Find More Tax Deductions With Wendy Barlin

Thomas Green here with Ethical Marketing Service. On the podcast today, we have Wendy Barlin. Wendy, welcome.

Thank you.

Would you like to take a moment and tell the audience a bit about yourself and what you do?

Sure. So thank you, Thomas. My accent is a little different than yours. I come from South Africa where I got a chartered accountancy license and then I came to the US in 1997 and my story is that of really believing in the American dream. I came here with nothing but a bag of dirty clothes and a CPA license and I went from accounting firm to accounting firm and all I found was boring old fashioned not really helping anybody. And so after about seven years of that I quit and I went out on my own and I’ve been running my own business in various forms since then really with the goal of answering people’s questions and truly helping and not being focused on that billable hour. I think that’s the biggest piece of my world that gives me joy is that I’m able to have conversations like this with clients without worrying about that was 15 minutes.

And I feel like it really turned a large piece of the accounting world and how we feel about flying upside down with that great introduction because as a result of that I feel like I’ve got loads of stuff to ask you about the first being about the American dream because I think it’s something that you say that you’re happy to speak about. you open with it. So do you want to let me know what your thoughts are on that? So I have a lot of friends and family who left South Africa looking for a bit of life, a different life make money. And a lot of my family chose to go to Australia. A lot of my family chose to go to Canada. Very few of us came to the US. And the part that I think I’ve been able to really build financial security and wealth for myself here is because I do believe the American dream is alive and well. Our gas prices are still some of the cheapest in the world.

We have this crazy credit system as crazy as it might be, but you can buy something here and not pay for it for a year interest free. That’s for me as an immigrant was amazing nowhere else in the world on my family able to take money, invest it and then pay for over a year interest free. As well as there’s a real sense of entrepreneurship in a lot of cities in the US because the tax rates here benefit anyone who runs a business, the people who pay the lowest taxes for business owners. People who have jobs, traditional jobs pay more taxes in this country than anybody else. So by learning how to manage the financial system and manage the tax system. I truly have been able to build from nothing. I came with literally a bag of dirty clothes. Well, yeah, what are your thoughts around that concept of taxation and where should we say?

Where highest and lowest sits? Have you got any thoughts on that? I think the bottom line is always the more money you make, the more tax you pay. You know, you don’t want to pay taxes to live under a bridge that I can promise you you’ll pay no taxes. But if you make money, you’re going to pay tax. So I’m not saying I don’t want to pay tax, unfortunately, it’s a necessary evil. We have to pay for police forces. We have to, we have to contribute as a society, but from where I sit, when I’m trying to do and what I worked so hard at is using the law to minimise the taxes you pay because at the end of the day, if I can keep more money in my pocket, I’m going to be more charitable. I’m going to hire more people. I’m gonna put more money into the economy. So when people say to me, oh, that sounds greedy. Oh, that sounds selfish. I actually don’t see that to be the case at all. I think let’s make money, let’s pay taxes, let’s try and keep as much of our money as we can so that we can help the economy grow your answer. Coming back to your last answer prior to that, you said that you arrived in the US with only a bag, any backstory there that you want to share.

So I literally arrived in Baghdad in close, I called my lawyer who had gotten me a H1B work Visa because South African accountants very soul to officer in the United States. So I had actually responded to a job advertisement and they had offered me a job in Los Angeles and I called the lawyer and I said, I’m arriving today. I need somewhere to stay. And she introduced me to someone that had a room to rent, found a room to rent. Then I had to, I didn’t have a car. So for the first six weeks I took busses and for anybody that’s been to Los Angeles, you know, the bus system is horrific. I had to go to discount stores to buy work appropriate clothes and it really was moments that I go back to because now here I am, almost 25 years later and I live on 10 times what I was paid for my first job and I sometimes speak to myself, How did I manage?

I looked quite well, he rented a room, I didn’t own a car, but I was happy. So why is it that now I own 10 times that in their days where I just want to tear my hair out. So I think that really all of us that start from meagre beginnings need to really remember those days and not shove them under the rug and be proud of what we’ve accomplished. But we generally are goldfish and we grow into the size of our bowls. That’s problem. That’s a good quote for the episode, that one. And there is a very interesting, should we say headline underneath your name on the profile And it is five tax deductions. Your accountant didn’t show you now. I want to know what my accountant didn’t show me Wendy. Well, without dishing accountant, I’m an accountant. And, and I feel like accountants are very business. Traditionally, we take on thousands of clients. So as many people as we can and we don’t really have the time to sit with our clients and explain things.

Right? So we say, okay, Thomas here’s your deductions, here’s your tax return, this is what you should do, sign here, bye-bye, see you next year. And no one really takes the time to sit down with you and say, all right, how do you deduct a meal? If I’m having a meal, how do I make it a business meal? Well, what is what does the law actually say? Because none of us wants to read the law. I don’t pretty sure nobody else on the Cole wants to. So, if someone with 25 years of experience can sit down and explain to me, how do I get more deductions? I’m not talking about spending more money because that’s silly. We don’t want to spend money to get deductions. What we want to do is look at money, we’re already spending and say, oh I see, this could be a deduction. And here in the us, it all comes back to business purpose, as long as you can show that your money that you spent has a business purpose, we can make a case for that being tax deductible. And so I think to everyone on the cold, no matter where you are in the world, the important thing is to be having those discussions with someone, your accountant, a consultant, someone who can help you understand and look at the money you’re spending and maximize your deductions and not just hand over a set of financial statements to a tax preparer and expect that they’re going to somehow save you money.

I mean maybe, but I think we all have a responsibility to be stewards of our own men and understand how could we do better? How can I save more? And if your accountant is not someone who welcomes those questions, then you’re with the wrong account in my opinion. Fantastic answer. But immediately just makes me think about the meal. So let’s say from a cash flow perspective, let’s say the business doesn’t pay for your meal and you’ve had a meal and it covers a business purpose and what what’s next, then what would you do? Well, as a business owner, you could reimburse yourself, right? You can pay yourself back for that meal that was now a business purpose and that would create your deduction, right? There were also required to keep receipts, remember? So they don’t have to be a piece of paper receipts anymore. It can be a photograph of your phone or a pdf. So fun in a restaurant. Usually what I’ll do is pull out my phone and take a photograph of that receipt and then save it or email it to myself as my proof and then deduct that meal.

But yes, you can reimburse yourself from the, so there isn’t a way of doing it non cash, like taking it, taking the tax deductible part and not being a cash flow to the business, correct? So here in the US tactical cash fixed and that means that anything that leads your bank account is a deduction if It’s appropriate. And business service, anything that arrived in the base accounts could be taxable. And so it’s purely cash based within a 12-month period. Okay. I’d better be careful. I don’t show my ignorance too much here because it might be a completely basic question that I just asked you. Well, you know what’s really interesting Thomas if you have that question, I’m pretty sure that there’s thousands of people with the same question. And I think that’s the problem is we’re all too shy to ask. Right. So I often go to meetings with investment advisors stock brokers. I have no idea what they’re talking about. And I will ask again and again, I’m so sorry. I really just don’t understand.

And they look at me and they say you’re an accountant, How can you not? I’m sorry. I know it’s embarrassing, but I don’t understand. You can be sure if I don’t understand a lot of other people do. So I say bring it on, ask the questions. There’s no judgment here. Well, I want to highlight one thing as well which is Probably 100% guilty of what you alluded to regarding sending over your accounts for the accountant to look over and not really talking about various different issues that might come up, that would very easily save money. have you, did you want to, I feel like I jumped in a little bit. Did you want to add on to any more deductions that the accountant didn’t show you? I would say it’s really important to ask your accountant that question. What am I missing? Is there anything on the tax return that I’m missing? Are there any expenses that are too small? What about travel? What about gifts? What about things that you do every day? You just have never thought of that could be deductible. So when you think about business purpose, that’s extremely broad, no matter what country you’re in.

And, and an example of that is a client. You have a little one of those white poodle dogs, fluffy little white things And she put all her pet grooming expenses through her business as a deduction. And most people go, that’s crazy. How is that business? Perfect. She used her dog on her website as our mascot on her business card. She actually got ordered at one year. Not because of the pet expenses for something up. And the auditor looked and said ma’am catch expenses and she was able to show that her dog was integral and her dogs grooming was integral to her business. She got it free and clear on it. So depending how creative you want to be and how much risk you’re willing to take. I think business purpose can be extremely broad. And so that’s why it’s really hard to have like a checklist or a cookie cutter list. I really feel it’s about discussion and relationship with your tax preparer because no two people that come into my office have exactly the same production.

It’s really important to not just be an envelope that gets dropped off. Your accountant needs to know you. So when I say to you Thomas, where are you taking your family for spring break? And he would say, oh we’re going to Dallas, huh? Are there any other professionals you might be going to see. There could be a business trip. Now if we never had that discussion, you would never have deducted that trip to Dallas. But because we were just having a conversation, we were able to find more deductions. And I see this over and over again when clients call me go yeah. You know where are you on my way to the dealership? I’m thinking about buying a new car. Ah Let’s talk about that. It’s very clever. And yeah maybe I’ll think about going to Dallas then. What do you think? I think you need to be strategic about where you travel When I travel. I always go looking for other accountants to visit. Even if I just go in and grab some of their business cards or their brochures to put in my file. So if I ever got on it and I’d be speaker.

These are the people that I met with. No government agents anywhere in the world has the time to follow up on each one of them. They’re never gonna call me and go. Mr Marlon. Did Mr Green visit you on June 12? And what did you discuss? You know who what are you talking about? You don’t have the resources. What they’re gonna ask you for is proof for your deduction here is my proof business card brochure dates and addresses the people I’ve visited. So again it’s about how creative do you want to read, how much risk can you tolerate? And the bottom line is don’t be greedy pigs get slaughtered, right? So you don’t want to be green. You don’t want to detect every trip and every dollar you want to look and go, what’s reasonable, what seems fair, what’s going to jump out at any government agency as being an unusually large number. That’s where we play. And that’s where the thinking and putting our heads together is really valuable. You mentioned the audit. I suspect that there are many people that if they were being audited, they would, you know, that would send a shiver down the spine type thing.

Is it something that merits that kind of reaction? I think for any of us, it does me too anytime I get an IRN or tax paperwork in the mail, I go, I hope this isn’t bad and it’s never pleasant only because it’s a waste anyone’s time. Right. Then if you scratch through your paperwork, it’s phone call this paperwork. It’s a terrible waste of my time Here in the us. We’re not going to jail. I don’t think you’re going to jail. If the government $10, it’s not that anything horrible is gonna happen to you. It’s more the sense of really. Now I have to deal with this. It’s like a flat tire on your way to work. However, I will say if anybody does get audited, I’ve seen too many of these with clients. The auditor is a person. They are a person too. And I found in 25 years of doing this that if you can be humble and kind, you will come out of an artist unscathed or way less scathed than if you come in aggressive and angry because these are people, they’re just trying to get through their day.

They’re doing the job. They’ve got a checklist, They need to get paper from you. They’re not trying to make you miserable, they’re just trying to do their job. And I’ve had clients being able to cry on demand. They’ve got all kinds of things waved humility and kindness. Go a long way in an audit. Great answer. There’s one which I really want to ask you about which is debunking certain tax myths. Any favourites?  I would say yes and I would say when it comes to taxes, what you hear on the golf course, which you here at the dinner table which you hear a book club or what you google is likely not true. I spend most Monday morning answering emails and phone calls from people who call and say, I heard this weekend and what you hear, please run it by a professional first before you act on it. Some of the biggest myths are related to home office deductions. I’m not sure if you allow those in the UK, but here in the US if you run a business from home, you can deduct your home office and about 20 years ago, that was a big auditable item.

Anyone who had a whole office, you can be sure. And IRS agent was going to show up at your door with a badge and say show me your office. I had clients where that happened. But in the last 10 years certainly since COVID there are no agents to go out and do house of course and the majority of people are working from home so where it is appropriate please take a home office deduction. I cannot tell you how many phone calls like yeah every week where people say oh no my prior accountant said never take a home office deduction will get part of it. Have your accountant done an education class in the last 10 years? Where have they been? This has not happened in the us alone. I think there are 19 million home office filers right now. So again you can’t be greedy and deduct your entire home and it’s just not practical right? You have to look somewhere but if you deduct a portion of your punishment against your income that seems reasonable. And there are a lot of the other myths about meals and travel in cars really seem to proliferate.

They seem to grow around dinner tables and golf clubs where people like to brag and they often don’t even know what they’re bragging about. But they’re spreading these myths that then become my phone call on a Monday morning. You like golf courses then okay. The tax deductible thing with offices around the U. K. Home office is rather I think it’s like a percentage of it. So you can deduct a percentage of bills and that’s sort of But I can’t say that I know what I am and what I’m not doing right now so I may have to look into that one. But it’s a question to ask, right? That’s the point of this conversation is not whether you can or you can’t but that you have that conversation and that you say to your accountant can I take a home office adoption? And if not, why not? And just learn and educate yourself so that you understand moving forward to your situation change Or maybe there’s some little thing you could do in order to be able to take that production. So the point is to debunk the myths but asking the question and not being shy to ask when you went into business for yourself.

Did you get more of a shall we say balanced view of what it’s what it’s like versus being working for a big accounting firm. How did you use change there? Well I think if when you sit on the other side of the desk you learn that I’ve got pleased to pay. I’ve got insurance to pay. So I’m dealing not only with the work but I’m also dealing with the business side of it. Right billing table all these things and I think that’s where a lot of people get tripped up is that you can be good at what you do. It does not mean you’ll be a good business owner. That’s really the difference. And I have a lot of conversations with people about if you just want to work for yourself and work from home and never hire anyone and never grow your business that’s okay. There’s nothing wrong with that. You’ll make a good living if you want to grow your business and hire people and build systems. That’s a different skill set. You can learn it, it’s hard work but it definitely requires a different skill set and mindset and it’s really important to know that you don’t just hang your name on the door and all of a sudden business comes.

It’s not an easy task. They’ve seen many days where I go I should just go and work for the I. R. S. Are there any differences shall we say about being an accountant in relation to tax? So you know your typical business they’ll go to an accountant and they’ll do their books for them. What changes for you given that you are an accountant And you also have to do your taxes. I think it gives you a better overall picture because you our work as tax preparers based on the book keeping numbers. So if you don’t have good bookkeeping numbers then your tax numbers don’t make any sense. And so I think being able to kind of have that broader view of how the business works all the way from the bill paying through the tax return at the end of the year. I think that gives you a much bigger perspective and that’s why when I ran my business, the way we choose to run it is to do both the bookkeeping all the way through the tax return because that allows us to be deeply involved in every client’s business and see all the money coming in and coming out as opposed to just being the tax preparer where you end up being sent to set of books.

And then you’ve got to first assess the book before you even do the taxes. I like the 2000 ft view of the entire business. So generally speaking, would you, I mean if you had to have someone else prepare your books, would you always have them a company which does both rather than just one or the other? If you can afford it? I definitely think that’s better because then that ERM has an entire handle on what’s going on in your life. Otherwise the bookkeeper does their peace and the tax people do their piece. And do they connect, do they have conversations, do they have discussions about what to do? So, my bookkeeping team any time they’re working on something, they will often email me and say, oh Wendy. I see Mr Green just bought a new car, how do you want this perspective taxes or Oh, I see this is going on. He bought a gift at you know Dylan. How should we how should we code that for tax purposes? So it’s a constant conversation where if you have to separate people it becomes a problem.

It’s the same as taxes. Had a lot of clients to say oh my business taxes are done by a big firm in the city. But my personal taxes, my mom’s granny’s sister does. And I tell them you’re not doing yourself a disservice pay bowl and have one food manage your entire tax life. Because they need to be able to see what was going on from a strategic and planning point of view. Otherwise it’s just a data capture and there is no value in paying a data capture. Yeah, 100%. See the logic there, I got an interesting one that I want to ask you about and what if I don’t have enough money to pay my taxes? That is a very common problem. It is not a reason to hide under your pillow. You’re not going to jail unless you’re Beyonce or Jay Z who hasn’t paid their taxes or whatever it is that you and I may do. They do not want to put us in a jail cell. It’s not worth it. So what you need to do if you don’t pay your tax if you do not have the cash to pay your taxes. What you need to do is call the government agency and be upfront High.

It’s Wendy Barlin. I know I owe you money. I don’t have it. What can we do? Don’t hide the letters. Get Nastier and Nastier. You’re gonna be stressed. You’re gonna have to wait for this night. Just come clean and remember the person on the other end of the phone is a person too. And so if you’re humble and say I owe money, I don’t have it. What can we do? 99% of the time? They will work with you. They’re not going to say hang on while I call the sheriff. They’re gonna say all right, well let’s can we do a payment plan If you owe in the US if you’re less than 25,000, it’s as easy as buying a car. So do you want a three year, five year or seven new payment? If you are more than that Then it’s a little more of a negotiation. Then they say to you, send us your bill, let’s see what you can afford to pay. And I applied to paying as little as $50 a month because the government agency knows they’re not going to get blood from a stone. If you don’t have it, you don’t have it. What they want is to get paid. So they’re happy to make a payment plan with you. And that relieves stress. I mean not that anybody wants to be on the payment plan.

But it’s better than going to the male market every day with a knot in your stomach waiting for another nasty lever. So my advice is always raise your hand and say, yeah, I owe you money. How can we resolve? Have you had any clients where they did bury their head in the sand? Yeah. And eventually the government will take money out again, clients called me and both the government took money out of my baking. I have no idea what, I really have no idea why I’m pretty on show. For the last year. They’ve been sending you nasty notices. or else I have people that mail that to me, they sent me a box full of unopened envelopes because they’re too scared to open them. So if you open them, tell me what’s in there. So I have seen it all, but I know I’m sure no one’s going to jail and our income levels and that fessing up and cleaning it up really changes your life also from a person. I’m an accountant. So I’m not so good, but I do believe in the power of personal integrity and when you are in alignment with the money, then the world opens doors for you.

So I have seen people that have buried the stuff a year and then they come clean and guess what? Within a year they’re making three times more money than they’ve ever made. They’re making five times more money than they’ve ever made because the stress and the anxiety of having to bury all that stuff could never allow them to truly grow into their businesses. And I really believe that when you get into financial integrity and align their doors open, I think a good follow up for me from my previous question would be what would stop you getting into that position of not having enough money to pay your taxes if you got some things that you recommend to people and this is actually a personal one. So I used the system profits. It’s a book written by Mike McLeary. I know they just opened in the UK. two people just opened up a branch or a franchise or whatever in the UK. It’s a book written by Mike McLeary that I personally found three years ago And this cash system has allowed me and about 75% of my clients to never, ever not have the money for taxes.

And about three years ago almost full now came to the end of the year. I was doing my tax planning, I paid the government what I owed them and you know what was left in my bank account, nothing, nothing. I had worked my butt off all year. I had the biggest revenue I’ve ever made in my business and at the end of the day after paying taxes, there was nothing left me, nothing. I sat down and cried and said how this happened. I’m an accountant. How did this happen to me and one of my colleagues recommended first and he has changed my life. I realised how much money are made, the more money is spent and I went on and on and on and now this system allows me to carve off money for taxes first, have all the money for myself second and then what’s left I can spend on my business, which absolutely changes up the mindset problem. And oh I need Facebook marketing, oh I need to hire three people. Oh there’s no money for me. Oh I didn’t save enough for taxes darn that doesn’t happen because we take out the tax money, foot, we take out money to pay off ourselves first and then what’s left we have to figure out how the business can live on that and if it can’t then we have to make some hard choices.

That’s really a simple system. But so life changing. Yeah, I’m aware of the book but I haven’t actually implemented it. How has your behaviour changed? Let’s say I know that the principal, I understand but what would you say you’re doing differently as a result of doing profit first. Right. So instead of just saying yes previously that’s our conference that I really wanted to go to. I love conferences. If I thought I would put it on the credit card with the absolute belief that I make enough money I’ll be able to fail. So I would put it on the credit card and go to the conference. Now I have a conference account where I put 1% of my revenue into. When I see a conference I want to go to, I look in that account and I go, I don’t have enough money maybe next year or do I have enough money. I’m going to go and then I go to that conference. Everything’s been prepaid because the money was in the account. I’m not putting things on a credit card hoping I can pay for them.

I still use credit cards. Love them. Fly all over the world on my three miles so I’m not a day brandy follower. I love credit cards but I never put anything on a credit card that I don’t have the cash rebate to pay for on the same day I wanted to and I think that’s where it’s really changed my mindset, staying on a personal level. We would take a family vacation to Hawaii and then when we came back and I sold the credit card and be like, oh In the next six months now when we want to take a vacation, my husband does most of the planning and he’ll look and what I put in the travel accounts and you’ll go can’t afford this hotel who can afford that one maybe three nights instead of five or whatever it is. But now our vacations come out of the vacation fund rather than going on a credit card with the hope and knowledge that will eventually paper because that’s stress. I was eating at me as well as I was the hamster and the wheel make more, spend more, make more, spend more. Now I don’t send anything that I don’t actually have. Yeah, great idea.

I think probably people would be a lot better off if they followed that particular through say approach. Is there anything that I should have asked you about today? I would say That one of the biggest questions I get especially from my agency owners is about hiring people, when to hire, who to hire and I am a big believer and that even caught before the horse this year you always need to have your cart before the horse. In my experiences in 25 years you always want to be one team member ahead and it doesn’t have to be an employee where you pay the payroll taxes is to be a consultant to someone in India to be someone in the Philippines it could be someone in India, it could be anywhere in the world but I have found that every time I’ve hired someone, the business problems and I hire someone and the business growth rather than working yourself to the point of imploding because you’re too scared to hire someone. So I really implore everybody out there who wants to grow or is working too hard, Go ahead and hire someone and you’ll see the business will come.

What are your goals, Wendy? My goals are to educate on a broader forum. I unfortunately running live bps over the last 25 years, could not answer all the phone calls that came in. And so right now I’m building tax strategy and castro strategy courses so that I can teach more small business owners who are not getting the attention from accountants that they need. and building courses that will be in groups of tents, that we’ll be able to educate more people about this stuff. It’s not hard, it’s just that we need someone to teach it and I want to be that someone and she said that’s happening or that is in process. Now, we’re starting off first group of classes this month in March, wow, so kind of already you’re already there then. Well, you know, I want to grow it to be a place where educating hundreds of thousands of people and it’s just about spreading the word and letting people know that they can learn this stuff.

It’s not something that only accountants know that accountants have chosen to not share. Well don’t have the time to share their excuse, but we really need to be educating the business public about how they can keep working harder than money. And that’s my goal. Well, I think that based on today, I think you’re exactly the right person to teach it because accounting, I don’t think has a great reputation for being the funniest of topics. But I’ve loved our conversation. I think you’ve been really knowledgeable and I’m sure the course is great. If someone wants to take it, where do they go? They can go to And also a lot of free resources at There’s some short downloads. There’s worksheets, all sorts of fun stuff. And right now the two classes are wait listed, but you can go ahead and put your information in and then when we open our next bachelor classes, we’ll let you know any closing thoughts for us today. Thank you. Thank you. I hope that everybody on the call takes the time to ask their accountants so hard.

Well, there’s going to be some interesting phone calls after this episode then, right? Wendy Barlin, thank you very much.

You’re welcome, Thomas.