Taking a Year-Round Approach to Taxes

0 Comment
Year round tax tips

Just a heads up, this post is sponsored by the fine folks at Block Advisors. This should go without saying, but all opinions are our own and came straight from our own noggins.

Ah, taxes. Everyone’s favorite topic, right? I don’t know about you, but April 15th at our house is celebrated with cake, balloons, and an IRS-shaped piñata. (Just us? Cool…)

But for serious, taxes can be complicated and frustrating, even in the best of times. As newlywed students, we had almost no income and no tax obligations to Uncle Sam. Then came graduation, our first real jobs, and the eventual slaying of our Debt Monster. And despite all of those baby steps through life, our tax situation was still pretty straightforward and we simply used some tax software to request, nay, demand the money that was rightfully ours in overpaid taxes (aka a refund).

As life has gotten more complicated, however, so have our taxes. In just the last ten months, we’ve added a second munchkin to our clan, transitioned into self-employment, and most recently, started a small business. Suddenly we’ve found ourselves staring down the barrel of a pretty hairy tax situation. And while we had a good run and it pained me to actually do it, we finally said goodbye to our tax prep software this year in lieu of breathing, speaking certified tax professional human. Humans: 1, Robot-driven Society: 0. (These robot dogs are reason enough to smash every computer and electronic in your home.)

What we needed was an accountant who could give us one-on-one feedback for our ongoing questions about how to best take advantage of the tax breaks for our financial situation. More importantly, we needed that interaction to happen more than once a year. And that’s where we give some major fist bumps to the tax prep and planning pros at Block Advisors. They don’t take a one-size-fits-all approach and they hold our sweaty, sometimes clammy hands throughout the entire year. Lucky them!

One hard lesson learned these last couple years is that tax planning in March or April is no different than budgeting for Christmas in November. You’ll likely spend a lot more than you anticipated, you’ll have missed out on some great opportunities earlier in the year to save some dough, and you’ll probably end up drinking way too much egg nog trying to take care of all the loose ends in such a short window before the big day hits. There are a lot of good reasons why we’re on the year-round tax planning train and why you might consider hopping aboard.

  • Tax-advantaged savings and retirement accounts like IRAs, 401ks, HSAs, and college savings plans are a great place to park your money for the future and out of the taxing grasp of Uncle Sam. But unless you’re planning and budgeting those funds throughout the year, it might be tough to scrape together a lump sum by their respective cutoff dates. Plan ahead and put money aside for these accounts every month.
  • If/when your income fluctuates throughout the year, it’s important to revise your withholding allowances. If you start freelancing or your spouse gets a job, you might want to withhold more money so that you don’t owe anything come April. On the flipside, if you become unemployed or you have a baby, you might want to claim more allowances so that you can hold onto more money that’s rightfully yours.
  • Over the last few years, we missed out on a lot of tax savings by not knowing or remembering the types of expenses that could be deductible like office supplies, gas for business travel, and child care. This point alone is where having a year-round tax partner like Block Advisors can actually pay for itself and then some. Plus, we don’t know about you, but important receipts tend to disappear into our office’s black hole of paperwork unless we’re intentional about it. We have a theory they hang out in the same place as our kids’ missing socks, mixing tiny cocktails and laughing at us. Or maybe Joanna has been throwing them away.
  • If you run a small business or do any freelance work, you actually have to pay quarterly estimated taxes. So to avoid getting hit with a costly penalty from the IRS or an invitation to hang out with Bernie Madoff in prison (alright, that might be a bit extreme), we have to stay up to date year round with the help of our accountant.

Taxes aren’t super fun, but they’re even less fun when you owe more than you should. And the first step to keeping more in your pocket is starting to plan for next year’s taxes today. For some, tax prep might be as simple as putting aside a little money each month into your 401k. But if you’re anything like us (read: not a tax expert), you might benefit from working with Blocks Advisors and having them help you prepare and plan for the current and future tax year.

Previous Post Next Post

You Might Also Like

No Comments

Leave a Reply