to avoid penalties and interest.
• Tax preparation can be a flexible career option for military spouses.

Links

Schedule a consultation with Mike

Schedule a consultation with Amy

Transcript

Episode 30 – Military Taxes ft. Paul D. Allen

Amy (00:02)

Hi, so today we have a special guest on our podcast. Paul Allen from PIM Tax Services is going to join us and answer some questions about taxes with military folks, retirement and taxes, and so on and so forth.

Mike (00:53)

Well, thanks so much for joining us today. We’re in probably people’s least favorite season of the year, tax season. But we thought it was important to have an expert on to talk about taxes. so do you mind telling us a little bit about your background and how you got into the tax business?

Paul D. Allen (01:18)

No, thanks for having me on your on your podcast so I was Navy 24 years and then when I had the Navy I actually worked for the government for a few years about six years as a GS and I did as I tell people I like that so much I Started my own tax business and I started actually getting involved with taxes after See how I can say this succinctly in 2013

I had my taxes professionally done by a CPA firm in my local area here at Virginia Beach. And I was pretty unhappy with the customer service and the fact that I found multiple errors on it. And I had a heck of a time convincing them to fix my return for me. And so I thought, well, golly, for the prices they charge and they got it wrong, I could get it wrong myself for free. So I should probably learn how to do that. so I went and Googled this.

we all do, Googled for how to learn tax preparation. I came across a course being offered by H &R Block. I took the H &R Block course. It only cost 200 bucks. I didn’t know at the time. didn’t realize, naively I didn’t realize that it was really just an eight week long job interview that if you survive the tax course, which most people didn’t, we started that class with 26 people and eight people finished.

So and then those eight of us were all offered jobs at H &R Block. And I thought, you know, that was pretty interesting. I’ll give it a try. So I mean, I was a, you know, a supervisory position with the government at GS 14 and would leave my day job and go work for 850 an hour at H &R Block in the evenings. So it was kind of amusing. But I learned a lot that year, did a lot of tax prep, really enjoyed.

tax prep, there were some things about the H &R Block business model I didn’t care for. I thought, well, you know, I could offer better value if I just did this on my own. And so, you know, in my standard overconfident fashion, I went and the next year just opened my own tax firm and started taking tax plans. I had already committed at that point to being a financial planner as well. And so in my mind, the tax business was going to be a way to generate prospects for the financial planning business. But to my

and delight, the tax business grew very quickly and became its own thing very fast. just sticking with the tax thing. So, you know, I guess the short answer is, petulance and hubris. That is how I became a tax preparer with my own tax business. I was highly annoyed with the service I got locally. I knew I could do a better job than that. And then I jumped into it with both feet probably sooner than I would advise other people to do.

Amy (03:55)

Hehehehehe

That’s usually the best kind of story. Those stories end up with the best endings. That’s what I found. So tell us more about PIMTACS. Who do you serve? What services do you provide? When you think about clients, is any job too big, too small?

Paul D. Allen (04:28)

Sure. So it started with me. say I opened the shop in 2016 to do taxes for the 2015 tax year. And it was just me until about 2020. And then I started getting to the point where I had more clients than I could do myself. And so I started hiring in this coming year, which is 2025 for the 2024 tax year. It’ll be me plus eight preparers and an admin.

We do, we handle mostly military families, right? We advertise for military and, but we do have, I would say 20 % maybe non-military clients. just are local, usually local. They want to come in and drop their stuff off. It’s convenient for them. Whether, you know, or they’re recommended by a military person that they knew said, Hey, you can, you can go to PIM. You can trust them.

We do mostly individual income tax returns. Probably 90 % of our businesses form 1040 individual tax returns. We do some small business returns, partnership returns, and S corporation returns, but pretty limited in scope there. We don’t do anything extraordinarily fancy. So if it’s just very straightforward, partnership and S corporation returns, we’re happy to handle those. If they become really complicated, then I refer people out.

We do representation, which is if you get a notice from the IRS or a state taxing agency and you don’t know how to respond to it, we can help you with that. We can represent you to that agency. But we currently not only do that for clients for whom we prepared the tax return, we don’t take walk-ins with that are being audited and try to help them. We do not.

currently do bookkeeping. have somebody who wants to work for me full time starting next year and I told her, you’re going to do bookkeeping, right? So I’m trying to push her. She is a she does understand accounting. She’s worked in corporate accounting for private private industry here locally for many years and and trying to talk her into variety bookkeeping. But we don’t currently officially offer bookkeeping. And yeah, when some when the return is too big for sure.

I talk to people and people usually the people that I refer out are clients that started small and their business grew very rapidly. So I some clients who for instance started with a taco truck and now they open a standing restaurant had 25 employees. I was like, need to go and get a CPA like, you know, she’s trying to keep her books on Excel. And so I’m like, look, you got a million dollar business like literally had over a million dollars of revenue. And so you have a million dollar business. You have to stop treating it like a garage sale, man. You got to keep, you know,

hire somebody that will do this for you.

And returns are too small. don’t know, but there’s limited value we provide when it’s, you know, an E2 comes to us with all they have is a W2 and they just have never done one before. So they are looking for help. And I’m like, look, it’s not that hard. You can do it yourself. You can get military one source to help you for free. There’s plenty of great free things.

I’m going to charge you 200 bucks and there’s just not 200 bucks worth of value added here for you. So I always try to talk people out of that. Those low end, I’m going say low end returns, but those very simple returns, basic returns so that people can, you know, hopefully get, if they’re paying us, I want them to get value for it. So we try to avoid doing the very simple returns that can be handled easily. There’s a lot of resources available for military people.

Amy (08:04)

Yeah.

Yeah, you just point them.

Paul D. Allen (08:14)

out there to do it. There’s VITA on base, maybe it depends on what base you’re on, but there might be a VITA program, volunteer program that’s easy. And again, military one source, I plug those guys all the time. I think they do great work for people that have, you know, basic returns.

Amy (08:31)

Yeah, that’s awesome. Pointing them to the right resources.

Mike (08:36)

That’s great. Thanks for giving us the background. well, know, Amy and I talk about tax planning quite a bit on this podcast. What’s the difference between tax planning and tax preparation?

Paul D. Allen (08:56)

You they sound similar, don’t they? Because when we usually write because we use the word preparation in English language, it usually means like you’re getting ready to do something you’re preparing. Right. And so what we should probably say actually is tax return preparation is what is what we’re doing. Right. So we were we’re getting the tax returned ready to file is what we do because and when you’re doing that, you’re not looking forward. You’re looking backward. Right. You’re not preparing for a future event. You’re preparing base. You’re reconciling you.

Mike (08:57)

Ha ha ha.

Amy (08:58)

Thank

Paul D. Allen (09:25)

prior year, right? You worked, you earned income, you had income withheld from your pay, then other events get factored in, you have to reconcile all these prior events on a tax return, figure out if you paid the right amount of tax, if you didn’t, how much more do you owe, if you paid too much, how much is your refund? That’s what tax return preparation is. And it’s required, it’s necessary. Tax planning is what

you all do, as financial advisors, you help your clients with tax planning. That is looking ahead and trying to figure out how to minimize future tax burden, right? And it’s not always just one year, but you might be looking at multi-year, a lifetime plan for minimizing taxes. And sometimes we’ll run into counterintuitive issues there where you might pay more tax this year

which hurts in the current year, but it’s because it’ll save you thousands or maybe tens of thousands of dollars in the future, right? So that’s, well, planning is, think planning is actually much more valuable than tax preparation, but I don’t see nearly as many clients engaged in it as I think would benefit from it, but it’s probably because tax planning is optional, tax preparation is not optional.

Mike (10:49)

So do you see a difference between clients that come in that have done the tax planning versus those who maybe haven’t engaged with an advisor to do any of that?

Amy (10:49)

That’s a good point.

Paul D. Allen (11:01)

I do and not to, know, it’s a little self aggrandizing since we’re all advisors here too, but I do. I have at PIM in the past year, we’ve done about 750, we have about 750 clients. Of those approximately, you’re just talking to me around rough numbers, about 200 have advisors because advisors frequently refer their clients here because I’d like to work with advisors who are easy to work with sometimes. Advisors have told me that’s not the case. get, you know, they get the Heisman.

from advisors, but I like to work with advisors. Anyway, so I’ve got about 200 clients who have advisors, which leaves about 550 who don’t. And I just started running some, my tax software will do reports and I have a little bit of time on my schedule in December that I can run some of these reports. And so I ran like, who did Roth conversions? How many of my clients did Roth conversions? And probably I would say,

Again, I wish I had time to have run the actual analysis. still want to do that and actually maybe blog about it some, about roughly rough numbers, about 80 % of the advised clients.

did some kind of traditional to Roth conversion and maybe 5 % of the non-advised clients. and we’re fans, I think you guys, I see you guys now in your heads, we’re fans of the Roth conversion right now because we think taxes are on sale, right? So tax on sale, buy as much as you can right now. So this is sort of the philosophy. We think tax rates are low. We think they’re unlikely to go lower, but they’re more likely to go higher in the future. And so,

Amy (12:22)

Wow.

Paul D. Allen (12:44)

you know, at some point that traditional IRA, traditional TSP, traditional 401k, 403b, the distributions from that are going to be taxed. So if you can roll it now, convert it now into Roth and pay the tax now, you are likely to get that at a lower rate. So also, you know, especially if you’re 10, 20, 30 years from retirement.

from taking distributions from those accounts, there’s going to be a significant amount of growth. We expect at least a significant amount of growth in those accounts that will also happen totally tax free. So, I mean, that’s one of the differences that I’m able to start quantifying is that advised clients are engaged in that kind of tax planning activity that’s going to or likely to save them thousands or tens of thousands of dollars in the future.

tax wise that most are only a very small percentage of unadvised clients are savvy enough to get into. And I’m always happy when I see that. like, this guy doesn’t even have an advisor and he’s doing these conversions, right? I’m always kind of excited for them.

Amy (13:51)

Yeah, there’s something, I and this is, you know, plenty in the literature that talks about how, you know, part of the role of an advisor is really just behavior modification to a larger degree. And, you know, it’s hard if you’re just by yourself out there to convince yourself that you should pay more this year, even if something is on sale, it’s just a really hard thing to do.

Paul D. Allen (14:13)

Even some

tax professionals that I know, colleagues in the tax profession are resistant to do anything that would increase the current year tax burden because to them it’s, know, you’re kind of only, you guys were Sopranos fans, there was a Sopranos episode where they said, you’re only as good as your last envelope. You know, you’re only in the tax business, you’re only as good as your last tax return, right? you know, they don’t want, you know, you don’t want to give somebody tax advice where it’s like, hey, I got a way where you could pay a lot more tax this year.

Right? Because you’re going to save it later. Right? Advisors will have that conversation. But tax planners are like, I don’t want to do that because then they won’t come back next year. You know, they’ll just blame me for this high tax.

Amy (14:43)

you

Yeah, yeah, interesting. So, you when you look and you may have this at the ready or not, but when you look across all the returns and specifically military folks, because that’s our audience here, when you look across the returns that, you know, the 750 or so, do you, what are the top couple, say two or three mistakes that you find on self-prepared returns that military members are making?

Paul D. Allen (15:25)

So we do a lot of landlord returns. A lot of military families, I think at a higher rate than most people, because we were forced to move. We were all military. We’re not forced to move anymore, yay for us. But military families are forced to move often. so they want that American dream, so they buy a house and then they get moved and they want to turn it into a rental property at a higher rate than I think non-military families do. And then they try to do their own tax return for it.

Amy (15:39)

you

Paul D. Allen (15:55)

I see a lot of mistakes in that regard, usually around depreciation. It’s actually to the point now where somebody says, hey, I prepared my tax return to pass as a landlord. I immediately just go to the schedule E and just go down the page to line 18 and see if it’s blank because it almost always is. Line 18 being the depreciation line, right? They just it was either too hard or they or they didn’t understand that depreciation needs to be taken. And so there’s no depreciation calculated. I also see people put

things on the wrong schedule. They’ll take their mortgage interest, their real estate taxes and put them on schedule A, which is for your personal property, not your business property, which goes on schedule E. And then not claiming things that they could claim for deductions like insurance is commonly missed. People don’t claim their insurance premiums for their rental properties or HOA expenses that they might have, some things like that. Outside of rental properties. Let’s see.

Common things I see from military families is not carrying forward things that carry forward from one return to the next. To a large degree, each texture is an independent event, but in many cases…

In many cases, they are related. You have things that carried forward from one year to the next. So things like capital losses, right? Capital losses are limited to $3,000 a year, vice other kinds of income. Any losses you might have had in excess of that get carried forward to the next year. Back to rental properties, again, if you had suspended passive losses from your property, which is, let’s do a whole other show on suspended passive losses. anyway, suspended passive losses, you know,

Amy (17:37)

Thank

Paul D. Allen (17:39)

carry forward and I see this dropped all the time on military families and I think it’s because military families you have so many options for getting your tax return prepared you might you know you go to VITA and then the next year well you’re on a base where there’s no VITA and so you say well I just do it myself and I use the whatever TurboTax is free to me this year so I’ll use that and then the next year use H &R Block and then so there’s inconsistency and when there’s inconsistency you have to manually know I have to carry this over

so you have to carry everything forward manually from one year to the next. And you have to know where to look and how to do that, right? And that’s pro-level stuff. And so a lot of people, I think, just kind of miss that. And literally, we’ve gone back and amended returns to capture tens of thousands of dollars of tax savings for people that they just were missing because they didn’t know how to carry those losses forward from one year to the next. then military families.

often don’t have to pay tax in the state where they’re living. They often don’t have to pay state taxes at all. And I see military families paying taxes to a state. Usually it’s the spouse, but not always. Sometimes it’s the military service member who, you know, doesn’t have to pay tax to their home state under certain circumstances, but they’re paying it anyway. And if you don’t have a tax professional who’s familiar with the military rules on tax treatment by states,

you can end up with us because I see, I mean, I amend returns every year that were professionally prepared, but the state tax returns need to be amended so that they weren’t required to pay tax in whatever, New Jersey or New York or California, and they did. And so we want to amend and get that back. So let me put a plug in for my buds at the Military Tax Experts Alliance. MilitaryTaxExperts.org is the website.

It’s all a group of colleagues, friends of mine who are in the business of professional tax preparation and serving military families specifically. they’re going to, if you’re looking for professional assistance for your tax prep in your military, that’s the first place you should start looking.

Amy (19:48)

Yeah, that’s great. I know that kind of, because I see it too. I ask for clients’ tax returns and often pick up on just the things that you talked about.

Mike (19:59)

Paul, you mentioned a little bit about the spouse’s state and residence where they need to pay taxes when they do, when they don’t. Can you help us understand a little more of what the rules are regarding that?

Paul D. Allen (20:16)

Probably not. Well, let’s say, let me qualify that. Yes, if you don’t know anything, right? Because if you don’t know anything, then what I have to tell you is that under the Servicemember Civil Relief Act, which has been expanded since it was initially created in like the 1940s, it’s been expanded many times to include military spouses in there. And starting in 2009, military spouses can also claim, could also start claiming the

Amy (20:18)

you

Paul D. Allen (20:45)

state where their service member was claiming for state of legal residence.

Starting in 20, I think starting in 2023, you could also, if you’re a military spouse, claim your original state as long as you are still had residency ties to that state. Right. So now you’ve got as a military spouse, you have actually more options than the military service member for not paying taxes, it seems, than the military service member does. So.

Amy (20:52)

Just give that motion.

Paul D. Allen (21:18)

which is great, but it is confusing. there are all these gray areas as to whether or not somebody qualifies. We see like, okay, well, I just had a couple of recent, came in recently and they moved here together unmarried and then they got married while they were here in Virginia. And so she’s like, when do I, when do I qualify? Do I qualify? You know, these.

It’s not cut and dried for the rules, you have to sort of interpolate there. And each state is a little different as well as to what they’ll count, what they won’t count. then almost every state, I think maybe even every state, if you have a rental property in that state, that’s not exempted from those state taxes, right? And then it’s, you know, if you have a business in Virginia, for example, if you have a business as a military spouse, if you have your own business, you open your own business.

That’s not a rental property business. You are not required to pay tax in Virginia unless you hire Virginians to do work in your company. So if you start employing Virginians now, welcome to the Commonwealth. You’re state taxes in Virginia. there’s a bunch of down in the weeds issues that come up all the time. So can I help you understand it better?

I suspect you both probably had at least that much understanding already, Of like who you can claim, when you can claim, right? But then you end up with these very specific circumstances and does this, you know, we have to go through those one at a time and determine whether or not that person qualifies under the rules to have be exempted from the state taxes where they’re living.

Amy (23:05)

So what you’re saying is there’s good reason service members and their spouses are confused about state of residency for spouses.

Paul D. Allen (23:13)

Often, often, right? Sometimes, like I said, sometimes it’s cut and dried, but not always, not always.

Amy (23:20)

So we actually, as you know, the title of this podcast is Operation Retirement Readiness. So as military members approach military retirement, are there some key considerations that they should watch out for that you see crop up? Maybe even are surprises, especially if they don’t have advisors?

Paul D. Allen (23:46)

Well, I think many of us and I put myself in this category, we’re surprised the first year we got out at how different our tax situation was. You know, I tried to attention to these things and I was like, what happened there? Why do I owe Virginia like $6,000? And so a couple of things. One, most of us would get out, we’re somewhere 40 plus or minus five years old and

Amy (23:55)

you

Paul D. Allen (24:15)

and we’re not going fishing, we’re starting another job. so income is going up. spouses are like, we’re not moving in two years, so I can take a real job or I can take that promotion. Right. And so so family income is going up, which means higher tax rates. Right. And it’s people are kind of used to the first hundred thousand dollars or so is really only taxed at about 10 percent rate because you’ve got all the deductions and all the credits and everything. Above that.

No more deductions in credits for you, my friends. You’re just paying a full 24 % on all that extra income, right? And so they’re usually pretty shocked at the fact that, well, as I tell people, it feels like your taxes are increasing faster than your pay because they are, right? Your income might have gone up 50%, but your taxes will double, right? So your rate of tax increase for a while will go up faster than that. So be prepared for that.

Amy (25:03)

you

Paul D. Allen (25:12)

Your withholding is almost always going to be jacked up because your employers will not do it correctly. DFAS will not. DFAS has no idea you have another job. And so they’re withholding that you got a $50,000 pension or whatever your military pension is. And they’re going to withhold like 12 percent. And then at the end of the year, when your family made $200,000, that’s going to be grossly underwithheld. Right. So you’re going to owe a big chunk of money paying state taxes is one that catches people off guard.

And the tax treatment of your retired pay is something that not everybody understands. is it taxed in the state I’m in? Is it non-taxed? And then states are moving, Virginia and Maryland both in the last couple of years have made significant moves on reducing the tax burden on military retired pay, which is great. I guess they’re tired of everybody moving to Florida and Texas, right? But, so that’s all good.

And then just like one little thing, I don’t see it that often, but every once in people do move, right? They get out of the military and they move and that move is still under military rules. And so if you had unreimbursed expenses of that move, we can write those off. Most people can’t anymore. Used to be able to write off moving expenses, civilian, military, anybody. Now only military can do it. And so that last move, you may have some tax benefits for doing.

Amy (26:37)

Got you. Awesome. Thanks for that.

Mike (26:40)

Paul, I’ve heard that recently the IRS has kind of stepped up, sending a lot more letters out these days to folks asking questions and probably some states too. If somebody gets one of those letters in the mail, what should they kind of do at least or what’s first couple steps that you’d advise on that?

Paul D. Allen (27:03)

Yeah, did you hear that for me? Because I I definitely have experienced that same thing. I see a lot more of my clients are getting letters from states in particular, the IRS to the IRS was for a while sending out like a bunch of letters that just made no sense. Like, hey, we got your return and we see nothing to change. And we’re like, why would you comment on that? But anyway, a couple of things, right? If you get a notice, don’t don’t stick your head in the sand like an ostrich. I have clients who have done that who

Try to ignore the letter like it’s going to go away. Don’t do that. Open it immediately because usually if there’s some required action on your part, you’ve got a short timeline to do it. You’ve got 30 days, maybe 60 days. You want to open it right away and read it. See if there’s what you’re supposed to be doing. Verify its authenticity. If it came to you in the mail at USPS, that’s how the IRS is going to send these things. That’s how the states are going to send these things. Because and

fraudsters will not generally they might but they’re less likely because strangely mail fraud carries huge jail sentences in this country much more so than if you they try to defraud you over the phone or a text message or an email. Right. So that’s how usually the fraudsters work is they’re going to send you something saying OK. But if you get a letter as I tell people all the time if you get a letter that’s one page long and you understand it the first time you read it that’s probably not from the IRS be very suspicious of that because

Amy (28:30)

you

Paul D. Allen (28:31)

The IRS

never sends a letter less than four pages long and you have to read it like four times and then you still probably don’t understand what it means. And then that’s probably authentic from the IRS, right? Because they just write the most bizarre, confusing, lawyerly written letters, right? So read it, verify it if you can, be suspicious, but if it’s a letter, it has more credibility than certainly if it’s anything other than a letter that you got in the mail, it is not.

authentic. Let’s see. Basically do what the letter tells you to do, right? If the letter says, the notice says, we need copies of some documentation, provide that. If the letter, if the notice says,

We need you to verify your identity. That’s probably the one that confuses people the most is like, why do I have to confirm my identity? Well, the IRS is trying to combat tax fraud. And so they randomly pick some tax returns every year and and require that the person who filed it, they contact the person who filed it and say, we need you to provide some type of identification to verify that it’s you. Just go ahead and do that as well.

If you don’t understand it, get help, right? Contact a professional. There are professionals who do this. But keep in mind that if the IRS is saying, we think you owe us $110, a professional is going to charge you a lot more than that, most likely. So there’s not a great value in paying somebody $800 to challenge a $110 decision from the IRS, right? So weigh that. But if the IRS is saying, we think you owe us thousands of dollars, you’re like, don’t.

understand why I would owe thousands of dollars, then contact a professional because they’re not always right. The IRS, particularly the states, send notices that, you know, we’re able to contact the IRS or the state and prove that their request for additional money is unwarranted, unfounded. Right. So they’re not always right. Don’t assume, well, they contacted me, so they must be right. They are not. And just be findable, which is probably the hardest part for

military families because we move all the time, right? Is the IRS and the states are, will send it to your last known address. And then if it’s not being forwarded, you’re not going to get it in. And even if it is being forwarded, you might not get it in time to comply with a 30 day request for information, right? And sadly, the courts have ruled many times that if the IRS sends you a notice to the last known address in their files, it is considered received by you.

So even though you’ve never seen it, it’s considered received. And so, you know, the penalties and interest starts stacking up. so make sure that you are keeping the IRS informed of your, you know, someplace where you’re going to get mail and also check your transcripts. I would say check your online transcripts to the IRS. They’ve got an online system. Now you have to verify yourself through the ID. Me, which can be frustrating for some people. I know.

My wife recently tried to do that and she was, I learned some new words. I was in the need for 24 years and I learned some new words that day. She was a little uptight about, little frustrated by the IRS trying to verify her identity. She eventually got that done. But monitor your transcripts because your transcripts will say in there a notice was issued and if you don’t get it, you can contact the IRS and say, got this notice. They’re supposed to put, make it available. The IRS is trying to modernize and make

like the notices available once you have your ID, me, identity verified, you can go into the IRS portal and get your notices to, not sure if that’s available yet or not. I heard that was coming. All good improvements, I think.

Amy (32:30)

That’s good.

Yeah, that’s good advice. Just reminding military families to, at a minimum, put in the change of address stuff through the post office. Nobody thinks of that, but yeah.

Paul D. Allen (32:42)

Nobody thinks of that, right? That’s like the last thing, you’re not a military move. So the last

thing you’re thinking is like, gee, I hope the IRS could find me if they need me, right? But it can be important. I’ve had people that didn’t get notices for months or years and, you know, it’s pretty hard to unwind those after a while.

Amy (32:48)

you

Yeah, yeah. So as we get ready to wrap up, is there anything big that we missed that you think military members either approaching military or ultimate retirement should be thinking about in terms of taxes?

Paul D. Allen (33:14)

Well, as you’re wrapping up a career, right, in the military, there’s more important things to think about probably than taxes. And you’re probably focused on those. But there are some tax things, right, like the SBP decision and we have the right insurances in place and those kinds of But taxes are still important. So I would think about, you know, making sure you’ve got your withholding set up straight. If you’re still serving right in your last year or two years of service,

you know, if your income is likely lower than it’s going to be, at least your taxable income, especially if you’re deployed to a combat zone, right? If you have this sort of artificially suppressed taxable income, take advantage of that to do something that you want to do that might be taxable, like traditional to Roth conversions or selling a rental property, right? So that you can do these in the 10 and the 12 percent say tax bracket instead of 22 or 24 percent.

Yeah, another capital gains. That’d be another thing, right? That you might want to take capital gains and that while you while again, while you start that suppressed thing, suppressed taxable income because of combat zone or because you’re, you know, still military and you know, I’ve got I can’t tell you how many clients I’ve acquired recently who are like, yeah, we work in cyber. My husband works in cyber. My wife works in cyber.

for the military and I’m like, there’s no future in that, right? I always try and make jokes. because those people are all walking in like 250, $300,000 jobs right out of the military. You got a TSSCI clearance, right? You have a high security clearance and you have, you know, cybersecurity experience. Yeah, I mean, it seems to me like you got your pick of some significant high paying jobs and you’re walking into like three, four times what you’re making in the military. be understand that that’s going to mean

Amy (34:48)

you

Paul D. Allen (35:11)

your tax rates going way up. Take advantage of the low tax rate to do those kind of things before you get out of active duty.

Amy (35:20)

Makes sense.

Mike (35:22)

That’s great. So any advice for somebody who may be approaching military retirement, who thinks, know, I don’t hate doing taxes. You know, it sounds kind of interesting. Looks like you could, you know, start your own business type thing doing this. But any any advice on how to get started or what somebody should maybe do is a first step.

Paul D. Allen (35:48)

yeah, you don’t have to wait either. And I’ll tell you, I think it’s a really great job for military spouses right now because you can, you can have flexible hours. you can have, you know, work remotely, work part time. And so I think that a lot of that, because a lot of military spouses you’re in, you’re in, you know, military families are in their child creating and raising years. So, you know, that flexibility is really useful.

People get now certainly could start a tax business as well I would say get some practical experience in it and see if you do like it because you know If you spend too much time and effort into it, so if there’s a fight a program You know where you are like on your on your base or something contact them and say hey you want to volunteer for the fighter program They’ll set you up the training which is a little for free the IRS sponsors training for that. It’s pretty good pretty decent

I think that professional software, I know like Intuit makes a lot of software for tax. And I think they’re always look for people and I think they have a training program in there too. I hire mostly military spouses and I put them through a course you can get, it costs 500 bucks and it’s available through Surgent. It’s called Surgent Income Tax School. it’s no joke, usually.

You know, people like, cool. And then a week later, they’re like, this class is hard. And I’m like, I know, but you’ll be really glad you have this information later. It’s it’s hard, but it’s good. It’s really good training. So, yeah, those are the things I can think of. Then, of course, the way I went, which is to go through one of the big block stores. Right. And you get, you know, I have good things to say. Good, good and bad things to say about that. But but you will definitely you can definitely learn a lot about tax in that in that situation.

Mike (37:19)

What?

Amy (37:44)

Yeah, and I would just add, because I did the same thing. I was preparing tax as well. I was still in active duty and it was fantastic experience. It was a good way to get your feet wet and definitely helps out as an advisor. So there’s tons of other things that we could dig into, Paul. And I think we need to have you back after tax season is over. But for now, to wrap up, where can people find out more about you and or PIM tax?

Paul D. Allen (38:15)

Well, I’m not a big social media guy, but I am on LinkedIn probably most days and So you find me on LinkedIn and then also at my website Pimtax.com P-I-M-T-A-X dot com And there’s some contact way to contact me through there if you want to

Amy (38:32)

Awesome.

Awesome. Well, Paul, thanks so much for your time today. This has been great. Like I said, I think there’s some other things that we need to dig a little deeper into, especially around the landlord question. I feel like there’s a lot more to say there. Maybe a couple other things. We’ll have you back after tax season’s over.

Paul D. Allen (38:53)

Awesome. Yeah, I look forward to that.

Mike (38:56)

appreciate it, Paul. Thanks again.

Amy (38:56)

Sounds good.

Thanks, Paul. Bye-bye.

Paul D. Allen (38:59)

Thanks, y’all.