Time for Tax Planning

Okay, I admit it.  I feed this squirrel, which is why he’s hanging out and staring me down.  I suppose I fascinate him, because every time he sees me, I’m working.  Perhaps he feels sorry for me.  Or he’s just hungry again.

He’s shaken me down for enough food that he’s set for the winter.  He’s got nothing to worry about, except for the neighbor’s cat, who I also feed.  (He prefers to eat at my house than his own.)  Too bad none of these dependents make it to my tax return.  Which of course, brings me to next year’s tax return.

The squirrel is all set for the year, but are you?  Have you done any tax planning?  Or do you think all you need to do is toss your documents at your preparer in April?  Will there be tears and tantrums if you get a big tax bill instead of a big refund?  Without planning, where do you stand?  There are changes every year to take into account.   Some people get married and are surprised by a large tax bill, because the things that worked when they were single suddenly do not work now as they are in a higher tax bracket, and they have a huge balance due.  Others have more deductions available to them during the tax year (perhaps large donations, a new dependent, a new house purchase bringing  real estate taxes and mortgage interest paid, for example), and they can adjust their allowances at work to have more money now in each paycheck, as opposed to a large refund.

Even if you prepare your own tax returns, it’s a good idea to do planning, perhaps even with a tax professional, to get some perspective on where you stand now, and to put any necessary changes in motion before the end of the year.  Once December 31st comes, it’s all over.  The window of opportunity has closed on almost everything.

Ready for some planning?  Time to pull out your important paperwork – paystubs, account statements, donation receipts, last year’s tax return, etc. and give yourself some interrupted time.

Here are some of the things to look at:

  • Is your withholding at work sufficient? Did you start a new job and submit a correct Form W-4?  Compare the withholding to last year’s salary.
  • Any major changes you should take into consideration? For example, marriage/divorce; large salary change; the sale of any restricted stock options, etc.
  • Will you max out your retirement plan at work by year end?
  • Will you fully fund an IRA by the deadline?
  • If you have children, do you have a 529 plan in place for their education? How much have you contributed so far this year?
  • Do you have any overseas accounts that will involve you chasing down statements that might take some time?
  • Cleaning out the garage? Have you valued the donations using a reasonable valuation guide for the fair market  value and attached a list to the signed and dated donation receipt?
  • Self-employed? Those books and records need to be in order NOW.  Estimated taxes need to be paid and they are based on net profit.

The takeaway here is that you can’t chase these things down next April and expect a positive outcome.  A little bit of planning now will plant the seeds for a peaceful tax filing, with better results, since your receipts will be organized and you know where you stand.

And speaking of receipts, if you have fading receipts, it’s time to digitize them before they are blank.  If you walk into an IRS audit with a faded or blank receipt, the IRS will allow you exactly what they can see – nothing.  As I always say, a scanner is your best friend.  One of the best investments you can make.

Time to go feed the squirrel, before the neighbor’s cat shows up.  Happy planning!

Giving the finger to the IRS is never a good idea!

It’s never a good idea to give the finger to any federal authority; especially the IRS.


Sadly, a man sent a fake bomb and his real finger to the IRS, as well as a bullet and a joint.  He is now in jail.

In addition to tax issues, there were clearly other factors here that led to this particular act.  I am not a psychiatrist nor do I have specifics on this person’s tax case (nor could I comment if I did), but I can share from experience with hundreds of clients with tax problems that people get stressed out and not everyone has a normal reaction, although most reactions are less drastic.

Many of these people let years and years go by before taking steps to settle their issues.  Another bad idea…….it doesn’t get better with time.

Believe it or not, if you have a tax problem, you have options.  You may not know what they are, but a good tax professional will.

Keep your digits and get help.


Pick up your copy of “101 Ways to Stay Off the IRS Radar“, available at Amazon and Barnes&Noble.com.  It is the most fun you will have with taxes, and you’ll learn important information you can use year round!

Deducting business mileage

This is the first of many posts “from the other side of the desk”:

The other day I heard a tax professional (whom I will call Mr. K) complaining about a situation he had with a new client.  The client wanted a deduction for business mileage, but he didn’t have a log.  “Oh, I drove about … 4,600 miles”, said the client.  (Probably got that number off the ceiling too.)  Mr. K explained to the client that estimates are not allowed; written proof is required.  Mr. K looked over the client’s prior year tax return and asked where the mileage info came from last year.  The client angrily replied that his previous tax preparer always provided the numbers, and made sure he paid a low amount of taxes.  (Oh joy…one of those.)

The upshot was that the client departed midstream and it was Mr. K’s turn to be upset — he lost an hour of time he’ll never get back.

My clients know better than that.  Tantrums don’t impress me.  I have thrown people out of my office for less.

Why?   Think fraud, tax evasion, outright stupidity and as my colleague frequently says, an inflated sense of entitlement.  But with commercials running all through tax season saying “you DESERVE a refund”, as if a refund is some sort of participation trophy for filing – I suppose it’s to be expected.

So, I thought today is a good day to remind taxpayers about a mileage log.  It’s so easy to do it correctly.  It takes just seconds to notate your miles every time you drive for business.  This will make tax time a breeze, save you a ton of money, and you will have records that will stand up to the IRS.  Don’t wait until tax season or worse, a tax audit, to scramble.  (That’s like writing your book report due today on the bus on the way to school.)  Start your log today.

I posted a cheat sheet at RealLifeTaxAdvice.com covering exactly what you need for a bulletproof mileage log.  Visit the website and get your free download today.

Want more help?  Get on the list for our upcoming ebook including a done-for-you mileage log with all of the information you need to stay IRS-compliant.  We’ll break down the two different ways you can report your mileage expenses, how to deal with an IRS audit for your mileage, and other great tips.  You’ll get first dibs when it comes out, AND a coupon code if you email me now.  No obligation.  Email me at team@RealLifeTaxAdvice.com.

Is this real or an IRS Scam?

I don’t understand it………..the IRS has given away BILLIONS in fraudulent returns.  Victims of scammers have lost MILLIONS, and let’s be truthful — how many people have NOT come forward!??!?!  People have lost their life savings, been frightened to death, literally ran from their homes when they thought they would be arrested, etc.  So why don’t more people know about the scams?  Why does the media ignore this?  Why isn’t it on every TV station, in every newspaper, and online?

It’s not just the elderly and immigrants; it’s millennials, it’s EVERYBODY!!!  These scam calls have been perfected with time, and sometimes you just don’t know for sure if it’s really the IRS or a scam.  And the fake notices are really convincing.

I put together 10 points to help people identify a scam.  It’s a quick cheatsheet, and I ask that you share it with your friends and family.  It’s a free download at RealLifeTaxAdvice.com.

If the caller is threatening jail, arrest, etc. — hang up the phone.  We all have to pay our taxes, but this is not how it’s done.  Give the caller NO personal information, and you can call the IRS directly.  Or ask a tax professional (we can spot fake calls and notices more easily than you can because we deal with them every day).  The IRS does not leave threatening messages on your voicemail; they do not contact you by email; they don’t show up in uniforms at your door (victims reported fake IRS agents showing up at their door in brown trooper-style uniforms with a trooper hat).

These scams have been going on for years, and they work.  But the more we can spread the word, the more we can help people.  Download your copy now:  RealLifeTaxAdvice.com.

I also talk about the scams in my book “101 Ways to Stay Off the IRS Radar“, available at Amazon and BN.com.  It’s less than $15, and I promise you — it’s an enjoyable read.  And you will learn important tips to stay out of trouble.

Have you ever received a scam call, robocall or fake notice?  Please share your story.  Let’s help others out.

Summer Brides & Grooms — Don’t Marry an IRS Nightmare!

The questions has been popped, the ring is on the finger, and the wedding plans are in motion.

Tax and financial expert Abby Eisenkraft from REAL LIFE TAX ADVICE shares 3 important questions to ask your intended BEFORE you say “I Do”:

√   Ask your spouse-to-be if all tax returns have been filed, and if there are any outstanding balances.

Why?  If you file jointly next year, you may lose an expected refund.  And you don’t want to start your marriage in debt!

√   Ask your spouse-to-be if there are any back-year unresolved tax problems, including any open audits.

Why?  Tax problems come up at the most inopportune times.  They always crop up right before a vacation, wedding, big event, etc.  And if a tax problem is large enough, the IRS can confiscate your passport.  Sure way to ruin a honeymoon!

√  Ask your spouse-to-be for a “sit down” to compare your paystubs and ensure enough tax is withheld.

Why?  The choices you made when you were single might have worked for  you then, but may not work now.  You may find yourself in a new tax bracket, and there are other considerations when you have a change in filing status.  A small investment in some tax planning with a professional now may pay off handsomely in the future.

Congratulations to all of you summer brides and grooms.  If there is a tax problem, deal with it together.  You can sort it out before tax season, and maintain that marital bliss!

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