When people come to work with us to do their tax return for the first time, there is often a palpable sense of relief. This isn’t necessarily because they couldn’t file their taxes themselves, many of them have been for years, but I think there is a sense of comfort that comes from working with someone whose knowledge you trust. Part of that is a sense that knowing that things were done right.

In this space, we often talk about bigger issues, what you can do for deductions, what counts as income, etc., and many of those things do get into the depths of tax law where a more nuanced level of knowledge can be key. Knowing that things were done right often involves a lot of the simpler things, though. I think this is highlighted by a recent list released by the IRS of “Common Errors Taxpayers Should Avoid.”

This starts with such simple mistakes as not putting in a Social Security number or entering one incorrectly. This sounds like one of those things that you would read quickly and respond with how you’d never do something so silly, but the entries on this list are there because enough people were silly enough to do it.

Another of those silly things is spelling your name wrong. Of course you know how to spell your name, it’s not like it’s secret knowledge, But let’s say you’re using some tax software, transpose two letters, and then read over it when giving that cursory look over your information at the end. It’s simpler to do than it feels on first read.

For those who are still going at it by hand, there are easy-to-make math mistakes (I mean we’re not talking about only numbers from zero to 10 here). For those who are using software, we then get back to those issues of deductions and income. Did you enter everything that you are obligated to include in the return? Are you sure the program put them in the right place?

I don’t think that anyone really goes into filing their taxes thinking the system is ‘simple’. Again, just look at the numbers. Even if you are a single person who receives one W2, those wacky standard deduction numbers show that someone somewhere put a great deal of thought into this anyway. And those who really know that their return is nowhere near simple are probably already using help to make sure that their return is done correctly.

I do think, however, that many people believe the system is ‘simple enough.’ They don’t want to pay what they envision as exorbitant fees to have someone file their tax return when they believe they can do it just as well themselves. This is a warning for that group. And it is only a warning because I am not saying it is impossible to do it correctly. I am, however, saying there are enough pitfalls that you want to be wary and that there is value in the peace of mind you receive by absolutely knowing that things have been handled correctly.

And if you want to receive that, please set up an appointment and let us give it to you.

Early returns are in, and this has nothing to do with Iowa or New Hampshire.

We are approximately a month into tax season, though realistically only a couple weeks in considering that many tax forms were not required to be mailed until the end of January. However you want to date it, though, the IRS is seeing a slight dip both in how many returns they have processed and the amount of refund checks given (if you want a few numbers on this, you can read this article).

Worrying about a dip in refunds was a storyline in last year’s tax season, too, as we sought to determine the ramifications of the Tax Cuts and Jobs Act. Really, though, I think this misses the point.

The idea shouldn’t be that filing tax returns is some grand game where you try to get the largest check possible back from the government every year. Many who opt for that strategy often miss the point that these refunds are largely money you’ve already given to the government out of your paycheck. The real number you want to be concerned with is how much you are actually paying in taxes – the money that you are not getting back.

Those big checks feel good because of the number on them. If someone suddenly gives you $2,000, you feel like you can really do something with that money. If someone gives you $77, that feels much less momentous because, well, that’s just an extra dinner out. If you get paid every other week, though, that $77 from each paycheck becomes $2,000 over a year.  Many taxpayers are in a position where the TCJA felt like it didn’t affect them much during the year (for they saw only that modest bump in their paycheck) but then it was a huge shock when the tax return check didn’t come.

If you know yourself, know that you won’t be good at saving that $77, and prefer getting the big check every year, that is okay. There are still adjustments you can make to see that it is taken out of your paycheck. If you didn’t realize how the changes would affect you and now want to develop a savings plan out of your own check every two weeks, that works, too.

Either way, moving forward happens by having information and knowledge. The way to have information and knowledge is not to only think about these things once a year when you get to that final number on your tax return. With forethought and a plan, you can have your money working for you in the way that you want.

If this is something you want to do, let us know. It is early enough in the tax season that we can probably accommodate such a discussion along with your regular tax appointment. And even if you’re not ready for that at this moment, or won’t be getting around to your taxes until closer to the deadline, there is no reason these conversations can’t also happen in May. We are here for you no matter the time.

Last week, I wrote about how one needs to be on top of their game if they want to endure unexpected surprises in business. Such ideas have remained in my mind since that time as I have heard many references to a “growth mindset,” and they go well together.

First, I want to acknowledge that these aren’t concepts that will apply to everybody. There are many out there who run a small business more as a side gig, are happy where it stands, and aren’t looking for it to change in any way. Many of those people would even be satisfied if situations change and that business reaches its end. If that is you and the loss of that business will not put you and your family in a difficult position, then yes, there is no need to push further than you’re comfortable.

For most, however, the ideas of growing bigger and increasing revenue are endlessly enticing. Some expansion can be possible by standing pat and continue to just do what you do, but eventually an endpoint will be reached. At some point you’ll exhaust a potential customer base if you don’t keep doing different things. So, in the interests of getting there, just what is in a growth mindset?

The biggest thing that I find necessary for one is the ability to believe that you can do more. If you think you only have so much ability, so much intelligence, so much talent and that they are finite resources, well I daresay you’ve already used them all up. If you believe that you can learn to do new things, branch out into new areas, and continue to improve in those areas in which you have yet to travel, then you have a chance for growth. You must be willing to expand as well as your business.

One of the biggest hurdles in getting into that mindset is a fear of failure. When you think about the things you already know how to do, you think of how you already succeed at them. That familiarity breeds comfort. You are not guaranteed that same level of success when trying new things. In fact, it is much more guaranteed that you will not succeed at all of them right away.  Failure, though, does not mean something will never work, it means something has not worked yet. And when it doesn’t work to start, that’s just a learning opportunity.

So set a vision of where you want to go. Don’t be afraid if the path isn’t clear but have a destination. Then take a step back from that goal and think about what things look like from that point. Then take another step back and so on, and you can start to map the entire path. Looking at each step can feel huge. These things may be way outside of what you know how to do, but it’s the way to get to where you want to be. And as always, don’t be afraid to take help along the way. There are people out there who have traveled similar paths and there are people out there who have gained the skills that you need. Do not be afraid to have them along as part of your journey.

When I opened a news website earlier this week, I read a headline that said the value of cryptocurrency was on the rise due to concerns about coronavirus. I have to admit the cause and effect there evaded me on first glance.

Inside the article, it becomes a little clearer. Worries about the virus had already been having a negative effect on the Chinese stock market (a more understandable cause and effect) and investors were looking to cryptocurrency for increased stability. And really, when you have something global like a cryptocurrency, one can see how it could better stand up to forces that could put a heavy strain on the economy of a single country.

This highlights something that I often speak about when it comes to business clients, the importance of keeping your own house in order. When larger events that are out of our hands start to potentially affect our economic picture, you want to be able to move in a way to lessen the impact. You want where you stand to remain strong.

Does your business rely on one good in one market or do you have room to move? If you’re spending money on advertising, do you know if it’s working for you? Do you know what areas of your business are the most profitable? Heck, do you know if your business is profitable at all? If you don’t have answers to some basic questions you will be far less equipped to handle unexpected situations.

The first people who are going to be able to see and handle those moments are those who are looking at numbers, seeing trends, and noting differences. On a larger level, f you aren’t noticing how things are changing until those early movers have moved, it may be too late. On a smaller level, f you aren’t noticing how things are changing in your business until you’re shifting money around to pay rent, it you’re not positioned to take those next steps.

Chances are you even know some questions that you’d like the answers to. It could be that getting those answers would take more time and effort than you’re willing to spend. You are even likely making a good choice there, as there are other tasks in your business that only you can do. It could be that you are not even sure what is necessary to get the answers. Either way, know that we are here to help you get those answers. You tell us where you want to go, and we will help you get there.

This is not to try to make light of or downplay what is happening in the world. It is impossible to accurately predict where things are going, and the end of the coronavirus concerns do not appear imminent. We can only hope things take an optimistic turn soon. And unfortunately, the things that I’ve discussed here aren’t actions that are going to combat these larger, more globally impactful issues. We can use such moments, however, as reminders of what we can do better, how we want to live our lives, and use them as impetus for change.

By now you most likely have seen tax documents starting to show up in your mailbox. It’s the time of year when they are unavoidable. Some look like good news, some look like bad news, but few come as surprises. Some people are surprised to find, though, that they themselves should have provided some tax forms to others.

This most often comes in the form of what is colloquially known as the “nanny tax.” It’s easy to see where the name comes from, since a nanny is someone a family provides a decent amount of money to over a year. The tax, however, covers anyone who could be seen as a household employee, be it a caregiver, housekeeper, etc.

The tax essentially comes down to the fact that if you paid a household employee more than $2,100 in the year, they owe 7.65% in Social Security and Medicare taxes on those wages. That seems like a decent chunk of money when you think of it on the whole. But this only breaks down to about $40 a week. That means it can even be reached by handing a babysitter some money after a weekly date with your spouse.

(Not that I’m going to tell you to go back and try to track down how much you paid the babysitter every week, but it is enlightening as to how easy this threshold could be to reach.)

Beyond what a household employee can personally owe, if you pay one of these employees more than $1,000 in any calendar quarter, you’re liable for paying federal and state unemployment taxes.

Granted, we aren’t talking about huge numbers here, but if this is something you were not aware of and you want to make sure that you are handling it correctly and legally going forward, contact us and we will work out a plan to make sure you have everything in order.

Keeping things in order is something to keep in mind all over the place when it comes to this time of year and those tax forms that you are starting to receive. The more you think now about getting stuff together, the less hectic the tax return process will feel.

A good starting point is knowing that whatever you needed to file last year’s return is going to be needed again. To move beyond that starting point, though, work by the mantra that you can never provide too much information.

If you come to your tax return appointment and bring some information, receipts, etc., that you aren’t sure if they’ll be applicable to your return or count as a deduction, the worst thing that can happen is you are told no. But it’s possible you find one or two that do count and then the little time it took to include that in your folder of forms will be worth it.

Then next year you’ll have an even better point at which to start from. Time is on your side for now, so get on these things and do not be afraid to make an early appointment to handle your return.

I wrote a couple weeks ago about the value of having someone knowledgeable guiding you through the tax return process. A lot of this value comes in knowing what you can deduct on a tax return. It is usually simpler to get that initial number of the amount of money you earned in a year than it is to properly use deductions to lower how much of that number will be taxed – and thus the amount of tax you have to actually pay.

A lot of these deduction misses come in simply not knowing that something is deductible. For example, you may know that having a home office is a potential deduction, but not understand that it doesn’t have to be a space with a separate entrance and your name on the door to count.

A lot of these deductions can also be difficult to know you are using correctly, though. For example, you may know that having a home office is a potential deduction, but not understand that doing some calculations on the family laptop at the dining room table twice a year for your Etsy shop is not going to count.

This is far from the only potential pitfall deduction, too. There are also weight loss programs, which are not deductible if you’ve entered one to look and feel better. They are deductible, however, if entering one was ordered by a doctor for a specific disease.

Are you looking forward to deducting some gambling losses this year? Well, then I hope you also kept track of how much you won.

Or are you one of the people who made a year-end charitable contribution with an eye to getting a little bump in your tax refund? Did you realize that this will only come into play if you are itemizing your tax deductions and not taking the standard one? And if you didn’t know that, are you then looking for ways to make the math work on the itemization side so that those contributions still came with the bonus you expected?

Hopefully by now you are starting to realize that doing that can be a difficult proposition and one that comes with potential serious consequences. You know all those scams that exist with people claiming to be from the IRS, that you better give them more money or face strict penalties? They work because we are scared and frightened of actually being in that position. So don’t put yourself in that situation.

And maybe it feels scary to meet with a professional because you don’t want to find out that you are in a worse position than you imagined. Sure, such a meeting may end in you finding that you cannot deduct all that you believed, but it will also probably help you find something you could deduct that you did not know about.

Finally, when it comes to facing such potential bits of bad news, remember the level of how bad it is can vary depending on how and when you receive it. Hearing it in February from someone who can help you from making a mistake on your tax return is going to be better than hearing it in August form an IRS agent.

We have made it to 2020 and you know what that means- enough jokes about vision that you’re already sick of them halfway through January!

While you’ve been going through that trial, you may have missed that a new W-4 form has come into play this year. You may have heard that this was coming, well now it is here. If you are curious to see the final product, just click here.

You definitely want to click there if you employ anyone or plan to in the future. Any hires you make should now be filling out this form and not an older form. Those of you who are familiar with these things won’t make an error of mistaking one for the other, for the new one does look quite a bit different.

That different look comes because there are a lot more spaces for information than there were on old versions of the form. It now allows you to adjust for dependents (instead of just claiming a number of exemptions) and account for other income or deductions. So even for your current employees, it might be worth letting them know that this exists and give them the chance to fill out a new form and alter how taxes are being withheld from their paychecks.

I’m going to be honest that although it is a great idea to have a form that allows an employee to look at their total tax picture, it is not going to be crystal clear to everyone how to navigate the form to their best advantage - even after reading all the instructions attached. This is not a real criticism of the form itself, but is more the nature of the tax system itself. After all, things becomes muddled on the form if you’re in as simple a situation as being married, filing a joint tax return with your spouse, and both be working full-time jobs.

So if you still have some questions on the form itself, click here for the full guidance offered by the IRS.

Another easy situation that complicates one’s tax situation is if you earn some or all of your income from being self-employed. This includes something as simple as occasionally driving an Uber. If you get a 1099 form (and they are coming to your mailbox soon), then that is money you have yet to be taxed on and will increase your burden when it comes time to file your return.

So if you have some questions on how to navigate the gig economy, click here for the IRS’s guidance in that area.

At this point, I feel like I may be putting too much information out there at once. So let’s loop back around to the beginning where the new W-4 form is allowing taxpayers to figure out their tax picture better than before. This means that answers about taxes are possible even if they sometimes feel elusive. When it feels overwhelming, though, know that you need not take on this battle alone and we are always happy to help you navigate the system and make it work for you. Now that does sound simple.