Friday, April 15, 2016

The Frugal Planner's Weekly Dispatch, It's Almost Tax Day! -- from Bloomingdale resident & Certified Financial Planner Chuck Donalies

From: Chuck Donalies, CFP® [] On Behalf Of Chuck Donalies, CFP®
Sent: Friday, April 15, 2016 9:00 AM
Subject: The Frugal Planner's Weekly Dispatch, It's Almost Tax Day!

The Frugal Planner's Weekly Dispatch

Volume 2, Issue 15
April 15, 2016
Tax Day is Monday, April 18th!

An example of what not to do when completing your taxes.

In case you've forgotten, Tax Day is nearly upon us! This year the IRS moved the Big Day to Monday, April 18th in order to accommodate D.C.'s celebration of Emancipation Day. If you're unfamiliar with the holiday, Emancipation Day commemorates the day when Abraham Lincoln signed the District of Columbia Compensated Emancipation Act, which freed more than 3,000 slaves in the District.

Last-Minute Tax Tips

This is a little too close to reality.

I'm sure everyone reading this filed their taxes a couple months ago. In the event you haven't, here are some last-minute tips to consider as you put off doing your taxes until Sunday night:
  1. Was your adjusted gross income less than $62,000 in 2015? If so, you qualify for Free File from the IRS. This link will take you to the Free File page on the IRS site.
  2. Have a simple tax situation, but don't qualify for above? Use Turbotax. Let's face it, the U.S. tax code is bloated and confusing. Software such as Turbotax is pricey and the tech support is terrible, but it's still a better option than doing the calculations on paper.
  3. Have a complex tax situation? Hire an accountant. This option may be more expensive than using software like Turbotax, but you'll have the benefit of working with an expert. In addition, you can deduct the cost of your tax preparation fees. Need a referral to a reputable tax preparer? Contact Mike Fine at Finesse Tax Accounting.
  4. You can file an extension, but you still have to pay. Filing an extension will buy you time until October 17, 2016. However, you still must pay your anticipated tax liability on April 18th.
  5. Want a lower tax bill? Put some money away. There's still time to make a contribution to an IRA, SEP IRA, Health Savings Account (HSA) or other tax-advantaged accounts for tax-year 2015 (reach out to me if you have any questions).
  6. Hold on to all of your tax-related documents. Your odds of being audited are slim, but there's always a chance the IRS will come knocking on your door. They'll want to see your W2s, 1099s, receipts, etc.
  7. Make sure to pay your estimated taxes. If you're a freelancer or independent consultant (and judging by the number of small businesses at co-working spaces such as WeWork, there are a lot of you) you need to pay your taxes on a quarterly basis.
  8. Taxes are a necessary evil. Okay, so this isn't a tip but an opinion. No one, including me, likes paying taxes. Are there inefficiencies and waste in government? Absolutely. However, if we want things like police, good schools, a strong military, sound infrastructure (safe roads and bridges are not just a 'nice to have'), libraries and all the other things we depend on, we have to actually pay for them.

While I'm on the Subject of Taxes...

Over 600,000 D.C. residents don't have voting representation.

I live in the District of Columbia and I don't have voting representation in the U.S. Congress (in fact D.C. residents were finally allowed to vote for President in 1961).

My wife and I have differing opinions on this subject. I always say, jokingly, I would happily give up voting representation in exchange for not having to pay federal taxes. This statement does not sit well with my wife and usually earns me a side-ways glance and sigh of contempt.

All joking aside, my wife has spent many hours, along with hundreds of volunteers, working to spread the word about the District's lack of voting representation. I don't see anything changing in the current polarized political environment, but I'm positive one day that will change and encourage you to educate yourself about an important, but often overlooked issue.

Want to learn more about D.C.'s lack of voting representation and what's being done to correct the situation?
Check out DC Vote.

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