TAXES DON’T HAVE TO BE SO TAXING
Tax season is here. Most believe that it only occurs once a year, but actually the season lasts all year. Whether for businesses or individual, events continually occur all year long that represent potential tax benefits or blunders, depending upon how they are handled. Although the major events occur from January through April, the remainder of the year should be utilized as the planning phase or preparation phase for the next filing period.
Just recently I had a discussion with a colleague about performing tax services. She proceeded to tell me what I should do during the busy season from January to April, in order to file taxes properly for clients. First she talked about how unfair the tax code is to the average citizen, and then she proceeded to explain how necessary it is to receive a refund. She viewed it as some sort of payback from the government for taking her hard earned money all year. She also talked about maximizing deductions, tax credits, and exemptions. As I listened intently, I waited patiently for her to come to the part about her role as a taxpayer and what she was willing to do to educate herself on the process. As the conversation concluded, I expressed my frustration with trying to educate individuals, who were only concerned with the size of their refund instead of overall planning. My colleague finally admitted that she fell into that category, and that her only concern was that she wanted a refund, the bigger the better. Anything that occurred outside of that reason was to be challenged. In conclusion, we both determined that we want to have the best experience possible. I want clients to be properly prepared throughout the year, and she wants to have a better overall financial experience. At this point I realized to achieve this will take a great coordination of efforts.
There appears to be a great divide that exists between tax preparers and tax clients. Why? For many reasons. The average tax client feels challenged by the complexity of the US tax code, and therefore has created a barrier of distrust concerning this system. They believe the majority who pay into the system are low to mid level wage earners, while the wealthy take advantage of laws written in their favor.
The tax preparers goal is to complete the tax form as accurately as possible, which allows the client to take advantage of all deductions and credits to their benefit. The tax preparer is committed to portraying the information based on the requirements of the US tax code.
How can we collaborate efforts so that everyone comes out on top?
The first course of action should be to clear our minds of what previously existed by way of action plans. It’s clear that what has happened has not worked very well for either of side. A shift in our mindset must occur. Change only comes from within.
Secondly we must take on new habits of behavior. The ultimate goal is to have each person financially solvent and to minimize their tax liability, while taking advantage of any credits or deductions. One must remember that every financial event that happens in our life has a potential direct impact on our tax situation. Start with educating yourself on simple processes like properly filing your W-4.
Third, we must take the necessary steps to plan in advance. Planning alleviates the stress of having to figure out important information months after it occurred. One procedure I’ve trained myself to do is to make a folder at the beginning of each year labeled “Tax File 200_”. As items occur throughout the year, such as donating clothes to Goodwill, or attending tax deductible fund raising events, I keep a copy of the notice or receipt, or whatever evidence is provided, as documentation of the possible deduction. I also make small notations or notes about what occurred and for what purpose. At the end of the year I just refer back to my folder and categorize all the information based on the type of expenditure. This process has helped numerous clients be better prepared for reporting special tax events. But still the trick here is you have to do it yourself.
Once we all make the decision to join efforts, we can all have a better tax experience!
Jacqueline E. Williams
Financial Strategist
NEW YEAR’S FINANCIAL RESOLUTIONS
The holiday season is finally over and it’s time for us to get back to what we call the “grindstone of life.” The beginning of the year brings new hopes, new possibilities, new ideas, new dreams, and new ambitions. We generally take this as a time to reflect on what has happened, and look for ways to make our experiences better than ever before. One of the most common practices is to make a new year’s resolution. From health goals, to relationship goals, to financial goals, we challenge ourselves every January 1st to come up with bigger and better ideas on how to live our lives more prosperous. Goal setting is a necessity if you expect to achieve anything. I’ve asked a few colleagues about their feelings on their financial goals for the New Year.
My News Years Resolution is the affirmation I repeat to myself everyday….
“I am the Center of Abundance, all of my needs, wants and desires are fulfilled”
and
“The Universe supplies all of my needs with unlimited possibilities”
Linda Slack, Creative Director
African American Family Connections
http://www.africanamericanfamilyconnection.com
I don’t really do resolutions I set goals instead. My financial goal for 2009 is doesn’t have $ value because I find I achieve more when I’m not focused on the money but instead focus on my passion which is helping women who want to operate a business online from home. So my financial goal for 2009 is help 5000 women enjoy their life by developing and improving their skills and resources to generate revenue continuously by operating a business online from home.
Beryl Powell
Business Advisor
OperateItRight (www.OperateItRight.com)
My goal is very simple; to save more money by making sure that I pay myself first.
Richard Williams, III, PhD
Assistant Professor, Morgan State University
My position on New Year’s resolutions is that every day is a new opportunity to make a better choice. New Year’s can occur daily, giving new hope, new faith, and a new found purpose of having the best experience possible. What’s your position on this most famous method of goal setting? Share your belief by leaving us a comment.
Jacqueline (Ford) Williams
Financial Strategist
Twas the night before Christmas
Twas the night before Christmas………………
While we shop through the mall
We rush and we hurry, having no fun at all
We’re feeling the pressure to buy one last gift
In hopes that our conscious will get quite a lift
As we open our wallets, and pull out a card
A struggle within us asks “Why is this hard?”
The pressure to buy, the pressure to spend
The struggle within us wants the misery to end
So we gently put the card back in its place
Feeling guilty, but trying our best to save face
So we think and we ponder about what really matters
As it comes to us clearly, amidst noise and the clatter
This season is not about money or things
This season is about the joy that one brings
The peace, the harmony, the happiness and love
Are all the things we should really think of
So let’s join our forces and pray with great might
That we realize there’s no need to struggle or fight
What we really should be thinking about instead
Is the human experience we share that’s widespread
So forget that last gift, and head home with great speed
Have the happiest, safest, holiday indeed.
Jacqueline E. Ford
Financial Poet
Year end financial tips during this holiday season
Year end has quickly caught up with us all. With the holiday season in the midst of all our daily activities, we get caught up in the cycle of spend, spend, spend. We buy gifts, plan vacations, purchase enormous amounts of food and spirits, as our way of creating a season of tidings and great joy! After all the dust has settled, and we make our way back to the everyday hustle and bustle of life, it is then we take notice of all the resources we used to make such a joyous occasion happen. There are ways to still enjoy ourselves while keeping a close watch on how much money we spend. Planning ahead for major events always puts us in a better situation than if we haven’t planned at all. Take note of what your financial limitations are and put yourself on a budget. Giving yourself these parameters to operate within will guide you through this period of spontaneity, when you feel like having just a little bit more won’t hurt. And remember, tax season is right around the corner. This is not the time or place to have the attitude that your refund will cover all your holiday expenditures. That’s like robbing Peter to pay Paul. Your tax profile should be well organized so that you can have the best tax filing experience ever. Below are some suggestions to help keep you on track.
1. Set up a holiday budget for gifts, parties, vacations, etc. Be sure to add a cushion of maybe 5-10% extra to allow for surprises (ex: I forget to get cousin Susie a gift)
2. DON’T USE CREDIT CARDS. It makes no sense to create more debt during this period. It’s very easy to go overboard with your spending. I personally am a big proponent of using my debit card from my checking account. This way I can’t spend more than I actually have. If you use credit cards, be prepared to pay them off immediately in January.
3. Find unique ways to give gifts, such as hand crafts, baking a favorite dish, or even performing an act of kindness.
4. Keep a receipt for all purchases during this period. During the holidays many events occur, such as parties, galas, and fund raisers, that are actually tax deductible events. You will need this information come tax time.
5. REMEMBER: the holidays are a time for sharing and enjoying the company of family friends. Reach out to someone who you haven’t heard from in awhile and let them know you care. It’s not always about the “things we get”, but more so about the “things we give”, such as Love.
Have a joyous and safe holiday, and remember spend wisely!
Jacqueline Ford
Financial Strategist
COMMON CENTS (SENSE)
Normally I’d write about business issues as it pertains to bookkeeping. However, I’ve decided to stir the pot so to speak. With all the news about the downturn in the economy, I though it best to focus on some serious soul searching elements of our behavior as consumers. Enjoy the article.
The more we work the more money we earn. The more money we earn, the more things we buy. Which came first, the chicken or the egg? The real question is which came first, the desire for consumption or higher earnings? This is a real paradox. There is an argument to support each as being first. But when you examine closely, does it really matter which came first. More importantly what are you going to do about the situation? What I’m really talking about here is getting honest about our financial lifestyles. Individually, consumers struggle in their own rights to stay ahead of potential financial disasters. With the economy in the condition it is today, many are taking special attention to national and global financial states. Is it because now we believe that the world feels our personal struggle? Or, are we now anxious that our perceived “cushion of comfort” has deflated?
Consumerism has reached new heights, as we find reasons to validate the choices we make. From a psychological viewpoint, one could say that our spending habits are directly related to our desires to achieve certain social status. We surround ourselves with successful people, hoping that in some way the success will “rub off” on us. In the meantime, we spend our time and energy trying to emulate what we think is success! In the short and long run, this leads to more consumption; more meals at restaurants, buying gifts, attending special functions to network, etc. Yes, I know, it takes money to make money, but at what point do we do some serious soul searching about whom we are and what our life’s purpose is? Does it really involve acquiring the best of the best through consumerism? How important is that Lexus, or the Fendi suit, or even the Dolce & Gabbana bag?
Keeping up with the Jones’ has turned the American dream into an American nightmare. Our spending habits have become our alter-egos. We have convinced ourselves that more is better. Look at how major companies have warehoused everything from purchasing cars, to grocery shopping, to outsourcing skilled labor from other countries. At some point the bubble will burst, just like the “dot com” bubble burst in the late 1990’s. Looking at our economy today, that bubble has burst again. Why is it that during times of prosperity we forget that what goes up eventually does not stay there? We ride the wave of artificial enthusiasm for as long as it will carry us. Not giving any forethought into being prepared for the cycles that the economy experiences and its impact on our lifestyle. We’re like kids in a candy store, eating all the candy we can right now, not thinking of the tooth ache that comes later.
Our perception of needs versus wants is much skewed. We are in complete denial about our spending habits and how they are directly related to the social statements we make. Even on a national scale, we can compare the spending habits of major corporations to our own households. For example, the mortgage crisis. Mortgage brokers were mesmerized by their own wheeling and dealing in unique products and the profits to be realized from selling them. In turn, the consumer, who purchased these mortgages, thought they could increase their social status by buying more house at cheaper interest rates. The end result, everyone is suffering. The mortgage industry has gone practically bankrupt as consumers are facing an all time high in foreclosures. Each side was looking only at the here and now, and forgot to prepare for the inevitable cycle.
What can we do to stop the madness?
1. Do some serious soul searching about your true purpose in life. Does it really include all the things that you’ve acquired?
2. Always have a plan, or need I say a cushion of your own. Pay yourself first.
3. Be in control of your spending habits instead of them controlling you. Impulse purchases are not an option, ever!
4. Always live below your means! Remember the Jones’ are an illusion
5. Find creative ways to save money that can include the family, such as starting your own garden, cooking more fresh meals at home together, or having game/movie night vs. going out.
6. Make sure your home, if you have one, is weather sealed to save energy.
7. Re-cycle. It’s a must for our environment. Our future generations need an earth that will continue to sustain them.
8. Join forces with an associate and barter your talents and services.
9. Stop riding on the emotional momentum of the media. It’s like having someone else living your life for you. Make sound financial decisions and stick with them no matter what is happening in the world.
10. Stay healthy mentally and physically. We perform best when our bodies and minds are in sync.
It’s all a case of mind over matter. Take control of your life and your finances. Stop playing the victim role every time an economic downturn happens. Stand strong because we all have “Common Cents”.
Jacqueline E. Ford
Financial Strategist
JE Financial Services