People are rolling into Tax Preparers’ offices, calling to inquire about pricing and stressing over the pending unknown dollars due to Uncle Sam. It would be different if people didn’t feel like all of their tax money was wasted, and it’s not! The fact that we have a military and I am much safer than the majority of people in other countries is not lost on me. It’s the wasted money that people remember and the news stories of scams we all pay for over and over again that make sending a check to the IRS seem like a penalty. Perhaps learning to frame a conversation around tax planning that addresses these emotions can help you gain a client. Here is an example;
Mr. Prospect, what do you think a fair tax bracket would be for you to pay for the services that are not a waste, like the military? Current brackets are 10,15,25,28, 33 and 35%, unless you`re making 415,000 or more a year, and you are in the 25% bracket. Be silent and let them actually ponder and answer before you speak. Doesn’t matter what they answer. They say,”10%” (or any other number), and you begin crafting the pattern of speaking to help them understand. This could also make a good base for a prospect forward blog or email.
Many people feel like taxes “happen to them” like a car accident rather than because of the choices they have made. An example of this is schedule A of a tax return. Schedule A includes things like taxes you paid to the State last year, medical expenses, charitable gifting and other things that are in your control and offset the tax bill from your earnings. You can learn to control that outcome by using the “Double Up!”
A commonly overlooked strategy by those who are near the limit on their itemized deductions is prepaying expenses that are deductible. For instance, if, in 2016, you were planning on spending approximately $10,000 on deductible expenses—health insurance, property taxes, charitable donations, excise taxes, or other itemized deductions—then you could prepay next year’s charitable contributions, next year’s health insurance, and in some cases, even next year’s property taxes.
For example, if a person paid all of their 2016 and 2017 expenses at the end of calendar year 2016, $20,000 of paid expenses would allow them to itemize and take greater deductions. Then, in 2017, they would simply claim the standard deduction because they would have no expenses that were on the itemized list. They were prepaid in 2016. This strategy leaves a smart taxpayer in an every-other-year posture—one year, double up, file the long form and itemize; the next year, claim standard deductions; the next year, double up and itemize; the next year, take the standard deduction. In sequence: itemize-standard deduction-itemize-standard deduction.
For people with the proper cash flow and circumstances, this is an excellent strategy for tax savings, especially now that the medical expense exclusion is 10%, up from 7.5%.
This is one small way to take control and learn to make your taxes fair. Not make them zero, as well all need to pay to live in this great country, just fair!
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The tax “What-if” Dr;-)