I love this time of year.
I love this time of year because I have an opportunity to give back.
To clients, AND even for people I barely know.
Some people like to make those big puzzles with 1,000 pieces that have a solid blue sky background with one small cloud in the corner.
Others like the Sunday New York Times crossword puzzle.
Whittling small pieces of wood into figurines.
Making those little samplers on a frame with embroidery needles.
I like to figure out what people are going to owe in April on their taxes.
IN EARLY JANUARY.
Who can tell me why that's useful?
Look up at the subject of this message...
I capitalize that, because it is a right and proper noun.
When done right, that is.
Here's the deal:
Your Friendly Internal Revenue Service believes they are a pay-as-you-go service.
Did you know that?
It's in the I.R. Code and everything.
Now if you work for someone else, and gave them a W-4 when you started, you're good.
You already pay as you go. FICA, which is SS and Medicare, and tax withholding.
If you're in one of 41 states you're even doing two tax withholdings.
Now we entrepreneurs, myself, all my monthly recurring clients, and almost all my tax return clients are in a different category.
How do we pay-as-we-go?
The answer is Estimated Taxes.
They are due on the 15th of April, June, September, and January.
That's it. Just 4 times a year.
Now...take a guess how many new clients come to me for a small business tax return that did not pay any estimated taxes all year.
It's one of those things, like not washing your hands after using the bathroom.
Yeah, I'm going there.
It's okay if you don't do it, once in a while, if nobody sees you, right?
Come on, you know you've been guilty of it.
In fact, you're far more likely to have blown off making payments.
Now if you’re one of my clients I hope you’ve found this amusing.
Because I’ve already either got you on board, or are on the path to belief.
Let’s get to the good part, shall we?
The end-of-the-year part.
Whether you’ve made timely payments earlier in the year or not…
…you got one big fat juicy chance to save yourself hundreds of unnecessary excess penalty dollars in April.
A make-up payment in January.
THAT’S why I love this like doing puzzles or needlepoint.
My little nerdy hobby can save dozens of people hundreds of dollars.
Not bragging, really.
If I need a tooth worked on I don’t try to do it myself.
I locate a pro.
We all do one something better than everything else we do.
My thing is figuring out how much people are going to owe in taxes between the 1st and the 14th of January.
We are closed for appointments on the first two work days of 2021, the 4th and 5th of January to run numbers for our current clients.
Then we’re going to be booking short appointments for as many people as we can get on board.
If you got this far are you asking yourself why it saves hundreds of dollars?
The reason is underpayment penalties. If you owe more than $1,000 in tax on your Form 1040 you are subject to them.
I have seen underpayment penalties in the thousands, even.
The funny thing is, if you can pay most of that in January you beat the penalty.
THAT’S why I’m so happy this time of year.
Hundreds of dollars could buy a lot of Christmas.
Come share the joy!
If I work for you now, and you missed my email, here is your rallying cry.
The sooner I can get a look at your income and expenses, the sooner I can do my little trick for you!
If I don’t work for you yet…
I will gladly estimate your taxes, and advise you on a payment amount…
…in exchange for the chance to earn your tax return business this coming season.
If that sounds fair to you, get ahold of me.