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Archive for the ‘Taxes’ Category
 In the 1986 classic movie Wall Street, Bud Fox (played by Charlie Sheen) is a young up-and-coming stockbroker who’s trying to make his mark in the world of finance. As he’s adjusting his tie before a big meeting with the titan Gordon Gekko, he says, “Life is made up of a few big moments. This is one of them.”
Well believe it or not, if you expect to receive a tax refund check, you’re coming up on one of your “big moments.”
Every year, many people blow this chance to get ahead. They spend their refund on a big, frivolous purchase or take a vacation. While these might feel like fine short term uses of a refund check, there are several that could change your life, remove your debt, or help you build your business or security.
Here are my five favorite uses for a refund check:
1) Wallop some debt. Here’s your big opportunity to focus on your art more. If you’re drowning in debt, you may find that your attention is focused more on side-jobs and instant income opportunities than the big picture. Clear your mind by getting rid of some debt payments.
For best results, tackle smaller debts first. Wiping these payments out creates breathing room for your budget. If possible, use the money you save on these payments to tackle bigger debts next. Soon you’ll be on your way to being “debt-free” and focused on your income opportunities instead of the mountain of bills on the counter. (more…)
Posted in budget, Debt, Goals, Income/Expenses, Investments, Newsletters, Saving Money, Savings, Taxes | No Comments »
Posted by Miata | March 22nd, 2013
Don’t taxes stink?
While I love the promise of a new year, the threat of an upcoming tax season is absolutely exhausting! I think we creatives have it doubly bad; we work from the energy of bending rules and pushing boundaries. There are no bendable boundaries or rules with the IRS. Instead, it’s a simple game: do it right, the first time, on time, and you win. Everything else is unacceptable.
 I tensed up writing that!
So, my goal at tax time is to control the amount of time and energy I have to spend on this task. If I can get my taxes filed and paid quickly and accurately, that’s about the biggest win I can imagine.
How do I do it? I’ll share with you some secrets that hopefully will make your tax season a little less stressful so you can focus on your art and not on April 15th. (more…)
Posted in budget, Credit Cards, Daily ProsperiTIP, Debt, Financial Planning, Goals, Mindset, Taxes | No Comments »
Posted by Miata | January 24th, 2013
I know Halloween was last week, but let’s keep the fun alive with some financial horror stories. Didn’t you love horror stories as a kid? I liked them…until I tried to sleep. Then, more often then not, I spent the night staring at the ceiling, sure that at any minute some disconfigured arm would grab me from under the bed.
The bad news is that we all have friends who have real life financial horror stories. Their money problems make it difficult to sleep. Maybe you have those issues. There’s good news: many of these horrible stories we can fix simply by turning on the lights: if we know they’re out there, we can avoid them or find ways for them to vanish:
Horrible Story #1) There once was a man who paid an annual fee on his credit card! There’s no reason to pay annual fees for cards unless you’re a high-powered user. Too many cards are available with no fees that still give you a low interest rate and reward points. Only pay fees if you find a card which you are certain will be justified by the rewards that are unavailable from a non-fee card.
Tip: Use online comparison sites to determine which card best meets your needs without paying a fee. (more…)
Posted in budget, Credit Cards, Financial Planning, home ownership, Income/Expenses, Internet Shopping, money plan, Saving Money, Taxes | No Comments »
Posted by Miata | November 8th, 2012
Sounds too good to be true, doesn’t it?
I realize I talk a lot in Abundance Bound workshops and this blog about avoiding “too good to be true”.
But there’s a good chance that you’ll be able to easily implement THE SAME strategy I used to pocket more money NOW.
How did I do it? Easy. I paid attention to taxes.
TAXES? UGHHH.
How can five little letters (t.a.x.e.s.) put people to sleep so easily? It’s the same for me. I can’t stand tax discussions. However, I love talking about how to get more money in our pockets. (more…)
Posted in artist's prosperity system, budget, Financial Planning, Goals, Income/Expenses, Investments, money plan, Saving Money, Taxes, Uncategorized | No Comments »
Posted by Miata | September 20th, 2012
I’m facing a big tax bill. Every year I have trouble putting away money for quarterly taxes. What’s a good trick to get money saved?
Here’s my favorite technique to save money: save into a central savings account that’s difficult to reach, then pay yourself a separate amount into checking from this fund. Have money automatically deducted from this central savings account each month for your tax bill before you pay yourself money to live so that you don’t face these huge bills.
It’s a horrible mistake to pay tax penalties. The IRS assesses a five percent penalty for every month you’re late filing. Then they tack on a half percent penalty per month on late payments. These amounts are on the overdue sum, not the entire tax due, and are capped at 25 percent.
The biggest problem I see?
People try to use discipline to fix their saving problem. Don’t trust your financial picture to your ability to be “disciplined.” Take 15 minutes with your bank and set everything up on automatic deduction. You’ll be happy you did the next time you encounter a large tax bill and the money is already saved.
Posted in From the Mailbag, Saving Money, Savings, Taxes | No Comments »
Posted by Miata | April 4th, 2012
 Let’s start with a basic tenant that you may already know: a large tax refund isn’t something to jump up and down about, unless you’re angry. A refund is exactly what it sounds like: a return of cash that you overpaid to the government. It’s money that could have been used on your craft, credit card debt or cash reserve. Instead, you sent the money to Washington and let them hold it for you.
Guess what interest rate you charged the government while they held your money?
That’s correct. Zero.
Still, if I had to choose between a refund and owing additional taxes, I’ll take the refund as the lesser of two evils. Refunds for many people are a big chance to fix past financial missteps. If you’re going to receive a refund this year, there are at least two mistakes you should avoid:
- Making a down payment on more debt. Nothing is worse to me than to use a tax refund as a down payment on more debt. Although sometimes it’s unavoidable, creating new debt usually comes with new problems.
- Buying toys. A sports car, motorcycle or boat can be a nice option if your financial house is in order, but it seems that too many people forget long term goals before they create short-term fun.
There are a number of smart ways to use a tax refund. Here are 10 of my favorites to get you started: (more…)
Posted in Taxes | 2 Comments »
Posted by Miata | March 15th, 2012
Right now, you’re probably receiving tons of tax documents. 1099’s from clients, W2’s from employers, statements from loans and savings plans….all kinds of important stuff. I hear all the time that people lose documents or can’t find one piece of paper and have to file an extension. This extra document you’re filing because you can’t find forms is time you could be using on your craft!
Here’s another idea:
- Create a tax basket and place it near your front door (or wherever you sort through your mail).
- As you come across tax documents, place them in the basket. Don’t open them yet. Just know they’re in the right spot.
- On a quiet weekend day, open each envelope and review the documents to ensure your income and expenses have been documented correctly. Leave yourself plenty of time before tax day for this task. If something is wrong it might take a few weeks to receive a corrected document.
Using the “tax basket” strategy, you’ll never lose a document and will save tons of time before tax day.
Posted in organization, ProsperiTIP, Taxes | No Comments »
Posted by Miata | February 15th, 2012
 You’re getting ready to do your taxes. The question is: Should you hire someone or do it yourself?
If your business is making money and you have business expenses, by all means, hire a competent professional. Ask friends who they use and interview at least three accountants before settling on a final choice. With tax time coming up, tax pros are getting busy, so don’t procrastinate!
If you don’t have 1099 self employment income, it makes sense to purchase a tax software package or hire a quick tax preparer (such as Liberty Tax Service or H&R Block).
At first blush, the tax preparer can make the job painless and help you save time for tasks you think are more important. I’m going to argue against this plan of attack, though.
I have a friend who owns some rental properties. When he experiences a problem for the first time, he does the work himself. At first, it was changing light fixtures, door knobs, and unplugging toilets. Later it was more technical work: installing ceiling fans, planting trees and shrubs and hooking up appliances. Once he finished a task once, he hired a professional to do it for him every time after that.
When I asked why he did it himself he gave me a good answer. “I know I won’t have time to do all of this work later. I do it once so that when I hire someone, I can tell if someone is going to do the work well. I can also evaluate their job fairly. Finally, I’ll know if someone is trying to pull the wool over my eyes.
I feel the same about tax preparation people. I prefer the software package because if you use one, you’ll learn a little about how taxes work. If your craft is going to make money in the future, you should begin educating yourself about tax forms and common terms. Just signing the bottom line after someone has done all the work doesn’t help make you more tax-savvy.
Posted in Taxes | No Comments »
Posted by Miata | February 7th, 2012
 Contribute to your 401k even if you don’t plan on staying with the company long enough to claim the matching dollars.
A 401k plan allows an investor to place money into investments on a pre-tax basis. Let me explain what that means: when you collect cash from an employer, they’ve already taken out federal tax, state tax, FICA tax, and in some cases, city taxes. Yuck. When you invest in a 401k, your money avoids ALL of these taxes until you take it out. That means you’ll have more money invested than if you tried to save these funds in the bank. Even when you take money out, it’s distributed as ordinary income, circumventing FICA taxes. The 401k is a powerful tool you should be using right now! When you leave your company, you can often leave it alone or roll it to an IRA until retirement.
Posted in Investments, Savings, Taxes | No Comments »
Posted by Miata | December 8th, 2011
 The IRS just sent me a notice that I still owe money on my taxes. I realized that I forgot to file all of my data on my tax return. What do I do?
- Lana
Lana – This is a great question for your accountant, if you have one. The basics are easy: the IRS has a form called 1040X, which is used specifically for situations like yours. The form is simple, but read the attached instructions. You’ll need to fill out only a portion of the form, depending on the particular mistake you’d made on the original. Include supporting documents along with your 1040X to make sure you keep the IRS happy.
Posted in Taxes | No Comments »
Posted by Miata | October 17th, 2011
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In the 1986 classic movie Wall Street, Bud Fox (played by Charlie Sheen) is a young up-and-coming stockbroker who’s trying to make his mark in the world of finance. As he’s adjusting his tie before a big meeting with the titan Gordon Gekko, he says, “Life is made up of a few big moments. This is one of them.”
