Before I say anything tax or accounting related, first I must address an issue much more important than my work – Happy 31st Birthday to my son Joshua!! What you see on our blog, our Facebook page, our website – its look and feel is mostly attributable to my son. I provide some content and ideas, and then I step away and let him do his thing. I couldn’t be happier with what I see. I don’t micro manage because my feeling is, son or not, you hire a trusted person to a job, and then let that person prove his/her worth on their own.
And now, back to our story…….
A lot of people may say tax season is winding down. For those who say that, you have no idea. Unless of course you are a CPA who has designed your business where you can actually wind it down now. For myself, and probably a majority of other CPA firms where the tax component is the largest percentage of their revenue, this is the crescendo period. This is the steepest hill of the year, a hill that’s CPA’s have been climbing since mid-December. On April 15th at some point during the day/evening, I’ll fall off the tax season cliff. Right now it’s a mad house – it’s feels like a leg day workout for the brain (just try some squat reps and you’ll know what I mean)!! I wish I was the perfectly organized and well-oiled CPA machine, but alas, I am just me stuck in my running around with my head chopped off mentality. There are some taxpayers who feel similar to myself – those who haven’t filed yet.
Just a few thoughts in early April:
You can extend the filing of your return on April 15th, which will buy you six-months on the due date, as an extended return is due on October 15th. BUT, and it’s a BIG but – you must pay your tax in by April 15th or you risk having the extension be rendered null and void, and you will be subject to late payment penalties. The purpose of the extension is to allow those extra time (up to 6 months) who can’t gather the information together to file a proper return. But unless you properly estimate what you will owe on April 15th, you run the risk of penalties and interest. In some cases estimating can be very difficult – it’s those times I conservatively calculate the estimated tax due on the high side, and also add in what I would expect the 1st estimated tax payment will be for next year (if you need to pay estimated taxes).
If you have no cash flow issues, you can still open up an IRA and save some tax dollars, subject to various rules.
Start thinking about next year. If you’ve struggled with information gathering, and you are surprised at your tax situation (expecting a refund but owing, owing a lot more than expected), you must take some accountability for that. In many cases, taxpayers never reach out to their CPA’s except during tax season (generally info comes in Feb 1st at the earliest). Of course, a CPA should try as best they can to reach out to their clients during the year (something I plan on doing much better at this year). I believe in “You get what you pay for”. You’re paying a CPA to perform important work for you – NEVER hesitate to ask questions during the year. Any time you make a financial move there could be tax ramifications. Read my previous blog – Ask Your CPA.
Final thought – I’m tired and it’s bedtime this Sunday evening (11:15PM). I’m up at 4:30 to start a grueling final climb. Not looking for sympathy……well, maybe just a quick moment of it.