Tuesday Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future. Quite frankly, we forgot to run it (again) this week. So now you get Thursday Tips. Hurray!
Like anything else, beauty is in the eyes of the beholder. A good tax preparer can see great opportunities for financial freedom, security, and stability in your life in that return.
Your return shows various sources of income and deductions, as well as your spending and savings habits, your financial savvy, and your opportunities.
Yes, the job of the person you have hired is to reduce your tax liability to the least possible, while keeping you honest. There is another job of that professional, however, and that is to advise you for your financial health.
One example is to inquire about a 401(k) plan you may have at work, and a matching of the contributions that your employer may be making; or to suggest that rainy day fund, as well as college planning (from age 1), as well as to inquire that you have proper legal documents in place, such as a will, living will and medical directives. To direct you to teach your children about saving and finances, to suggest you meet with your insurance advisor about life and disability insurance.
The earned income credits, child credits, and the other adjustments, credits, and payments will get you the large refunds – it’s not rocket science, but the experienced tax preparer will help you walk through your financial life a little less problematic.
So, if you want just a tax return, do it yourself, or try one of the chains. So what if you lessen your refund, or leave out important items, or enter wrong information, or end up in debt rather than a refund. But if you want some value, there is no substitute for experience. A trained professional is much more aware of what needs to be included, where things can be stretched to accommodate different expenses, and what new laws have been brought in since the last taxation period that may affect a claim.
What does your tax return say about you? You might think it says something about the amount of income you make or the fact that you pay too much in taxes. Actually, though, it says one other thing too. It says whether you are a planner or a reporter. It says whether you are victim of excess tax and poor planning or whether you are in control. Remember: A tax return is a report, not a tax plan.
If you wait until you prepare your tax return to think about taxes, there is one truth you have to be willing to accept: You have lost your ability to plan; you are going to pay more. There are no extensions on tax strategies.
It you missed your planning opportunity last year, today is a new day – not only for you, but for you to also teach your children. (And to learn with them.)
There are numerous items on the market that teach children of all ages how to use money, make change, accrue savings, and manage and maintain accounts, according to the society.
For children who receive one, an allowance is a great way to learn the value of money. One popular game, Loose Change (from mindware.com), features cards with nickels, dimes, quarters, and half dollars. The key is to be the first one to have a pile of cards that add up to exactly one dollar without exceeding the value, or the player goes bust.
For kids five and older, the Pretend & Play Checkbook with Calculator (learningresources.com) allows a child to have their own checkbook, write checks, calculate and keep balances of their money. This award-winning pretend play checkbook and calculator teaches children important life skills and responsibility.
A great learning tool for older children (and parents, too) interested in learning more about the stock market, www.oneshare.com is a worthy option. You can purchase a share and order a frame to teach teenagers about the value of money and the incentives for being an investor in the market.
Also recommend are traditional games like Monopoly, Life, and PayDay. These best-selling board games help teach older children about real-world financial concepts like insurance policies, bank loans, income tax, career choices and salaries, and real estate acquisitions.
Remember, the most important financial lesson you can give your children is to practice smart money habits so they can emulate and explain saving, investing, donating, and smart spending.
And getting back to you and your taxes, is a local tax professional really worth an extra fifty or hundred dollars?
I mean, who needs to know the tax code any longer? To do taxes, just fill in the blanks of any number of tax software programs on the market. Yes, you can spit out tax returns. Don’t believe me?
Just walk into any discount tax store and see the employees without a college degree banging out tax returns. And what about all those tax accountants in India preparing tax returns for CPAs here in the USA: Do you think they have read, studied, and understand the Internal Revenue Code and the Treasury Regulations, all written in a very difficult variant of English?
Have you ever reached New Delhi after experiencing a problem with your internet, cable TV, computer, or cell phone, only to have the customer service representative ask you the very same questions that you already answered initially through the company’s automated answering system and waste 30 minutes of your time, before referring you to level “two” support in California, Texas, Florida, or Massachusetts?!?
Do you really believe that they understand the complexity and nuances of our tax code, written in that Swiftian or Joycean language of legalese? Nevertheless, many CPAs farm out tax returns to them every year.
So, find out who’s preparing your tax return and what their credentials are. It’s your money.
Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.