4 More Tax Lessons Learned in 2014

finance foundations, financial religion, taxes
cashreg4

Some predictions I got horribly wrong:

  • Selling APPL stock in 2008
  • Selling AMZN stock 2009
  • The demise of this whole “smart-phone-craze” thing

Finally, though, I got something right:

You gotta keep learning about your taxes.

Here are 4 more lessons I learned… as I filed my 2013 taxes:

1. Peace of Mind > Cost

In past tax seasons, as April 15 approached, I debated between doing it myself and hiring an accountant. Yes, I wanted to save my hard-earned money…

But it was more than that.

I was annoyed by the thought, “I should figure this out.”

I thought, “This can’t be that hard,” or “There’s software that walks me through the whole thing,” or  “My parents always managed to do their own taxes, why shouldn’t I?”

So I always tried it on my own… at first.

Afterwards, inevitably I’d feel this… doubt. Even if I got it done. Even if I got a return, I always wondered:

  • What if I screwed up?
  • What if I overpaid and I’m not getting back what I’m owed?
  • What if I missed a detail and end up getting audited?

Now, compare that experience to this year, when I went to see my accountant, Zeke.

Zeke saw my girlfriend, Amy, was 1099’ed for most of the year but hadn’t deducted any expenses. So he spent 10 minutes asking her questions:

  • Did you buy any supplies?
  • Did you travel to any events?
  • Did you get any business cards made?

When he found out she took the bar, he lit up: “Okay, great… How much was the bar exam? Did you take a prep course? Did you buy supplies in order to study for it? Where did you take it?”

He was able to expense off most bar-related items and reduce how much she owed the IRS.

Now, could Amy and I have figured this out on our own? Probably.

We’d spend a few hours on Google…

Take couple hours filing…

Then spend another hour or two double-checking our research and our work…

And afterwards, we still wouldn’t have felt the same peace of mind after Zeke’s 10 minutes doing the exact same thing.

To me, that peace of mind is priceless.

2. You Are Responsible For You

I’ve taken on a good amount of freelance work in the past 4 years — about 4 or 5 jobs have been on a 1099-basis. You know the number of times my employers said to me:

“Okay, your money isn’t getting taxed, so make sure you’re filling out your estimated tax forms…”

OR  “Save 20 percent of that paycheck for taxes at the end of the year”?

NEVER.

Same thing in Amy’s case, plus she only just recently arrived in the country — how was she supposed to know to complete estimated tax forms, or that if she was 1099’ed, she’d need to pay back taxes at the end of the year?

It’s easy to put the blame on our employers for not preparing us.

We could get on Reddit and complain to the Internets about how badly we were treated.

I could draft up a blog post about how shitty some employers are.

Ultimately though, we’re the ones who have to pay those taxes… so the onus is on us.

Even if your employer tells you, “don’t worry about taxes, you’re not making enough to have to pay…” even if you have an accountant who’s helping you file…

You are responsible for you. 

Which means year after year, it’s up to you to keep learning.

3. You can earn Reward Points or Miles by Paying Taxes

While I got money back on my federal filing, I did owe some state tax. And if I’m going to pay, I might as well earn some reward miles, right?

But, can you pay the IRS with credit card?

Turns out you can, through a couple of specific vendors (note: these vendors charge a fee, which in turn can be deducted as a tax expense for the following year.)

For information on earning more reward miles, click here.

4. You’re Never Done Learning

We were nearing the end of our appointment, and Zeke asked, “Well, can you think of anything else?”

I pulled out my computer and started looking through my expense spreadsheet, trying to find any other deductions…

“Hey that looks like a nice, shiny new computer. When’d you get it?”

Well, turned out I got in at the beginning of 2013. So, onto the deductions part of that expense went.

If I decided to try and do this all on my own…

If I decided I wanted to save money by filing myself…

I’d have missed so many opportunities to learn.

After Zeke suggested I deduct my computer, it got me thinking about other deductions sitting in front of my face. What else had I missed for 2014?

On the drive home, I thought of three new deductions I hadn’t taken yet.

I’ll never catch all the deductions. Even with an accountant, we’ll probably never get it 100 percent right.

But hey, there’s always next year…

(If you need more information taxes, what sort of deductions you can take, and common pitfalls, click here.)

#####

Photo Credit: Sean McMenemy

0 comments… add one

Leave a Comment