Welcome to Money Matters , the podcast that focuses on how to use the money you have make the money you need and save the money you want .
Now , here is your host , Ms Kim .
Chapman , welcome to another edition of Money Matters . I am your host , kim Chapman . It's tax season , so what else are we going to talk about ? Taxes , get ready to embark on a journey through the basics of tax filing and preparation . And , of course , we're going to be talking to a CPA , because that is most definitely not my area of expertise .
So joining me today is CPA Ms Jody Buckner . Welcome , and thank you so much for coming and joining me today . Well , thank , you .
I'm glad to be here .
So , to get started , tell us first of all I hate when people do acronyms like I'm doing . Let's talk about what does CPA stand for , and then tell us a little bit about your professional background .
All right , so CPA certified public accountant . I am a CPA from 1997 , I believe , went to LSU , graduated and started working in a local CPA firm . I passed the CPA exam after studying for a long time and I've worked now for about 30 years as a CFO for two different companies locally and I have a side CPA practice .
So a numbers person , I have to say , and of course we know each other . We work through , we partner together through Jumpstar , which is definitely a passion . We both share financial literacy . So let's dive right in . What are some factors individuals should consider when determining the optimal time to file their taxes ?
Because , of course , by the time this airs , we'll be thick into taxis and I know some people go straight for the juggler , especially if they're getting a refund . I think those are going to be the ones that do it a little bit earlier , People that typically , oh , want to wait until the end , but what do you say ?
I say don't do your taxes too early , because maybe you don't have all your paperwork . So you're supposed to have your W-2 by January 31st , but maybe there are some other forms that aren't due till the end of February and so you don't have all your things . Get all your paperwork together , Get your taxes prepared . You don't have to pay .
So you don't have to pay until April 15th . So you don't have to pay , even though you've already got it prepared .
So I don't know . So you mean that I can file my taxes now and wait until that date ? If I owe to send that check , that's right . I think it would haunt me the entire time . All right , so , as a CPA , what are some common mistakes you see people make when preparing their taxes and how can they avoid them ?
So I would say number one is just like what I just said you don't have all your paperwork yet . So people want to get that W-2 , they want to go ahead and file their taxes and the next thing you know , they're calling me up and say , oh , I got this in the mail . Did I need this ? Yes , you needed it . So be patient , you know .
Make sure you have everything you need . Another common mistake is they gave me the wrong bank account number . They didn't know the right routing number , and so I file their taxes . They're supposed to get a refund and guess what ? The banking information was wrong . The other things maybe you didn't take the credits that were due you .
You're trying to do it yourself . You didn't know about this credit . So those are the kind of mistakes I see most often .
All right . So what are some of the advantages of working with a CPA compared to , you know , just your standard tax preparer , even just doing self-wear , doing it at home ?
CPAs are tax planners . I call us Like . We are always looking at you , you know what do you do , what are you active in , or you maximizing your deductions ? We have to stay up to date on tax laws . Cpa society requires us to take 40 hours of continuing education every year , so we tend to stay up to date more on what's going on .
All right , so can you share some strategies for maximizing deductions and credits , to optimize refunds or minimize preparation process ?
So I get this question a lot and my number one thing is talk to your CPA , tell us about your life . We need to know your marital status , your children , things you may be involved in financially . We need to get to know you . Do you invest ? Do you own a home ? Do you have medical and dental bills More than just your normal checkups ?
Do you give to charities ? Those are all things that you have to talk to your CPA .
And so if I wanted to schedule an appointment to see a CPA , what sort of thing should I make sure I bring in hand ? And , ideally , if it's not over complicated , how long should I expect to spend with a CPA ?
Generally , if you're just coming to get your taxes done or if you just want to come talk to us in general , out of season , you need to bring all the forms you've gotten in the mail . Bring anything that do you have a business and that's going to require a lot more . Just come talk to us .
I say not during tax season , just say hey , I'm interested in getting a CPA . It's June , call me , come , sit down , let's have a talk , let's discuss your situation .
And I imagine it's a lot better than April when everybody's looking at oh my God , it's time to file those taxes .
Right , don't call me and say I just want to come talk to you on April 10th .
Now I see this a lot , of course , in my industry in terms of financial counseling . We'll see individuals that have large refunds that I often use the quote saying that's basically an overpayment to the government . So what are some advantages and disadvantages of receiving a large tax refund versus adjusting your withholding and receiving more money throughout the year ?
I call this a saver versus a spender question . I tell people , if you are a spender , it's probably better to get a refund . It's because it's kind of a little savings account for you . That's not ideal , because you're letting the government use your money but at the same time , if you're a spender , that little refund is going to help you at that point .
Now , if you're a saver , yes , change your withholding , get your money throughout the year , because you're going to save your money anyway . But if you're a spender , you need a refund .
Yeah , we find that a lot , that sometimes people get that one check and that's their advantage to be able to throw money in savings , maybe take care of some debt . But then , of course , on the other spectrum , they find it , maybe they waste it and then they're struggling throughout the year .
So that's always kind of a I know it's definitely an individual question , but something that I talk about a lot , definitely in my office . So that's for the people with refunds . Let's talk about the people that owe . What are the most common reasons individuals find themselves owing taxes after filing their tax return ?
Generally it is because their withholding is wrong on their paycheck . I mean , the W-4 form changed a number of years ago and it's much more difficult to fill out now .
Used to you .
Check single or married and you put how many you wanted to claim . Now it's like through this whole process . So I tell people , when you change jobs , when you fill out a new W-4 , look at that first paycheck and go to your human resources department and say does this look right to you ?
Because in my current job I'll notice on people's paychecks oh no , you're not having enough withholding . I can tell . So make sure you check with your human resources department .
So you mentioned you said that form changed a couple years ago . So if I've been at my job like I have been , seems like forever in a day . Should I go back and review my W-4 form ?
You probably shouldn't , unless when you file your taxes , your owe and money , or you're getting a large refund , then you can discuss what you should be claiming Because in your situations change , our children grow up , you don't have a dependent anymore , that type of thing .
Well , it comes soon when we can add those animals and pets on our taxes , because I tell you , not only do I see it as a big part of my budget , I see it as a big part of individual budgets as well . I tell you , that would make life easier . How can individuals effectively organize their financial records throughout the year ? To streamline this process ?
I know you mentioned come in with that paperwork . Come in with that paperwork , but tell us a little bit about what that paperwork looks like and you know what's the best way to organize throughout the year so that it's not such a stressful time come March and April .
Yeah , so get yourself a filing system . I recommend just an accordion so you can file your receipts , just put them in alphabetical order and then type them up at the end of the year . If that's overwhelming , then every month go through what you had for the year .
I have an in-home daycare that fills out forms monthly for her expenses and then totals them at the end of the year . A filing system is key . Keep your receipts and , of course , nowadays there are a lot of apps where you can scan your receipts and it files them for you .
So there's a lot of options . That's definitely helpful , because receipts are not created equal and I tell you some receipts . You buy something on Monday and you don't know what it says on Tuesday . All right , all right . So what role does tax planning play in getting the most out of tax preparation , and how far in advance should an individual start planning ?
So I say stay prepared all year . It's much less overwhelming . Ask your CPA during the year . We love tax questions outside of tax season .
That's good to know . I would think you'd be resting . Stay away , because you know . When does tax season typically really start to ramp up ? Is it after January 3rd , 31st , once the W2s are released ?
Well , we're busy in January because 1099s have to be prepared for companies and that kind of thing .
So yeah , January 1st is we hit the floor running and is it crash and burn after April 15th ? Yeah , after April 15th .
We need a few weeks off .
Time for rest and relaxation . All CPAs are in the Bahamas , all right . Are there any specific tax saving opportunities or strategies that people commonly overlook ?
Don't forget the education credit . If you have a child in college , please take the credit .
Or two or three .
Yeah , child care credit . People forget about that one . If you pay in child care , make sure you tell your CPA . There's also a retirement savings credit for people . If you're self-preparing a lot of time people skip that . Most people know about the earned income credit .
So I would say education credit is probably the number one I see skip most , but retirement savings credit that's a big one I see too . So people need to remember . If you're putting in a retirement account , make sure you tell someone .
Okay , how can individuals take advantage of recent changes in tax laws or regulations to optimize their tax situation ?
So there really hasn't been any big changes lately , but be sure to ask your CPA if you have any specific questions about that .
So here's the big question To itemize or not to itemize . So what should a tax preparer consider when deciding whether they want to go ahead and itemize their deductions or just take that standard deduction ? A standard sounds easy , but is there really an advantage one over the other ?
So I always tell people to track your itemized deductions Because if it adds up to more than the standard deduction , you definitely want to use it . You always want to use the higher deduction . People are afraid if they itemize , the IRS is going to look at it . People always talk about that and this is not true .
Unless it's excessive , the IRS is not that scary .
That's what you say , right .
Just make sure what you're reporting is correct . I mean , that's what the IRS really wants to know , right ? Like yes , you gave to this charity , yes , you paid your property taxes , your state taxes . Like that's your itemized deduction , so make sure you just keep up with that .
So maybe what are some of the most common things that are itemized itemized , if I can say that right and then what are maybe some of the most unusual things you've seen become itemized deductions ?
Well , your standard itemized deductions are your taxes , your state taxes , your property taxes . Then you have your contributions . I mean , it's basic things , it's interest on a mortgage , right . Those are probably the four most common . So if you don't own a home , if you're not a big charitable person , then you're probably not going to itemize Unusual .
Let me think , do I have anything ? I don't really . I think there's a lot of unusual things that you truly can atomize .
Okay , just never know . You always hear certain little things . Of course , when somebody's working from home , of course they want to be able to deduct the electric bill and even the sofa that they're sitting on in terms of work furniture , so I was just curious about that .
So can you explain the benefits of tax efficient investment strategies and how they tie into tax preparation ?
So this is a big topic and people have varying ideas on this . I tend to like deferring taxes as long as possible . If I have the option to put money in a 401k , I am definitely taking advantage of that and I'm doing it with a tax deferred option . I always encourage everyone to enroll in this if they have the option .
Most companies match some part of that contribution and that's an automatic return , and people they're so worried about putting money because they don't think they have enough , but I promise you , if you put $20 a week into this 401k , your company is going to give you some part of that more than likely , so please take advantage of that .
There are other options to invest in , like Roth IRAs , that are not tax deferred , so it's an individual choice .
Definitely , and I think those are something that's often overlooked and people don't realize , like you said , that $20 , especially if you start when you are young and it just adds up over time , because time is what really really makes that difference , not so much how much you put in , but that time All right .
So , of course , for self-employed individuals or small business owners , what are some key tax planning that they should implement ?
Track everything , whether you think it's deductible or not . Record it and then add your CPA . Never over extend yourself to get a tax deduction , but if you can pay it early to get a write-off , I encourage you to do so . Bonus depreciation is a hot topic . It went down to 80% in 2023 . The Senate is still debating this .
It could still go back up to 100% for 2023 , which is an odd thing . But make sure that you track everything .
So I imagine the average listening probably has a simple tax form that they have to fill out , but of course there are some that are going to be complicated and I imagine that's why CPAs actually exist to be able to do that .
So how can individuals navigate complex tax situations such as multiple sources of income , investment properties or international tax obligations ? Just saying all that sounds scary and complicated .
Right and it's really not as complicated . I think people are just so concerned about the IRS . It's like the big tax man's coming because you see these stories on TV or you see these advertisements . It's really not as scary as you think , but prepare in advance . Ask your CPA for help in tax planning . I promise you .
If you come to my office and you say , jody , I'm starting this business , what should I do ? I'm going to give you some really good advice to sit here and say you're going to keep organized and get everything done and it's not as scary as it sounds .
It's amazing how that little three-letter acronym just kind of has that common feeling when people hear it IRS and so , of course , because they don't want to get audited . So what are some common red flags that can trigger and audit , and how can taxpayers minimize their risk of being audited ? We want to stay under the radar . We don't want to hear their name .
We want to stay clear of them . So how can we stay on our best behavior ?
So it's usually simple mistakes that cause letters to come in the mail Math errors , keying in the items wrong these don't cause audits . You're just going to simply get a letter in the mail and they're going to want you to reply . People really get upset when they get a letter from the IRS , but they just want to reply .
So audits usually come when letters are not answered . You're just ignoring it because you're scared to death . It's an IRS letter , of course , or someone's taking extremely high deductions . If you are taking really high deductions compared to others in your income tax bracket , that's when a red flag comes up to the IRS . The IRS is really not that scary .
They're short staff so they're hard to get in touch with , which makes people even more nervous , but I promise you it's not as scary as you think .
That's a promise I'm going to hold you to if I ever get audited , all right . So what resources or tools do you recommend for individuals looking to educate themselves about tax preparation and tax planning , so that we can all feel a little bit better about the IRS ?
So I don't have a lot of go-to places besides your CPA . But most of your local libraries , a lot of your banks and credit unions hold seminars all the time on different strategies . Sign up for their emails , attend their meetings . They would love to have you . You can just google just about anything these days .
So if you're just curious and want some fun reading I mean , I know everybody likes to read about taxes- Especially if you have insomnia , right ?
All right , so you mentioned , of course , tax laws are forever changing , so how can tax preparers or taxpayers stay informed about changes in tax laws and regulations that may affect their situation ?
So before you bring in your tax information , you can call your CPA's office ask is there anything new that I should be aware of ? If you're a client a lot of times , the CPA probably knows you . They're going to contact you during the year and say , hey , did you know this changed , so we need you to bring something different .
Okay , and then finally , what advice do you give individuals who want to ensure they're getting the most out of their tax preparation experience ? You hear these commercials all the time come over here , come over there . We're going to make sure we double your refund , we'll make sure we get you more .
What can they do to make sure that they're really getting the most bang out of their taxes ?
I say shop around for a great CPA . We're a great group . If I can help you , I will glad you to send you to one of my CPA friends who will help you . So just pay attention , don't always fall for the gimmick that you say .
Yes , and there are a lot of gimmick .
So , of course , if our listeners want to be able to reach out to you , because you make it seem so easy , you're calming our fears for the IRS and it seems like it's more of a relationship that you know , because I kind of think of a CPA , almost like the dentist not that they're all , for they're doing a good service for us , but it's taxes .
So if they want to be able to reach out to you , jodi , get some more information , develop that relationship , come and make sure that they're getting the most out of their taxes . How can you be reached ?
So you can email me at jodi with an ibuckner at yahoocom or call me 225-287-9617 . Also , let me give you a brief plug . I work at Lyon specialty . I'm the CFO there . We're a wholesale distributor to convenience stores and restaurants from the CFO . If you know of a convenience store or restaurant looking for a supplier , give me a call for that too .
There you go . Well , thank you so much for joining us . I definitely hope you've been lighting our listeners , that the takeaway will be prepare all year long , come and see you in the off season and stop fearing the IRS . I think I got that straight . I'm definitely holding her to that in terms , if I ever get that letter in the mail .
But thank you so much for joining us . Oh , thank you .
Kim , appreciate you having me on .
Determining whether you itemize deductions or take standard deduction can significantly impact your tax liability . Here are a couple of tips to help you decide which option is going to be best for you . First , calculate your potential itemized deductions .
Start by gathering information on deductible expenses , such as your mortgage interest , property taxes , state and local taxes , medical expenses , things like that , and see which one adds up to be more for you . Consider changes in the tax laws . Tax laws can change annually . Make sure you're up to date on that information to help you make that decision .
And then , of course , evaluate your filing status . Your filing status could be single , married filing jointly , met filing separate , married filing separately , or head of household . Choose the filing status that maximizes your tax benefits .
And finally , check out neighbors fcuorg for slash financial education to learn more on how to use the money you have , make the money you need and save the money .