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Taxing Matters

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Taxing Matters

Do you ever feel like you pay way too much in taxes?  If so, you are not alone.  When you account for all of the different taxes that we pay - federal and state income tax, real estate taxes, social security and medicare taxes, ad valorem taxes, sales taxes. . . .  For many taxpayer's almost a third of their income goes to some type of "tax".  OUCH!  And if you own a business, there are even more taxes that come into play - employer payroll taxes, inventory taxes, corporate net worth taxes; the list seems to go on and on and on.

As a public accountant for the last 18 years, I have been asked many times what the secret is to paying less taxes.   And while there are many tips and strategies you can use to help lower your tax burden (see our 101 Tax Tips Booklet on this site for a list of ideas), the real key to paying less taxes really falls to being a proactive taxpayer.  (Sorry, no magic wand here). 

So, how can you be proactive?  There are a couple of things you must do if you want to be in better control of your tax situation.  (They are listed in our Tax Tips Booklet as Tip  #1 and Tip #101). 

Tip #1 is to keep good records.  I can recall countless times that we have worked with a client to prepare their tax return and we have asked them about certain deductions that they may qualify for and they respond "Yes, I am sure I had that last year, but I have no idea how much I paid and I don't have any receipts to prove the deduction, so let's just not worry about it."  I am sure nationwide that there are probably hundreds of thousands of dollars of legitimate tax deductions that are never claimed because of poor recordkeeping.  Lost tax deductions equal lost tax dollars from taxpayer's wallets.  UNCLE SAM WINS!!

Tip #101 is to stay on top of changing tax laws.  Now, I know that this can be a full-time job, believe me!  We spend an incredible amount of time each year studying new tax legislation and how it affects our clients.  Tax laws can often be confusing because for every rule that is some exception that may or may not apply and if it is snowing in July and there are pink elephants in your yard you might qualify for the deduction. . . . Well, you get the picture.

This is why working with a qualified, experienced tax professional can really help you to understand the tax laws as they apply to your specific tax situation and can help you plan for taxes.  We do quite a bit of tax work between February 1st and April 15th each year, but the most important tax work we do happens between July and December.  This is when we do tax planning with our clients to help them to be proactive and to stay a step ahead of the tax man.  Waiting until tax time can leave you a few days late and a few dollars short when it comes to tax savings. 

Yes, being proactive takes work, but it is time well spent.  You can reap the benefits year after year.

Many Happy Returns!!