Get ya PAPER(s)!

Get ya PAPER(s)!

It’s tax time – I’m sorry for all of us involved – which means every one!


I’m going to try and make your entire tax life slightly easier and less painful. Below is a not-so-brief list of everything you need to get organized with before you file your taxes:

Personal Information:

  • Your Social Security Number
  • Your Spouse’s Social Security number (if married)
  • Social Security Numbers for any dependents

Income Information:

(Everything you made in every which way you made it. Bartering sheep for wood counts, really)

  • W-2 Forms from all employers you, and your spouse if you’re filing a joint return, working for during the past tax year.
  • 1099 Forms if you, and your spouse, completed contract work and earned more than $600
  • Investment income information
    • Interest Income
    • Dividend Income
    • Proceeds from the sale of bonds or stocks
    • Income from foreign investments
  • Income from local and state tax refunds from the prior year
  • Business income
    • Essentially accounting records for any business that you own
  • Unemployment income
  • Rental property income
  • Social Security benefits
  • Miscellaneous income
    • Jury Duty
    • Lottery and Gambling Winnings
    • Form 1099-MISC for prizes and awards
    • Form 1099-MSA for distributions from medical savings accounts

Income Adjustments:

(These can all help reduce how much you owe in taxes, and increase your chance of receiving a tax refund)

  • Homebuyer tax credit
  • Green energy credits
  • IRA contributions
  • Mortgage interest
  • Student loan interest
  • Medical Savings Account (MSA) contributions
  • Self-employed health insurance
  • Moving expenses

Credits & Deductions:

(Again, these will help you lower the amount of tax you have to pay)

  • Education Costs
  • Childcare costs
  • Adoption costs
  • Charitable contributions/donations
  • Casualty and theft losses
  • Qualified business expenses
  • Medical expenses
  • Job and moving expenses

Preparation for Direct Deposit:

(You know… in case you want your money being refunded to you ASAP)

  • Your bank account number
  • Your bank’s routing number


Hopefully this makes it super easy to get organized. I honestly believe that gathering everything is like 85% of the effort in getting your taxes done. Here’s to hoping I can save the world from tax misery one post at a time!

–Not all heroes wear capes–

Giving Less to Uncle Sam!

Giving Less to Uncle Sam!

We interrupt our regularly scheduled programming to bring you an overview on Business Expenses! If you find this post valuable – all thanks go to Courtney for submitting the question!

First of all, if you have business expenses PLEASE make sure you are paid on a 1099 (self-employed) or have set up an LLC through which you can deduct your expenses. Under the new tax law passed by the Trump administration at the end of 2017, this is really the only way to deduct those expenses. The entire “Job & miscellaneous deductions” section of the schedule A has been completely eliminated.

Secondly, there is a business income deduction for small pass-through entities. Most businesses qualify and although certain service businesses (attorneys, accountants, financial advisors, etc.) have an income phase-out, it generally works out beneficially for taxpayers with small businesses. You get an additional 20% deduction on your taxes due, on top of the new lower tax brackets!

Now the fun stuff!

What kinds of expenses can you deduct? Some common ones:

  • Marketing expenses
  • Home office expenses
  • Cost of Goods Sold
    • The cost of products or raw materials, including freight
    • Storage
    • Direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products
    • Factory overhead
  • Capital Expenses
    • Business start-up costs
    • Business assets
    • Business improvements
  • Business car expenses
  • Business cell phone/utility expenses
  • Insurance costs
  • Retirement plan costs
  • Training/Education Expenses

I want to touch on that last one because I think it’s extra important!

If you’re self-employed you can absolutely set up your own 401(k) plan or Self Employed Pension plan. This will allow you to stash more of your income away on a tax deferred basis. There are annual limits, of course, but it’s a great way to reduce your tax burden and save extra for the future. I encourage all my small business clients to establish 401(k)’s for their business, it’s basically forced savings for yourself that will pay you in dividends in the future.

I’m going to use a yoga instructor as an example here of a walk through of how you can significantly reduce the taxes you pay by utilizing expenses! Please make sure you track them and have receipts for proof. Unfortunately, those who have business deductions are statistically more likely to get audited – so don’t go writing off private jet purchases!

Let’s assume a yoga instructor has an income of $100,000 a year (and files as a single tax payer):

  • Income: $100,000
    • SEP IRA or 401(k) savings: $5,500
  • Adjusted Gross Income: $94,500
    • Expenses:
      • Marketing: $2,500
      • Health Plan: $8,000
      • Insurance: $2,000
      • Yoga Mats: $300
      • Blocks/Straps/Tools: $300
      • Cost of Essential Oils for sale: $500
      • Car Expenses: $4,500
      • Gas/Mileage Expense (54.5 cents per mile): $400
      • Music/ Subscriptions: $150
      • Training/Education/Continuing Ed: $3,000
      • Professional Memberships (Yoga Alliance, etc): $300
      • Mandatory subscriptions to maintain licenses: $240
      • Yoga apparel for teaching classes: $1,500
    • Total Deductible Expenses: $23,690
  • Taxable Income: $70,810
  • Under the new tax brackets Federal Tax Due: $13,356.25
  • WITH 20% Deduction: $10,685

Under the new tax bill your effective tax rate (not counting state taxes) would be only 15%. If you had a 401(k) and managed to stash away $18,000 (current cap for those under age 50) you could decrease it even more!

Of course, this is all used for illustrative purposes and should absolutely NOT be construed as tax advice. I’m not a CPA or an EA. Just a CFP® hoping to help make things simpler and easier for all!