Tax season

3 Things To Do In March For Financial Health

Welcome to March! As we get closer to the spring equinox, we can’t help but feel the freshness and the energy of “new starts”. While this may be the beginning of the next season, this is also the season for completion, specifically, the completion of major financial obligations, such as tax filing. For the month of March, here are three things you can do to ensure and promote your financial health.

  • Review your budget and see how you’re doing. If you set up a budget for the year, this is a good time to look at how you’re doing and make adjustments. I’ve found it’s best to look at the previous quarter objectively: don’t beat yourself up over financial missteps, just commit to doing better in the future, and move on. Looking at your numbers at this point is also good if you have a tax year that differs from the standard calendar (January to December). Fiscal year filers may find it useful to see what’s happening in March, as this is often their mid-year point, and as such, a good time to make big changes to ensure that they finish strong.
  • File Forms 1120S and 1065, as well as applicable Schedule Ks. This is the time to file tax returns for partnerships and S-corps (unless you’re on a different tax year schedule). Schedule Ks should also be filed at this point. If this doesn’t apply to you, then start gathering the financial documents needed to file your tax returns (especially if you file a 1040). Review those documents and make sure that the information that has been reported is correct.
  • Update your beneficiaries on insurance policies and retirement accounts. While you’re in the process of reviewing and reconciling, it may be a good idea to review all of your insurance policies and retirement accounts. Make sure that the correct beneficiaries are listed, and take time to read through the benefits available under each policy. It’s worthwhile to check these regularly, and confirm whether your comprehension is still clear and accurate.

That’s all for March. Do you have any financial moves you’re making this month? I’d love to hear all about it!

3 Things To Do In February For Financial Health

Hello February!

On my end, it’s been a rather . . . intense start to this new year. I’m looking forward to calmer days in the weeks to come. That being said, I want to encourage you all to continue taking steps to improve or protect your financial health, even when life is hectic. This month, I wanted to focus on a few things that can be done quickly and that don’t take a lot of time. Taking care of your finances doesn’t require a ton of time-consuming projects.

Here are three things you can do to stay on top of your finances in February:

  • Pull your free annual credit reports. Annual credit reports are a right. This website will allow you to get free copies of your credit reports from the three reporting bureaus (Equifax, Experian, and TransUnion) for free. Just because you pull the reports doesn’t mean that you have to analyze them today: put them aside until you have the time to review them. If it helps, schedule the time needed to review them, so this task doesn’t fall through the cracks. Also, Equifax is currently allowing up to SIX free reports per year for anyone within the United States (these extra annual reports will be available until 2026). So after you make corrections to your report, you can allow a month or two, then pull the Equifax report to see if the changes are displaying.
  • File Form 1096 for information returns. If you or your business made payments that should be reported on 1099s, 1098s, W-2s, and a number of other information returns, then you have to file this form. Depending on the number of forms that need to be filed, this may not necessarily be a quick task. But it’s the beginning of the month: if you do paper mailed information returns, it’s still early enough to order this form from IRS (you can’t use the online version for submission). Form 1096 is the cover sheet for hard-copy information returns: you simply have to count how many of each information return you’re sending into IRS, then jot it down on the form. If you don’t have to file information returns, then of course you can skip this tip.
  • Move your savings to an account with a better interest rate. Bankrate has a listing of the current rates of both physical and digital banks offering high yield savings accounts. Do your research then move your coins.

That’s it for February: short and sweet, because your time is precious. Talk to you all soon!

3 Things To Do in January for Financial Health

Welcome to 2023! I hope that the end of last year and the beginning of this year was enjoyable for you all. In the Mid-Atlantic region, we were delighted to get some warmer weather just in time for the New Year. It was a pleasant change from the bitterly cold temperatures we had during Christmas weekend. As the clock switched from 2022 to 2023, there were many things to celebrate and appreciate: I count all of you, dear readers, as blessings.

To start your financial year right, here are a few things that you can prioritize for January. It’s early enough to get a great headstart on a lot of tasks that can feel overwhelming once the calmness of the holiday break transitions back to business as usual.

  • Continue refining your financial vision and commit to eliminating any habits that don’t serve your financial health. I’d advise you reject the New Year resolution mentality (unless it works for you: in that case, do it!) If resolutions haven’t been successful for you in the past, it’s time to try something different. Instead of coming up with a large, dramatic change for the year, why not just spend a little time refining your vision for the year (I discuss this vision in December’s financial health recommendations). Even if you did a great job of creating your financial vision last year, or in other years past, it’s still a good exercise to review what’s working, see what isn’t working for you, and make sure what you’re currently doing is putting you on the path to what you desire. If you identify any sabotaging activities or habits, commit to eliminating the one that is easiest to drop. If you focus on dropping a simple but damaging habit, then you can get a quick “win” that gives you the momentum to take on bigger challenges as they arise.
  • Download a tax calendar and start putting the dates on your digital and paper calendars now. It’s so easy to pull up the calendars, print them, and forget them. Don’t do that! You can find IRS’s calendar here. You can find additional federal tax calendars for specific professions and businesses here, and you can search for “tax calendar” on your respective state and local websites to see additional dates that need to be recorded on your business and personal calendars. If you pay a financial consultant, accountant, or tax preparation service to manage your numbers, you can help them to help you, by knowing when certain payments or forms are due to be submitted. Little known fact: one of the penalties that IRS regularly enforces is failure to file timely, and it is one of their heaviest (non-criminal) penalties. You can avoid it just by keeping up with the dates!
  • Pay your last estimated tax payment for tax year 2022. This payment is due to be submitted by January 17 this year. Use Form 1040-ES to submit it. If you had a particularly successful final quarter of 2022, consider adding a little more money to your payment, to help prevent underpayment penalties.

Those are the three tips for January, just in time to help you all hit the ground running! Have a great day, and I’ll talk to you all soon.

Extensions Due on October 17th

Just a gentle (or firm, depending on what you require) reminder: all of those extended tax returns are due on October 17th. If you’ve been following this blog since the summer, then you know I’ve been sounding the alarm on tax return extensions and how to prepare for filing those. Along with filing extended tax returns, this is the time to do any withdrawals of excess IRA contributions made during calendar year 2021 (excess contributions must be withdrawn to avoid penalties). This is also the time to contribute to solo 401(k) simplified employee pension (SEP) plan for tax year 2021 if you extended the filing time for Form 1040.

Whew, that’s a lot! There is still time to do a few things to close out tax year 2021 if you’ve extended your time to file. For most tax preparers, October 17th is the end of their tax season, and they can finally have a chance to rest before the beginning of the next tax season. However, if you’re a business owner, you may have a different tax filing date. If so, keeping up with the general extension dates and assigning specific tasks to complete on those dates can be a fantastic way of staying ahead of the surge of work that comes when its time to file taxes.

That’s all: get those extended taxes filed! Talk to you all soon!

Take Advantage of the Summer Slowdown – Major Money Tips

Hello friends! We are roughly 6 weeks post June 15th, the most recent major IRS deadline for a large group of taxpayers. This time of year is generally among the slowest for tax professionals, and the perfect time for taking a well-earned vacation. Likewise, many business owners that have non-seasonal businesses may experience a slump in activity, as well.

Aside from going somewhere lovely for a vacay, there are a few other ways to take advantage of the summer slowdown. When enjoying this downtime, it’s easy to forget that there are things that can be done now, in order to make the remainder of the year a bit easier on you. If you’re lucky, taking action now may create some additional pockets of downtime even during the busier seasons! Here are some things both tax practitioners as well as taxpayers can do during this quiet period:

  • Start compiling the documents needed to complete the next scheduled quarterly estimated tax payment (for people that do not pay taxes through wages – the next quarterly due date is September 15, 2022)
  • Contact any clients that have filed extensions, and provide a quick checklist of documents to have before completing their returns. If they need to request missing documents, this is a perfect time to do so. If you’re not a practitioner, then reviewing IRS’s records for your most recent tax year is also a good idea: as a taxpayer, it’s helpful to know what figures and income statements IRS has, so that you can ensure that you have all of the documents reported under your tax ID number.
  • Conduct a review of 2022 business activities up to this point, and identify 1-3 areas for improvement. Come up with one small, concrete step that can be taken today, to move toward that improvement.
  • Reach out to clients to express appreciation for continued support (this applies to tax practitioners as well as individuals that have goods- or service-based businesses).
  • Start and finish reading one book related to your area of expertise. Select another book or two to read during the last 4 months of the year.
  • Digitize any paper records that have been missed, and save these documents in secure ways.
  • Find one thing to outsource either for the summer or the upcoming fall and winter seasons. Set up a payment arrangement to cover the outsourced service until the end of the year.
  • Set your remainder of the year goals (September to December goals). Get a head-start on some of those goals now.
  • Review your paper calendars (or digital calendars) for the past three months. Complete anything that was inadvertently missed.
  • Create a business vision board (I’ll be upgrading mine and sharing it in a future post).
  • Write out your business vision for 2023, and use the remainder of the summer, as well as the upcoming seasons, to arrange your affairs for a smooth transition into your vision.
  • Check on the completion status for required continuing professional education courses (CPE). Schedule and take those necessary CPEs while you have free time.
  • Review your current memberships and affiliations to see if you’re taking advantage of all of the benefits of being a member. If not, start using those perks today. If the organizations you’ve joined aren’t providing enough benefit, reconsider whether you should remain a member (cancel memberships if appropriate).

I am already scheduling most of these activities for myself, because these are tasks that I have been neglecting for a while now, and I know my life and business will improve drastically once I work on these. If you’re doing any of the things listed above, let me know about it in the comments below! I’d love to hear about your plans.

Your Taxes Are Filed- Now What?

You have your returns done (or you will have them done soon). Now you get to relax … Actually, don’t relax yet. You have a couple more things to do. But these are quick- I promise!- and will save you a lot of future headaches.

Await your refund

If you are receiving a refund, then it normally takes 2 weeks for electronically filed returns and 4-6 weeks for mailed returns. If you experience delays, you can check the refund status on the IRS “Where’s Your Refund?” application.

Submit your payment

The sooner you pay, the better. Every day that you delay paying your taxes, interest and penalties accrue. Even paying a portion will translate into savings.

Request an extension of time to pay

You can contact IRS to request an extension of time to pay your taxes, in case you aren’t able to pay. The extensions are available for up to 120 days, though if you need less time, that is fine.

Request that penalties be waived

While you’re requesting your extension of time to pay, you can ask for a penalty waiver. When penalties are waived, your overall bill will be reduced. This is at IRS’s discretion, so it may or may not work. But it doesn’t hurt to ask!

Double-check your records

A few weeks after submitting your returns, compare your tax returns to your receipts and other documents. Sometime between June and August, get copies of all of your income statements from IRS (you can do this online). If you see a forgotten 1099 or W-2, you can amend your tax return to include that newly discovered information.

Prepare for next year

Adjust your W-4s at work if your withholding was inadequate. Start digitally scanning your receipts and other relevant documents so that you can have all of your information in one place.

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This short list will help you catch any errors and reduce your tax stress. Here’s to low-stress future tax seasons!

Tax Day is Two Days Away: Freebies For ALL!

With Tax Day (April 15th) being upon us, it only makes sense that all of us taxpaying citizens get something for doing this annual test of patience. Several major media outlets have published the places where you can get freebies on Tax Day. Here is a list of everyone that is giving away Tax Day Freebies:

DailyFinance has a comprehensive list of restaurants and retailers that are offering freebies on Tax Day. My favorites from their list are Burger King (the chicken fries are back!), Olive Garden, and Bonefish Grill.

DealNews has a brief list of freebies, but a notable one is HydroMassage, where you can get a free massage via water jet. Just what you need to relax after a stressful tax session.

Kiplinger mentions that Boston Market, California Tortilla, Schlotsky’s, Office Depot, and several other places are giving away Tax Day Freebies. Let’s just rejoice over the fact that California Tortilla is participating.

SunSentinel highlights the fact that Staples will be allowing people to shred up to 5 lbs of documents for free, up to May 2. Sounds like a great way to handle some of that overdue spring cleaning.

eSmart Tax features some yummy deals, like Maggie Moo’s, IHOP, and Cinnabon. Those are some of the sweetest, tastiest deals I’ve seen.

Will you all be joining in the Tax Day Freebie fun?

Less Than 1 Week From April 15th- Are You Ready?

During my time as a tax professional, I have devised a quick checklist of items to have on hand before preparing your taxes. It never fails that, when I mention the items needed, at least one item is missing every time. Save yourself some time and aggravation by having these items ready when you go to file your taxes:

  • Social Security Numbers for everyone to be listed on the tax return
  • Copies of all W-2s, 1099s, and 1098s received during the year (yes, that job you worked for less than a month should be included!)
  • Bank and credit card statements showing business expenses paid
  • Any receipts for items purchased for your job, if you are an employee
  • Copies of local taxes paid, sales taxes paid, property taxes paid, and real estate taxes paid
  • Copies of any expenses that you’ve paid, that you are unsure if you can claim on your return (a skilled preparer can tell you if those “mystery” expenses can be deducted)
  • Copies of charitable donation receipts
  • Brokerage statements
  • Receipts for any energy efficient upgrades that you’ve completed during the year

This is not an all-inclusive list, but having these items nearby will making it much easier to prepare your taxes quickly and efficiently.

Countdown to Tax Day- If You Need More Time …

April 15th is right around the corner. Are your taxes already done, or will you be sending in your taxes right before the deadline?

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For many people, there is some anxiety surrounding tax day, either because they cannot submit their tax return on time, or they cannot pay the tax due by April 15th. If you fall into either category, relax! There are things you can do to give you more time to file and pay your taxes.

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If you need a little more time to do your taxes, have no fear. You can request an extension of time to file electronically or using a paper form. To submit it electronically, just go to any one of IRS’s FREE FILE providers to request for an automatic SIX MONTH extension. You can submit this extension request regardless of your income. If you prefer to mail in the extension request, use Form 4868 and mail it to the appropriate address as indicated in the form.

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If you have your return ready but you can’t pay your taxes, you can request an extension of time to pay. The extension of time to file IS NOT the same as an extension of time to pay. If you need more time to pay your tax, you have to complete a different form. You will need to complete Form 1127 in order to get more time to pay your taxes. Granting a payment extension is at IRS’s discretion, and they do not promise that everyone will be allowed more time to pay. They generally only allow it under hardship circumstances. But it never hurts to try, especially if you cannot afford to pay by April 15th.

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If you have other IRS questions, feel free to contact me for a FREE consultation. I’d love to help you!