Tax Day Has Come and Gone, Now What? Preparing Now for Next Year

Tax Day Has Come and Gone, Now What?

Tax day has come and gone for the year, and many of you are breathing a sigh of relief. Now you plan to kick back and enjoy the next twelve months and put taxes out of your mind until next April.

That’s a huge mistake.

If you want to make the most out of your yearly tax routine, you need to put together a game plan for next year. Here are the minimum steps you should begin taking today to be better prepared for your taxes next year.

Hire a Professional

Unless your taxes are simple enough to file using a 1040EZ, you will likely be well-served by hiring a professional to prepare your taxes for you. Chances are you’re already paying for tax preparation software, which means you’re out of pocket about $50 anyway. An informal survey on Dave Ramsey’s Facebook page revealed that the average return for self-filing individuals was $1,824 while the average refund for filers who hired a professional was $2,615. As you can see, the tax pro more than paid for themselves.

Tax software often leads users astray by not having any sort of checks and balances to ensure you’ve entered all your information correctly. The software doesn’t know how to apply all the deductions and credits for which you qualify—the best it can do is offer you options based on your input. Sure, tax software has gotten better and more intuitive over the years, but it cannot beat a professional with a working brain.

When you consider that a seasoned tax pro understands the intricacies of current tax code and can not only get you the largest return possible but also ensure that your taxes are filed properly, you begin to understand the benefits of paying their fee. Don’t overlook the added bonus of not spending hours and hours working on all that paperwork yourself—that’s what you’re paying the pro to take care of!

If you’re an entrepreneur, you’ll discover that a reputable tax pro is worth their weight in saved money. Why wade through all that red tape on your own? A professional knows how to find all the deductions and credits for which you qualify while ensuring you meet your legal obligations.

Don’t already have a tax pro in your corner? Ask your friends for recommendations, or check out one of Dave Ramsey’s Endorsed Local Providers.

File Your Taxes Early

Why wait until April 15 every year to file your taxes, especially if you’re going to hire a pro? Starting now, get a file folder and begin collecting all the relevant information you’ll need for next year’s taxes—things such as investment income statements and mortgage interest statements. If you plan on itemizing deductions, you’ll need to collect receipts for your charitable donations, child care expenses, college expenses—basically anything and everything your tax pro is going to need.

After the first of the year, place your W-2s and 1099s in your folder, along with any other relevant documents. Remember, most of your tax documents are required by law to be in the mail and headed toward you by January 31 each year. If you haven’t received all your documents by mid-February, you need to get on the phone and find out what’s going on.

As soon as you’ve received all your statements, schedule an appointment with your local tax pro. Not only does this get it all done and off your mind sooner, it also gives your tax pro more time to work on your filing. A tax pro’s schedule tends to fill up fast in the last month or so before the deadline, so you want to beat the rush and get your paperwork to them as early as possible. Don’t forget that even the best tax pro is human, and no matter how hard they try or how experienced they might be, they’re also feeling the crunch in the weeks leading up to April 15, which means they’ll be more prone to mistakes.

Don’t Look Forward to Getting Anything Back

There was a day when I looked forward to tax season because I was pretty sure I was going to get a return. In my immaturity, my plan was to take that “unexpected windfall” and spend it. Tax refund day felt like Christmas.

The truth is that what really happened is I allowed the government to take too much money out of my paycheck—essentially giving Washington an interest free loan. Wouldn’t it be better to keep that money and use it to pay off debt or invest?

Think about it. The average tax refund in 2014 was $3,096, and is expected to rise higher every year. That’s $258 per month the average tax payer could be putting to good use rather than sending it to a government who’s more likely to waste it than use it wisely.

How much faster could you get out of debt if you applied an extra $258 per month to your bills? What if you invested that money instead? An investment of $258 per month over the course of 20 years would end up being worth between $120,721 and $249,843.

How’s that 0% interest loan you’ve been giving the government looking now? Of course, the key to using that saved money is to put it toward debt or savings, not use it to justify a new monthly payment.

Your goal at tax time should be to pay nothing and not get a big lump sum back from Washington. For starters, use the Withholding Calculator at IRS.gov to find out how to properly fill out your W-4 at work. Has your family situation changed since you last filled one out? It’s time for an update.

Better yet, sit down with your tax professional and ask their advice to find out how to best set yourself up to keep as much money as possible in your paycheck.

Say “No” to Shortcuts and Tricks

Don’t fall prey to taking shortcuts with your taxes. You’re only one audit away from major financial and legal difficulties if there’s anything fishy going on with your taxes.

There are also so-called “smart tricks” that some tax pros may try to persuade you to take advantage of—things like whole life insurance policies, annuities, and holding on to your mortgage. Sure, there are tax breaks available for some of these practices, but if you sit down and do some critical thinking you’ll learn that you’ll be far better off pursuing investment vehicles like matching 401(k) plans at work and Roth IRAs, or paying off your mortgage early and investing the savings. In the long run, you’ll earn exponentially more money from investing than from tax breaks.

What About This Year’s Refund?

If you received a sizable tax refund this year, what’s your plan? Instead of blowing it, why not stick it in a savings account at the bank while you take some time to consider the wisest use of your funds?

My advice is to follow Dave Ramsey’s Baby Steps, which means making sure you have a starter emergency fund of $1,000 saved up and then throw every extra dime at your debt until it’s paid off. If you’re out of debt, make sure you’ve got an emergency fund of 3-6 months worth of expenses, then look into saving for retirement and college, and paying your home off early.

Four Core Characteristics of a Successful Marriage

Successful Marriage

I don’t dare come here and write a post that makes things sound like my marriage has been perfect. We’ve had our ups and downs, and admittedly most of the downs have had me at their center. What I can say about our marriage is that every great moment has had four characteristics working in tandem.

Four Core Characteristics of a Successful Marriage

  • Responsibility: When I look back at our 20+ years of marriage, I realize that the best times relationally come when we’re doing our best to take responsibility for our words, actions, and mistakes. That doesn’t mean we try to make ourselves into some sort of a martyr. It’s those times when we act like mature adults, admit our faults, and own up to our decisions that allow for complete transparency with one another.
  • Repentance: When we do hurt one another—even if unintentionally—it’s vitally important that we repent of what we’ve done. The greatest hurts come when sins are repeated rather than done away with for good. Repentance is so much more than simple sorrow, it’s true remorse and contrition over the harm caused coupled with an intentional effort to change one’s life. Often, this is something that’s impossible on our own. We need a relationship with God and some accountability in our lives to keep us on track.
  • Grace: The freedom to fail in marriage is absolutely vital. I don’t mean giving your spouse some sort of unspoken approval to sin, but rather recognizing that they’re human too, so they’re going to mess up. This means they’re going to sin, they’re going to hurt you, and just goof up stuff in general. Much of the grace you offer your spouse gives them the ability to be completely honest with you, as well as the freedom to be themselves rather than put on a mask in order to become the person they think you want them to be.
  • Forgiveness: People often forget that forgiveness has two sides. First, we need to forgive our spouse regularly and freely. This isn’t always easy, but it’s the final, necessary component to the restoration and repair of any relationship. Second, we need to learn how to forgive ourselves as well. I don’t mean just blowing off our sins and mistakes as if they’re no big deal, but finding that place in ourselves where we don’t wallow in our regret but instead move forward and work to be the kind of spouse we know we should be.

What you you add to this list? What do you think are the necessary characteristics of a successful marriage? Please share in the comments.

Taking Risks When You Feel Foolish

Taking Risks When You Feel Foolish

I read a news story a couple of weeks ago that was one of the neatest things I’ve read in a long time. Essentially what happened is that a BMW dealership in Auckland, New Zealand took out a front page ad in the newspaper that said, “April Fools Day Special. Be the first person to bring your car, along with this coupon, into the BMW Newmarket dealership this morning, ask for Tom, and we’ll swap out your old car—whatever it is—for a brand new BMW.”

Too good to be true, right?

When It’s Worth the Risk

Well, one woman named Tiaana fell for it and headed for the dealership, newspaper clipping in hand. She arrived, asked for Tom, and within moments had been handed the keys to a brand new Beemer.

Of course, the whole thing was a promotional setup by BMW. The video of the event says, “It was a test to see who would risk looking like the ultimate fool for the ultimate car.”

How many people saw that day’s newspaper, had a nice little laugh, then blew the whole thing off? How many others gave it a moments thought then decided they’d never take such a risk because they thought it was a setup to make fun of someone?

How many of those people felt even more foolish when they found out the ad was no joke?

Take the First Step

How often have you decided against stepping out and taking a risk for fear of looking foolish? There’s a difference between foolish risks and feeling foolish. A foolish risk is one that is ill-considered, ill-timed, or done without any sort of thought, planning, or investigation.

But a risk that might make you look foolish, what do you really have to lose? In Tiaana’s case, the worst that could have happened is that she’d be made fun of a little bit. Maybe she’d end up on a candid camera show or the evening news. Sure, that could have been embarrassing, but you can almost guarantee she and her friends would have laughed about it in the years to come. “Remember that time you walked into that BMW dealership…?”

No one’s advocating you take crazy risks, but maybe we should all take more risk that make other people look at us and say, “You’re crazy!” Yes, if something sounds too good to be true it usually is—but you never know until you investigate and discover the truth. Isn’t that part of taking risks?

Chris Hogan tweeted a great quote from Frederick Wilcox the other day:


It’s time to stop worrying about the what ifs and take the first steps toward something bigger and greater than who, where, and what we are now. The greatest adventures begin by stepping out and taking action—many times when no one else will.

Remember the wise words of J.R.R. Tolkien’s Gandalf in The Lord of the Rings. “It’s a dangerous business, Frodo, going out your door. You step onto the road, and if you don’t keep your feet, there’s no knowing where you might be swept off to.”

Choosing to Give Grace Instead of Justice

grace-instead-justice

I was particularly moved by a story I read online a few days ago about a pair of Michigan police officers who chose to mete out grace and compassion instead of justice. These officers—Jason Pavlige and James Hodges— answered a phone call reporting a woman holding a baby in her arms while riding in the passenger seat of a car. They learned the young couple involved couldn’t afford a car seat for their child. They were new to area, just getting on their feet, and had no family, friends, or co-workers they could call on for help.

Instead of ticketing the couple for their infraction, they chose another solution—a beautiful work of grace in this young couple’s life.

“We spoke with each other and made the decision to go get them a car seat so we’d know the kid was safe and that this issue wouldn’t come up again,” Hodges told ABC News.

What amazing insight these two young men demonstrated. Rather than administering the justice that was within their duty to perform, they understood that ticketing the couple wouldn’t solve the root problem. In fact, it would only exacerbate and magnify the issue. If they couldn’t afford the car seat now, how would they be able to afford it after paying a fine? Instead, they gave freely and the issue dissolved.

Sometimes the power to change someone else’s life is in our hands. Leaders should ask themselves, “How can I help?” before we go strictly by-the-book and teach them a lesson by administering swift justice.

Instead of giving people what they deserve, how about giving them what they need when it’s in your power to do so?