It’s the same old thing each year. Although less than 12 hours ago, people were celebrating the start of a New Year, I’m not sure that they know or that our definition of a New Year means the same from person-to-person. As an Accountant and Tax Preparer, my job is to make sure that people really have a New financial year and the first thing I inquire about, is their last year! Yep you can step into a new year, a new first quarter but there must be reconciliation of the last quarter. Financially, anything you did or didn’t do, last year, can and will follow you into this year! Bad habits, lack of planning, lack of money management, overdrawn account accounts, bad and desperate business moves, and the list continues endlessly; are all bought into the next year. To change any of the above means reviewing, reconciling and analyzing; that’s professional Bookkeeping! It begins with data entry and ends with Business Consulting/Decision Making.
Well each year, Tax season, is like a fisherman’s tale, the buzz about it is larger than life! You have vendors, stores, car dealerships who want to help people spend their tax dollars and they advertise, place sale ads all geared toward gaining that business! The soundbites are crazy! I love how some of the tax companies and new professionals tell people how much money that they can get back! BEWARE OF THE SOUNDBITES! As I say all the time, “I can’t make this stuff up!” Refunds vary because the situations that people have vary!
1) Listen to EVERYTHING people say and not just the good parts! When you hear…, you can get up to $6500 in earned income credit…..understand that the key is up to! Earned income credit is based on the amount a person makes IN EARNED INCOME! People who earn the most money are those who receive the least amount of earned income credit. SIDEBAR: Earned income credit limits have increased for tax year 2016.
2) I’m not sure why but people love talking about large returns and how they got them. Be careful not every wild story is true! When people are called out or really questioned their stories fold quicker than a paper bag. The thing is, story tellers know that a professional will not discuss his or her return, so they can makeup whatever they desire!
3) SOME PEOPLE WHO TELL YOU WILD STORIES ABOUT LARGE RETURNS ARE TELLING YOU THE TRUTH, BUT THEY MAKE NOT SHARE WITH YOU ALL THE LIES THAT ARE TOLD TO GET THAT RETURN NOR WILL THEY TELL YOU THE POTENTIAL LIABILITY THEY FACE IF AUDITED. Less than 20% of people are audited however, as I tell all my clients, it’s not worth it! A few thousand dollars that will be spent before you know it isn’t worth the potential of having to pay back the IRS. While soooooo many get away with it, you would be the one to do it and get caught. I’m just saying be wise! Be safe not sorry!
4) I wish I knew why people feel the need to extort or spread stories about their tax returns, but I don’t. All I know is the soundbites sound good, they are fish stories, larger than life, more exciting than true and those who get caught up in the stories could get caught up in soooooooooooooo much more!
5) Challenge the stories you hear! If it is a law, then ask for proof
6) Push the boundaries of the story teller. If you brag enough to discuss how much or how large your return is, then ask for a salary range, ask about children, how many, ages, college? The more questions you ask the more the story will either unfold or unravel.
If it sounds too good to be true, then it probably is! Get real information and stop listening to the soundbites about tax preparation, refunds and results.
