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Why Are You Mad At Your Accountant?

Here is a question to ask yourself after tax season is over.  What really happens during a typical tax season for a family or business? I have been doing this for over 20 years, and so let me describe to you the typical outcomes. The first thing that we see is that most people cross their fingers and say three Hail Mary’s hoping for a refund.  Does this sound like you?  You gather all of these documents that you get from your employer, your investment companies, and real estate you own, then you hand them over to somebody (an accountant or CPA) and pray that they’re going to get you some money back so you can go on that vacation or remodel your house.  Most individuals that we meet who get a federal refund during tax time think that their CPA is the bomb.  They are assumed to be the smartest, brightest, and most unbelievable individuals in the world.  It’s ...

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Are My Withholdings For Taxes Correct?

Since tax season has just passed, you are probably in one of two states of minds.   Either a) you love your CPA because you got a big refund, or b) you hate your CPA because you owed money.   It generally falls into one of those two camps when returns are filed.   Remember, if you get a tax refund that means you essentially gave an interest free loan to the Government.    Some people see this as an effective way to force savings during the year, but you really lose out on the opportunity cost of having these resources in your hands during the course of the year. As of April 27, the Internal Revenue Service had authorized more than 99.1 million refunds for the 2011 tax year—up about 1% a year earlier. It also represents more than three-fourths of all the individual income-tax returns processed by the IRS by that date. The total dollar amount of refunds this year was about ...

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Consequences of Unfiled Taxes and What to Do Now

Despite common belief, filing unfiled tax returns regardless of how many years have passed is not as scary as it may sound. Do not be deterred from doing so even if you do not currently have the funds to pay for the taxes. In fact, not filing your taxes at all can often have greater penalties and be more detrimental to your financial situation than being unable to pay. Ultimately, the faster you file your taxes the better. In this case the phrase, ‘better now than never,’ could not reign more true. Penalties for Unfiled Tax Returns While many people avoid filing their tax returns because they are unable to fulfill the payments, the penalties and added fees are far worse for not filing at all versus being unable to pay. In best case scenarios, you may even be due a refund without realizing. Keep in mind, the IRS will no longer honor this after a certain period of time. ...

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I like April 15th!

Within a few weeks, we will be approaching one of my favorite days of the year April 15th.   This is the last day of the official tax season unless you are filing an extension.   If you ever want to see something truly funny, park your car around 10 p.m. outside of a U.S. Post Office on the last day of tax season and watch the masses flock with their tax returns. The thing I like about April 15th is asking the question, “Did you learn anything different this tax year than the year before this one?” Each year, people seem to spend more time watching Dancing With The Starts or some other reality show than figuring out ways to save money in taxes.   By the time the 2009 tax season ends on April 15th, we are almost a trimester into the 2010 tax year.   This is the time to reflect and ask yourself what you will do differently in 2010 ...

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Is it smart to get tax refund?

Around tax time, we often hear the question, “Is it smart to get a tax refund?”  The answer really falls into the ‘it depends’ category. In general, I am not a big fan of getting refunds.  Anytime in today’s world that you give the Government an interest free loan of your money for a year is probably not a good idea.  When you get a refund, you withheld too much money out of your paycheck over the course of the year.  When your actual tax calculation is done at year end, you will receive the excess withholding back in the form of a refund.   This means that you should really sit with your accountant, CPA, or financial advisor and adjust that withholding number for the current tax year.   If you are going to put more money back into your paycheck, make sure you have those dollars systematically saved into some type of savings or investment vehicle so you don’t spend ...

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