TAX TALES: larger than life and full of lies….
Everyone likes to lie about money, especially their money! No one wants to tell people that they overspend, do not budget and cannot afford the lifestyle that they live. I get it! We’re private about money because we are lying about it. It’s only when you speak to others that you realize your deficiencies, as it relates to money and the way you manage or mismanage it. However, I’m very amused and slightly frustrated when people lie about their tax situation.
I grow weary of the clients that come to me, comparing their situation to another person’s situation when the only proof that they have is ‘word of mouth’! It’s always the same, “a person at my job, who does his or her own taxes said that they got back $10k”, or “I heard that I should at least get $5k off the top because of my children.” I don’t mind clients doing their research, I expect you to do that but allow it to be actual research and not the TAX TALES that myself and other professionals have to fight each year just to do a great job! HOW CAN YOU BE SURE IT’S A TAX TALE? Here are few ways and a few things you should know about taxes in general BEFORE you begin listening to everyone’s opinions!
If it sounds too good to be true, then it is!
You can write off a lot of things, however, tax professionals tend to pursue or move cautiously thinking about the ‘what if’ situation. While audits are random and unlikely, since this is our livelihood, we tend to not want audits especially if they can be prevented or not provoked by the things one does. Writing off too much is one of those things! There has to be wisdom in everything one does.
- LARGE WRITE-OFFS on personal tax returns are a RED FLAG! The taxpayer didn’t plan properly during the year. If you didn’t plan during the year, chances are you don’t have records during the year and wait until the end of the year to pull files together. If you handle business that way, you’re bound to either overwrite-off expenses leaving room for the IRS to come and get money from expenses you wrote off that you cannot provide proof of or that may be questionable! Delayed tax doesn’t mean denied tax liability. It’s better to owe a little than suffer a lot later!
- ASK FOLLOW-UP QUESTIONS! Always ask the person giving you advice for the tax law or proof of what they are saying. For example, when someone tells you that you should get $5 just for your children, ask them: “does it matter how much you make?” Questions like that. One to two questions, specific questions usually rule out liars because either they know or they are guessing.
- Google it! If you were to google the statement concerning receiving $5k for your children, (which is earned income credit) you would find not just that information but the complete table. There is a table that tells a person that if you have one child and make between this number and this number, your earned income credit is…..$(random amount). However, that’s it, there is a table! It’s not just one amount and it is based on how much you earn! Newsflash if you make over $40,402 as a single, head of household or widow, then you don’t qualify if you have one child.
- TAXATION IS VERY SPECIFIC! VERY! So before you compare yourself to another, make sure you know EXACTLY HOW MUCH THEY MAKE OR MADE! Some of the people you are speaking with may either make much more than you or much less. Just because you work together means nothing! Fiscally responsible people monitor their income all year long and not just at tax time, so please do not compare your situation to theirs! Children, home-owners, charitable donations, all of these things affect your taxes.
- TURBO TAXERS – If you have ever used Turbo Tax you know you can play with it. You can manipulate answers to get the return amount desired. Now for many that will solve their short-term issue of receiving the money that they want and desire but the chances for it to return them, later always remain. Personally, people can take all the risk they desire but as a professional, chances that are unnecessary and risky are calls we tend to leave to the client. We’re paid to be professional!
- EVERYONE wants to have it all, make money and not have it swallowed up in taxes, and that does occur. Just know that people with money, spend money to manage their wealth. It’s not a miracle it’s called business. As your money increases, your tax liabilities change and tax brackets change so too do you have to adapt and change with the way you handle your business if you want to remain successful on the next level!
Step up to the plate and remember that having more means managing more! Don’t fall for the okie dokie and be tricked into scams and cons.
