Word on the tax professional “street” is that tax filing numbers are down across the board so far. That is from data released by software providers (though this year, of all years, I simply don’t understand why somebody would use software), as well as overall numbers from the IRS, AND those who are using a professional.
It seems that many taxpayers are a little skittish about all of these changes.
And with further news rolling around the newsfeeds that some are seeing lower refunds than they might have expected, well … it seems that this tax season has been a little rocky for the industry.
But that being the case on a broad level, we at Team Canberra Company are in the midst of one of the best tax seasons we’ve ever experienced. From a bunch of wonderful new clients, to the gratification we’ve experienced from helping long standing clients keep MORE than they thought was possible … well, suffice to say that we love what we get to do.
So thank you for your referrals, and for continuing to trust us as you have been. And if you haven’t gotten started on it yet … well, having a pro in your corner can make a big difference. So take advantage! Shoot us an email or give us a call: (805) 962-1040. We’ll walk you through whatever you need.
The new tax law is causing people to have concern about what their tax situation is for the tax year ended 2018. There are many moving parts. The news media is spreading the idea that the refund is less this year. The people spreading this idea obviously could not pass a third grade math test. The refund is less because they changed the tax tables to accommodate the new law. The overall objective of the tax tables is to cause you to break even at the end of the year. The government hopes to issue you a $500 refund and the taxpayer wants to end up owing $500 on April 15.
When they changed the tax withholding tables in January 2018 they lowered the withholding and thus gave everyone a higher net take home pay. So now the whole year the taxpayer has had and enjoyed a higher net take home pay. This created more money to spend at the end of the month.
The tables adjusted in January leaves the whole year to enjoy more money and if you look on your paycheck pay stub you can see that weekly less Federal withholding occurred. Less money was taken out if you left your exemption allowances without change or adjustment on the W-4 FORM on file with your employer.
Now we are in tax season the media is spreading rumors that the people are getting a smaller refund. Your refund is determined by reporting your income and deductions in your tax return. Then you calculate your taxable income. From taxable income you multiply that amount by the applicable tax rates. The math result is the tax you owe. The tax you owe is then compared to your withholding reported on your W-2 form. The withholding, your prepayment of the expected tax, is then compared to the tax you owe and then the excess is refunded. Had they not changed the tax withholding tables in January you would then be receiving a gigantic refund.
So I guess we can take the news on the surface, we have to have enough knowledge to know that the news is full of beans sometimes or they are just trying to emotionally incite the public.
For those people in business and file Schedule C, the calculation of the new 20% deduction is important. The IRS is still issuing explanations in how to properly apply the 20% and more information is coming out weekly as to who is eligible and who is not eligible.
Your pension plan needs. Everyone reading this e-letter has a need to properly plan for the retirement years. The worst part of life is when you retire then run out of money. So everyone knows to set money aside in a pension plan or use real estate purchased to be your retirement program. If we all were to buy one rental property every second year and we started when we were 30 years old then by 60 years old we would own 15 rental properties. If each of these rental properties was a 20 unit apartment complex then we would own 300 rental units or rental rooms. With 300 rental rooms with no mortgage at age 65 you would have approximately $600,000 per month coming to your mail box. At age 65 $600,000 per month would be enough to keep you traveling the world in good style.
We find the hardest part of this retirement plan is to get started. As people for the most part have other priorities at age 30 and then they do not make plans to get their real estate investment portfolio underway.
For those that are behind in making wise investments there are other pension arrangements. A defined benefit program allowing you to put in more than $50,000 per year is available to self-employed people. Then IRA’S and Roth letting you put in $6,000 per year. Most people today are deciding to put money into their Roth account. Some of the people with wisdom are putting Roth money into retirement accounts for their children and grandchildren. Roth allows the money to grow and build inside the protected account and then when you allow free online spades card game the withdrawal at age 65 or older, all of the money, principal and investment earnings come out completely tax free.
So at CANBERRA COMPANY we are champions in helping and motivating people in getting started with their investment program and then their retirement program. We have found ways to move the most stubborn people who want to put things off until next year. Financial planning of this kind needs a trained professional.
Steve Pybrum CEO