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In episode 23 we demystify the complexities of a tax return with Sonia Castelan

“Without those necessities I needed, I wouldn’t be here right now. I wouldn’t be here, you guys. I wouldn’t be here having to speak about taxes.” 

Sonia Castelan is a first-gen Latinx tax professional with over 8 years of corporate experience. She helps the Latinx community gain financial confidence and minimize their taxes by incorporating tax strategies to keep more money in their pockets and expand their financial portfolio.

Sonya Castelan was in a difficult financial situation and was determined to take back control of her finances. She self-taught herself how to budget and started building her own sinking funds to reach her financial goals. She then came across an opportunity to become a licensed tax professional, and her knowledge of data analytics helped her transition into this role. By teaching others how to become financially successful and utilizing the same tax strategies as the wealthy, she was able to help the BIPOC community to minimize their taxes and build their financial portfolio.

In this episode, you will learn the following:

1) We will use a sample tax return to break down the different areas you should be familiar with and understand.
2) We will cover how profits from a business flow through to your personal return.
3) We will also cover some common missed opportunities so you can save money in the future.


Sonia Castelan’s Instagram

Sample Tax Return 2022 Demo Return – HOH

Other episodes you’ll enjoy:

Tax-Smart Investing: Reducing Your Tax Bill & Improving Your Portfolio

Securing Your Family’s Future: Estate Planning Tips

Building Wealth: Understanding Investments, Fees & Risk

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Chapter Summaries:

In this live show, we’re going to break down the complexities of a tax return. We will also cover some common missed opportunities so you can save money in the future. If you have any questions, feel free to leave things on the chat.
For many people, understanding tax returns can be really confusing. Sonia is going to help us break down the complexity of the tax return. The Latino community is the fastest growing business owners in the nation. Sonia will help us understand pass through entities in a way that we can use that knowledge to be better business owners.
Sonia is a first gen Latinx tax professional located in Connecticut. She helps the bypass community gain financial confidence and also help them minimize their taxes. Sonia is also teaching bypass community to utilize the same strategies as the wealthy so that they can implement it.
The taxes that we are paying are being contributed to our federal government as well as the state that you live in. Those are utilized to pay for the essentials that we need as a whole in society. Without that, we’re probably being a mess right now.
Most of us will have a 1040, if not all of us. What this shows to the IRS is what your tax situation was in that particular year. Be careful when trying to make up numbers. The IRS will cross reference what you’re putting in here.
Sonia: The second portion of the 1040 is the tax and credit. She qualified for two types of tax credit, which is the earned income credit and then the child tax credit. Any overpayments that you made plus your tax credits will get subtracted from the income tax, and usually that will result in a refund.
The income section of the 1040 is from line one to line eight. As a financial advisor, one of the things that I want to make sure is that I’m reducing taxable income for my clients when they don’t need it. Being careful in what type of investments you place in which account is important.
Another thing that I wanted to talk about here is the W Two income. A lot of people do get very confused when they’re looking at this particular income section. The IRS knows what you’re doing. There are ways to lower your taxable income. It’s just up to you to do it.
The IRS is going to request prior year tax return and they want to see what your business activity was in those particular areas. The Schedule C that needs to be submitted along with your individual, it cannot be submitted separately. You have to reconcile and double check your transactions correctly.
Sonia tax Tips for 2023 and onwards. Reconciling your books monthly, if not on a quarterly basis. Consider adding tax planning. Real estate, investments, businesses, your W Two job, they all add up.
If you’re a sole proprietor or LLC or partnership again, those are treated as passed through entity. Tax law does not allow owners to categorize their withdrawals as wages unless they file an S or C Corp. Tax entity. Once you file that particular entity, then you are allowed to pay yourself and label that as wage.
People don’t understand the difference between me pay myself a salary versus taking a withdrawal, a distribution for my business. That’s another trigger to being audited. If you guys make mistakes on your tax returns, too, it’s okay, as long as you make those changes before the IRS catches it.
Sonia: When is it convenient to file as head of household instead of married filing joint? She says that is like a highly abused filing status, as well. Sonia is currently taking on new clients and offers a free 15 minute consultation call.
All right, well, make sure we would put links to all of your social channels and that free strategy session you talked about in the show notes again. Thank you so much for being here. I really appreciate your time.