Ep 79: What You Should Be Doing Now As Tax Day Closes In

We are talking today about something that some of us put off for a really long time,  and that has to do with Uncle Sam... and taxes.

Look, I know it's not everybody's favorite topic, and I know that you're like, oh, Shannon, this is kind of a big snoozefest. Look, I love seeing all of your posts on social media gathering all of your receipts, and doing everything last minute, but honestly, it gives me anxiety. So I can only imagine what it's doing for you.

So this week we are talking about making tax season easy for you this year, and next week, we'll plan ahead for next year.

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Securities offered through LPL Financial, a member of FINRA/SIPC. Advisory services offered through Advisors' Pride, a SEC registered investment advisor. LPL Financial, Advisors' Pride, Forethought Planning and the guests of Thrive For[e]ward podcast are separate and unaffiliated parties. Lisa Harris and Lisa Harris & Co are not affiliated with Forethought Planning, Advisor's Pride, or LPL Financial. The views expressed here are those of the participants, and not those of Forethought Planning, Advisor's Pride, or LPL financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. LPL Financial and Forethought Planning do not offer legal services.   

Transcript

Shannon Foreman  0:00  
Alright friends, welcome to the Thrive Forward podcast. We are talking today about something that some of us put off for a really long time. And that has to do with Uncle Sam. And taxes. Look, I know it's not everybody's favorite topic, I know that you're like, oh, Shannon, this is kind of a big snooze fast, you just, it's not any fun to do. I'm just gonna wait until April 14. Look, I love seeing all of your posts on social media, where you're gathering all of your receipts, and you're doing everything last minute. And honestly, it gives me anxiety. So I can only imagine what it's doing for you. As someone who loves planning in my life, I look forward to not having to do all that. I know that there are many professionals out there with wonderful checklists for you to utilize and not wait into the last minute. So today, we're actually going to talk about what should you be doing now before April 15. Then on our next episode, we're going to talk about what should you know this year in 2021. So if you have not already, make sure that you're subscribed to the drive forward podcast, so you don't miss out on that content. That is to come on our next episode. But let's dive right in. Alright, friends, well, here's the thing. So many checklists are out there regarding your taxes, you can easily search in Google, what do I need to prepare for taxes? Now, as I've said plenty of times on the Thrive Forward podcast, if this isn't your jam, perhaps you should offload this on to someone else, right. Maybe you're getting to a point where your taxes are a bit more complex. Let's say you have either multiple properties, you have restricted stock options or regular stock options. You maybe had a spouse pass away, you sold a house, you have multiple children in a mixed family, where you're, you know, rotating who claims who perhaps you have charitable donations, perhaps your investments produce different types of income for yourself, or you are a business owner. Those are a lot of complex situations. And that's where I think it's best to be able to trust in a tax professional, add that person to what I've referred to many times your personal board of directors, let that person take off some of that, what is the time that it takes for you, and the stress that it takes for you to produce those things? Could you be doing something else that might either be more enjoyable, or perhaps make you more money if you are more productive during that timeframe, and offload that onto someone else? Remember, your time is also valuable. But if for some reason you really like doing this yourself? Well, there are going to be some things that both you need to prepare for yourself as well as your tax professional. So let's talk a little bit about this. In the interest of the podcast, I said, Hey, you might want to plan ahead, because you know what the IRS might take longer this year to process our returns our lovely friend COVID, who two years later, has not gone away. We have had significant amounts of things that have been affected in our lives. And guess what the IRS is one of them, like many places, they are short staffed and shortchanged on the amount of people it takes to be able to help process your tax return. No, it is not something that just automatically goes into machine and spits out a refund check for you. There are actual people who Review countless amounts of documents in the IRS. So patience is something we need to have. If we are really relying on that return. We shouldn't wait till the last minute if it is something that many Americans think of their tax refund as their earned savings account, which we can talk about in a different fashion on our next episode where we go into what should you be planning this year for next year's tax season.

Shannon Foreman  4:27  
But today, we're talking about between now February and April 15. Well, my friend, get your notebook out or sit down with this recording later with your partner or your spouse or whomever you're filing tax returns with so that you can start to consider some things that are going to happen your way you need to make sure that you're paying attention to so you know all of those little forms that you get in the mail from various different places that usually have the number 1099 or as we call them in In the industry 1099, how many of those are going to be issued once you've reached a certain place of interest? And I get this question all too often from now, at the beginning of the year when I'm recording this in January, all the way through March, usually, and sometimes 1099 can take a while to get to you. So you want to make sure that you're prepared. And maybe I've done some tax planning with your financial planner, or your financial professional prior to you actually, like filing your tax returns, what prep do you need to do what dividends, what interest are you receiving, that's the reason why you're likely getting a 1099. Now, some of you have maybe some more complex forms that might come in, depending on how you get paid your income, whether you're a part of a partnership, or a business, you might have K ones, you might have other pieces of income supporting documents that you need to also get together. Now one thing that I often see people do, and especially my business owners, which you know, I love y'all, I am one of you. But the gathering of the receipts on April 14 has really got to stop my friends, there is so much technology out there available to you that is low cost, and has the ability to track these expenses for yourself throughout the year. But make sure that you have all of your expenses, make sure you're paying attention to things like for instance, the IRS has now ruled and you want to make sure that you always double check with your tax professional. But restaurants if you're a business owner, you used to only be able to write off a portion of that dining out expense that you might have that might have changed for you, you want to make sure that you check into that. Also, you know, every fancy outfit that you buy as an entrepreneur that you want to use for a photoshoot by friends, Oh, those are tax deductible. So please make sure that you're checking with your tax professional, or you feel comfortable getting audited, I mean, you're gonna have to be able to produce the receipt and show that you've never worn it again, that's one caveat to being able to write off clothing is it either has your lovely businesses insignia on it, or you only wore at once. And of course, I'm not a tax professional. So I'm not using that as a piece of advice for you. So you do want to make sure that you double check on your personal situations with your personal tax advisor. Or if you're filing your taxes yourself, honestly one of the websites you should dig into is irs.gov. They've got a lot of really great resources out there. And to be honest, they don't sugarcoat or hide anything for you, they do make things really easy and under, for you to understand and look into, and you got to have to dig a little bit and kind of know what you're looking for. But once you get it, you aren't gonna find a lot of gray area, it's either this or that. That being said, the other piece that I see is, and this is something that the Foreman's used to do, but we track everything on one space right now. So it's super easy for us to be able to get these pieces of resources for us at the end of the year. But charitable donations. Also, you know, when you're looking at all of these deductions, you know, maybe it's the Girl Scout that came to the door, maybe it's, you know, the Boy Scout wreath that you purchased, or the magazines from the kid up the street, whatever it might be, maybe you're writing those checks, make sure that you're keeping track of that, because a lot of times you're not actually getting a receipt. So we actually keep record. Thank you, Jim foreman for doing this. He's actually more organized when it comes to this kind of stuff. He owns this process in our household, again, delegating different things, but making sure everybody's on the same page and understand so if something happens to somebody, somebody can quickly step in. That means that we keep track of that. And we know like, Hey, we've done this, and this kind of adds up to this situation. Now, when you're looking at all of these different deductions that you have, and it can get complex, especially when you've got a 1099 over here, and a 1099 Oh are over here, because maybe you roll have rolled over a 401k

Shannon Foreman  9:27  
or you've got your mortgage interest, and you've got all these other things. And of course, everything varies per state. So we're kind of talking at a federal level, because if you want to get into state level, there's all different clients that we serve in all different states. So you do want to make sure that you run those past your professional. That being said, there is this thing called the standard deduction, my friends. If you don't have deductions upon above a certain point, you likely are wasting all your time keeping track of everything. So for in Since in the tax year 2021, if you are watching this on our visual piece, you'll see my lovely with my dear friend Nate from my my previous employer, I get these every year. And they are key financial data. It's actually something we're ordering for clients this year. But the standard deduction for married filing jointly in 2021 is 25,100. single or married filing separately, your standard deduction is 12,500. These are all things you can Google, you can literally Google text tables, you can literally Google standard deduction, and you'll be able to have these things pop up. But for you to understand, I don't want you to sit and waste time, my friends or anxiety on different things, understand what all of these things are that are adding up. If your standard deduction is more, remember those little alligators that we used to learn about a math class where the alligator wants to eat the bigger number, right? Well, the bigger number, if the bigger number is the standard deduction, will you're going to take the standard deduction, and then you're not really going to need to write off any of those other things. So chances are most people probably fall in line to this when we had the tax law changes a few years ago, that's where we ended up in that situation where the standard deduction went up, which in enticed people to last write things off, because they didn't have to keep record of anything anymore. So if you're kind of at that threshold, and you don't know, then you should absolutely make sure that you're adding those things up, or you're providing those to your tax professional. Now getting into like, if you're using someone, like we use a CPA team, we just absolutely adore them, they're wonderful. Because I get to hand it off to somebody else. Right? That that is that is why I adore them. I adore them, because I get to say, hey, here you go, I don't want to have to deal with it. And that being said, I've already got my questionnaire, they sent me a questionnaire in the mail to make sure things in my life had not changed. A lot has changed in my life, but not a lot in my text situation. So we're gonna, they're asking me, Are there changes in my income status? Right? Did I get a raise? Did I? Well, I pay myself differently. But this is maybe something that you should consider? Did you get a raise? Did you get a bonus? Are there any other benefits that are eligible to you? Did you receive inheritance? Did you roll over an old 401k? Because you changed a job? Did you sell a home? Did you purchase a new home? All of these types of life changes do have the tendency to did you have a baby did you get married all of the lovely life transitions, that impact is in so many other ways, will likely impact us from a tax situation too.

Shannon Foreman  13:05  
So you want to understand where you're at from those scenarios, and make sure that if you don't have a list of things from someone else, Google finalist my friends have some things that you need to understand. First of all, you need to gather all your 1099 on any of your documents that you're sent in the mail, if you are getting 1099 for income, if you're getting 1099 for interest and dividends, if you're getting 1099 for mortgage interest, if you're getting a 1099, because you rolled over a 401k likely some of the 401k pieces don't necessarily need to be filed until later, which you can ask your tax professional about. But you need to get all those documents, just grab a folder. And as they come in the mail from now, until I'd say probably mid to end February is usually when you have to have all those documents out. Just file it all in there. So you have a better understanding of what's happening. That being said, don't wait until the last minute right now, as you're listening to this, tell yourself, I'm going to schedule time to sit down and either one, decide when I'm going to block out time to do my tax returns or to when I'm going to start calling somebody to hire them. And the reality is, it's probably going to be harder to get into professional CPA firms at this point in time. But that doesn't mean that there aren't other resources available to you. I just want you to be cautious and understand what those people's credentials are. Right? Did they just go through like a three week tax training program that they're just basically going to do the same thing you would do if you're using like, let's say an online program or a software tax planning software? Then why are you paying those individuals right? I mean, yes, they're going to do it for you but you're literally sitting in front of them with all of the documents, and they're just the ones that are pressing the buttons. So understand those different types of scenarios, call and see what those availabilities are. And make sure that you're really understanding have your stuff together, don't be that client that waits till the last minute and has to file an extension. Now, extensions are perfectly fine to file and you're not penalized for doing them. But you do want to make sure that you're that you understand everything and you're not pushing it out too far. Make sure that you're not pushing out be inevitable, especially if you are anticipating that you might need that return or those funds to be able to live off of I know so many that are hurting from a financial standpoint, and yet so many that are financially blessed, that we need to understand how is this personally going to affect us in this timeframe and not putting things off longer? Nothing, nothing happens faster, if we take our time. Look, we are all professionals here. And one thing that I have said constantly is your fire drill doesn't mean it's somebody else's fire drill. So you need to make sure that you take the responsibility to get yourself organized right now, that's also where it comes in handy. And we're going to talk about this on the next episode. But if you're waiting to the last minute, you don't know where all of the things are that are coming for you. And you're like, oh, maybe I missed something that I did I have this other account, did I do this other thing, understanding your financial picture, and spending some time with your money. So you're not all over the place. I think as you look forward, you will really regret not being able to plan ahead more frequently. Sure, if you like to live on the edge, by all means my friend. But let's take the time and the respect of ourselves. And our finances and our money to have a healthy relationship. And a healthy relationship with our money also means making sure that we're organized and moving that thought process forward and not being stagnant or, or, or really, at the end of the day, a lot of times just ignoring it until the last minute. All right friends,

Shannon Foreman  17:17  
I know we are talking about taxes on this episode of The Thrive board podcast. But I'm going to pause here, because I know taxes lead to other conversations. And as you are gathering all of those documents, and you're thinking about things, or some of the things that are coming to mind for you, man, I should really be more organized. Or I should probably understand how this investment works. Or I haven't talked to my financial advisor in a really long time for what is the financial advisor, maybe some of this stuff is just becoming way too overwhelming for you. And you need that personal board of directors to be able to go to but that one person is kind of missing for you. Well, we would love to come around you help you serve you when it comes to your financial planning, investment management, as well as just your overall life planning. Here at forethought planning. We start with our wealth assessments, and you can simply go to forethought planning.com backslash wealth assessment to start your journey with us today. Now, back to more tax planning. Now, you don't have to wait much longer, actually, the tax season opens in January. So you're clear to start filing your tax returns now. And as long as you have all of your documents, again, making sure that you have any time 99 That should be coming your way, whether it is income that you need to pay to yourself, or somebody else's paying to you or it's interest or it's interest that you've paid to somebody else to like your mortgage interest, or any other loans that you might have. I will caveat if you have a savings account, you're likely not going to get a 1099 Unless your interest is above a certain dollar amount. And since savings accounts aren't really paying us that much. Depending on the dollar amount that you have in there, you may not get a 1099. So you can always call your financial institution and ask them if you should be expecting one. Many of your financial advisors will be able to pull that 1099 for you if you need one, and you've missed it or haven't received it yet. caveat though also, most financial institutions won't give you a 1099 in January, you're likely going to have to wait till February and sometimes even the end of February before you will get those so that you can process your tax returns another piece, which is kind of a pain in the rear end. Sometimes 1099 Get repurposed or reprocessed and you might have to file an amended amendment amendment. Good luck. tastin at 10 times, you may have to file an amendment to your tax returns. So that's something that you might want to Yes, not wait to the last minute, but don't file too early either and have a greater understanding, understand where your deductions are at, are you at a place where you will likely take the standard deduction, or are there other pieces that you shouldn't miss in terms of bringing enough business expenses, charitable donations, college tuition, other things that you should be thinking about from an expense standpoint as well, there are also several different types of tax credits that you might be eligible for. Some of those have actually been paid out to us if we have children over the last 12 months or so even longer than that. So you might want to consider adjusting and working with a professional so that you're not leaving

Shannon Foreman  20:56  
any money on the table, and you're not missing out on anything. Again, if you're pretty straightforward, and you're a W two employee, no bonuses, no stock options, no selling a house, no large transitions, then just understanding you have all of those documents, maybe utilizing an online service. Again, that's credible and resourceful to be able to use for your processing of your tax returns, if you've got some of those life transitions and complexities, my friend, lean into a professional, there's nothing wrong with that. In fact, we delegate a lot of things in our lives. And this is one area that is okay to delegate in. And of course, if you need recommendations in terms of individuals to use to ask your financial planner, ask an attorney that you might know, ask some of those professional individuals in your life, they will usually have many a different person that they can direct you in to be able to utilize going forward. So get yourself organized. Understand the documents that you need to have, make sure that you're not waiting till the last minute and hire a professional if this is something that is just not your jam. Alright, if you want to understand not only how to prepare for April 15, this year for tax year 2021, but what to consider going forward the rest of the year so you don't have to panic going forward. Join us on the next episode of The Thrive Forward podcast. Again. As always, we'd love for you to subscribe so you don't miss out on any of our great free content that we offer. And my friend, don't put things off in your financial picture. You're worthy of wealth, and wealth begins with strategy as well as understanding deep down inside. What is important to us taxes might not be important. But if you want to create lasting wealth for yourself, your family and maybe even the next generation and your community got to stop ignoring things. So you are worthy of well. The views expressed here are those of the participants and not those of forethought planning advisors pide, or LPL. Financial all investing involves risk including loss of principle, no strategy assures success or protects against loss securities are offered through LPL Financial and member of FINRA and SIPC advisory services offered through advisors pride and SEC registered investment advisor LPL Financial Advisors pride forethought planning and the guests of the Thrive Forward podcast are separate and unaffiliated parties

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