Tax Day Takeaways | The Modest Millions Show

Today is Tax Day in the U.S. It’s a day dreaded by many, but hopefully this year’s tax season was relatively stress-free and free of any major surprises for you. As we wrap up one tax year and plan for the next, it’s time to look back at what you would have done differently and make some Tax Year’s Resolutions for this coming year.


IN THIS WEEK’S EPISODE

  • Discussing the value of looking back at the previous year’s taxes
  • Taking learnings from last year and planning for this coming year
  • Importance of baby steps toward achieving your tax goals
  • How tools like Quickbooks can help you better track income and expenses

Tax Year Takeaways

If you’re listening to this on the day it’s published, it’s Tax Day in the U.S.: April 18, 2017. It’s a day dreaded by many, but hopefully this year’s tax season was relatively stress-free and free of any major surprises for you.

If you’re listening to episodes in order, you may remember I had teased another topic on evaluating traditional versus Roth accounts, but given coming off the holiday weekend and the timeliness of the topic, I wanted to quickly cover Tax Day today.

Finishing up tax season, I always come away with thoughts on what I should do different next year. Maybe you have some of these thoughts too:

  • Should I hire a CPA?
  • How can I better plan for contributing to my IRA?
  • Should I budget for more charitable donations?
  • Did I maximize all the deductions available to me?
  • How can I lower my tax bill next year?
  • How do I better track business expenses?
  • How can I use tax-loss harvesting to my advantage this year?

Hindsight is 20/20, and it’s important to always reflect on what you can improve upon, but if you don’t take action you’ll always be legally blind.

Just like new year’s resolutions, you need to make a plan and then make a plan to accomplish the plan. Let’s call it “Tax Year’s Resolutions.”

This year, I’m declaring it here and now that I’m going to put our money where my mouth is. I’ve told my wife over for the past few years that we’ll need to ditch TurboTax “next year” and go to a CPA to better maximize our finances. To date, our finances have been relatively straightforward, but it has felt like we’ve only been on the cusp of being able to benefit from a CPA.

That’s hard to admit when I’ve been a proud DIY tax filer for my whole working life. It’s hard to think about giving up control–and paying extra–to let someone else do our taxes. But this year we’re taking a more aggressive approach to our personal finances as we implement some of the strategies we’ll explore here on the show.

I’ve heard tax pros can often find extra tax savings that can often offset the added costs, and I’ll leave it to my CPA listeners to weigh in here. I think we just need to pull the trigger and do it…”next year.”

There are some small steps we’ll need to take to throughout the year to get us to that goal, including implementing things like tax-loss harvesting via taxable investments, budgeting for IRA contributions and better tracking our income and expenses of the various side hustles my wife and I are each currently hustling. These are activities that will help us justify the additional investment in professional tax services. And I’m not talking about Jackson Hewitt or H&R Block. I’m sure they’re fine, but I’d prefer to go with a local CPA that can focus more on our situation in a more personalized manner. That may not be true, and very likely is too broad of a statement, but it’s a hunch that I’ll take with us when we start interviewing CPAs. And that’s truly Step One: calling a couple CPAs over the next few weeks to see if/when it makes sense to engage them and hang up my DIY green eyeshade visor that I pretend I wear when I’m doing our taxes.

So, that’s my Tax Year’s Resolution. What are you going to do differently this year to put yourself in a better tax situation 12 months from now? What are you going to do (baby steps) throughout the year to get it done?

Let’s take a quick break to talk tax tools and then we’ll come back to wrap up.

TOOLS

As we talk tracking to make it easier come tax time, it’s tough to beat Quickbooks, especially when you have income and expenses coming in from a variety of sources, as we do. There are a handful of good point-solutions, or applications that excel in one or two things, but if you’re looking for an all-in-one solution, check out Quickbooks. You can get a free 30-day trial at modestmillions.com/quickbooks. Oh, and if you’ve got a side hustle or two of your own, here’s a quick tax tip: you can write it off as a business expense. Check it out.

WRAP-UP

Alright, that’ll do it for this week’s episode.  I’d love to hear from you. What are your Tax Year’s Resolutions?

Also, I’d appreciate your feedback for me or for the show, topic ideas, personal anecdotes of your own journey or if you just want to say hi. You can always reach me at feedback[at]modestmillions[.]com.

For a recap of the strategies, tools and links that we talked about today, check out the show notes at modestmillions.com/007.

Also, while you’re on the site, don’t forget to subscribe to receive email updates when we post new episodes (you can do so at modestmillions.com/subscribe). And please, if you like what we’re doing here and you find the information valuable, help us spread the word and show your support by leaving us a five-star review on your whatever podcast platform you’re listening to us on.

Join me next week when we continue our series on retirement savings and talk about the pros and cons of traditional versus Roth accounts and figuring out which option(s) might be right for you and your situation.

Until then, remember to keep squirreling away now to earn millions later!

Thanks for listening; we’ll catch you next time!

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