I being a professional in financial planning services and the owner of a Tax Office feel an obligation to educate my clients as well as the public at large about using proper legal tax strategies to help accomplish after tax estate and financial planning goals.
The tax preparation cycle repeats itself year after year in the same way, which is human but unfortunate and unhealthy. People start getting tax documents in late January after wrapping up their own books and accounting. They gather documents that reflect the year they just lived, in review, and a small or sometimes larger dread starts to form in their mind, “oh my taxes are going to be terrible.”
They get the last document they expected after waiting daily for it and finally it arrives and they call us to come in…… “WE NEED to get this done ASAP!” Why is it urgent? Because they are in a hurry to pay the IRS and State? No of course not…it’s the uncomfortable feeling of the unknown!
People don’t generally feel in control of their tax bill, even though ultimately they are in more control than they think, so it’s that fear that the bill will be a much larger amount than even they expected. To make it even worse, somehow, it’s also because it’s a TAX BILL…… UGGGGGGGH!
Think about it, if you dropped your car off at a garage with a transmission hesitation you think the same way as you do your tax bill. “This could be bad, new transmission was not what I was planning on this week!” What will this cost me? It could be just low fluid or a seal (a few hundred) or the big one, complete replacement $1800. Plus $2500 in labor?
It’s the same pain of the unknown and often in the same ballpark as folk’s tax bills, “will I owe another $500.00 or $2000.00???? But instead of ugggh it’s AHHHHHHHHHHHHHHHHHHHHHHHHHHHH” No sleep is loss over the transmission, just standard adult dread. When it’s Taxes however it’s ten times worse and over the same dollars, WHY? Don’t know just because its taxes!
Here’s our point, your taxes are in your control to a much greater degree than you think but you need education as to the tweaks you could make and you need that information in JUNE so you also have time to put the plan in place. For instance, perhaps you’re planning on replacing a porch on your home in the fall after golf winds down for the season. You are going to take the funds from a short bond you own that was yielding 4% and now is up to 4.75% but is going to mature next February so the great rate is over soon anyway! Tax planning might be that you should use a home equity line of credit instead for several reasons. The materials are on sale now and in the fall will be 15% higher and you should hire the contractor you want now as the good ones always get booked up in the fall rush. The interest is 2.75% on the home equity line and so even though you will pay interest on money for 5 months, you leave the bond paying 4.75% and the 2.75% the bank is charging is tax deductible. The bond when cashed is taxable and at below par you’d loose value that you will not lose in February by allowing it to mature.
It’s all just a matter of doing the math and discussing plans, from grandkids education contributions you might make this fall to if you should roll IRA to Roth before taking that part time consulting job you have been offered. NOW IS THE TIME TO COME IN AND TALK ABOUT 2015! NOT late fall or next year.
We’ll be calling you in a few days, PLEASE come in for at least 30 mins. Let’s fix the IRS bill for 2016 when we can which is NOW! End the cycle, lets do this correctly and together!
This letter, email or post should be going out to every prospect, client or other persons in your CRM !
You are welcome!
The Tax “What if” Dr 😉