Hi, everyone. This is the How to Lower Your Tax
Bill podcast. I'm your host, Terrence Hutchins.
I'm a financial and tax advisor in the Dallas
Fort Worth area. And the goal of this podcast
is to help you listeners get educated on different
tax strategies that you can implement to improve
your tax situation immediately. Each episode
will break down useful tax tips you can use to
save money, no matter what your personal or business
income situation. Because our motto is keep more
of what you earn. So let's get into today's episode.
So welcome back to another episode of how to
lower your tax bill. I am accompanied by Tamiya
Kelly once again by popular demand. And so we're
going to talk about a an important topic whenever
you are preparing your tax return on the importance
of reviewing and understanding what happened
in your prior year. So on this episode, we're
going to talk about tax deductions and tax credits.
We're going to talk about things that impact
your taxes from the prior year. So things that
might have happened that will impact what happens
in your current year. We're going to hopefully
help you look at maybe where you kind of find
this information. then just give you some tips
around how you can ultimately utilize this information
to keep more money in your pocket and This isn't
gonna be a segment I wouldn't say but Tamiya
did have a history lesson She wanted to share
on some of the things she had actually researched
prior to our episodes I'm gonna give her the
floor and let her talk about that. So get your
notebooks out and I am very excited for this
portion of the podcast Hey, well, listen, thank
you so much for having me back. Hey, good people.
I am back. I once was blind, but now I see is
back. And this is another episode to share and
put out my business out there about what I didn't
know about taxes. Right. But I want to say last
episode, we spent a lot of time saying when you
look back at your tax return, when you look back
at your tax return. And this is an important
podcast for you to do just that, right? One of
the things that I say I once was blind, but now
I see. And I say that because I didn't know,
right? I didn't know a lot of things. But if
you listen to this podcast. Go back to all of
the episodes, especially if you are a small business,
use this podcast like you would use, like you
study in a book or something, pull out your previous
tax returns, literally go line by line. Terrence
does an amazing job of knowing the line numbers
off of the top of his head. Me, not so much,
but you definitely can follow along. And one
of the things that I researched in preparation
for this particular podcast was the deductions
and you know how we talk about standard deductions
and itemized deductions. Listen, I didn't know
anything about it. I just want a bigger refund.
I told y 'all that last podcast. Okay. This particular
fact, and it's not a new segment, it's kind of
a play on what Terrence does on his other episodes
at the end where he gives you that little nugget.
We're just doing it at the beginning. And so
just kind of a heads up, the Individual Income
Act of 1944 was created by President Franklin
D. Roosevelt. So back in the day, the 20th century,
less than 10 Americans paid 2 % levied on income
over $2 ,000. Can you imagine? $2 ,000. Income
over $2 ,000, yes. Less than 10, one in 10 Americans
paid 2 % of this tax. And so the tax code was
crazy. It was chaotic. I believe at that time
it was about 30. two different income brackets,
32 different income tax brackets. So much so
that President Roosevelt was like, listen, I
don't know what's going on. It was said that
he would just send in his tax return half done
with a $15 ,000 check and just say, send me a
invoice for the balance if there is one. Because
it was so chaotic. And so they did a study. But
when they did that study, they realized that
what was complicated was the income brackets
and the lengthy list of exemptions. And most
of the time, consuming part of the tax filing
process was clearly the adding of individual
deductions. And so with that, the standard tax
deduction was created to give Americans a relief
on trying to figure out, taking a truckload of
receipts to their tax preparer to do their taxes.
And so they said to make it simple, let's give
the people, I think at the time it was like 500,
the standard deduction was like 500. Okay. For
the people. So, you know, that's a little, little,
did you know? Fun fact there. 1944 created the
standard deductions. Interesting, interesting.
So I affectionately call her Mother Kelly. She
has the soul of someone who was born in 1944,
even though she's much younger than that. But
it's interesting, you were talking about Roosevelt
and many times with law, It is based upon whoever
is in charge and some of the pain points or some
of the things they want to get done does impact
what gets passed in the law and how that impacts
us as taxpayers. And that's why the tax code
is so long because there have been many leaders
who have come into play, have their own agenda,
and then they had to add things or change things
so that it could actually get passed. In fact,
the biggest tax overhaul prior to the most recent
one here in 2018 was when Ronald Reagan was president.
And if you recall, he was an actor prior to becoming
president. And so the top tax rate when he got
in office was 70 percent. So we complain about
our top 37 and some people complain about paying
20. Well, imagine paying 70 percent of your income
in taxes. So he actually cut that by 25 percent
because he felt like, well, you know, if we give
more people money, then they'll spend more money.
They'll inflate the economy more. So there's
always a balance on. How much does the government
get versus how much you should get and what you
should do with it? And so one of the goals we
always talk about with this podcast is making
sure that the government get less legally based
on the rules that they put in place. And so one
of the ways that you can actually lower your
tax bill is to look at what happened in the prior
year. And through this, we have what are called
tax carry forwards. So a carry forward is probably
a deduction or credit that you had in a year.
but you weren't able to use it because you didn't
have enough tax liability to use it in that year.
So we're going to talk about some examples there.
And the difference between a tax credit and a
tax deduction, I always compare it to, let's
say you went to the store and you had a gift
card where I could actually just buy something
dollar for dollar. So if something costs a hundred
dollars, I can use my hundred dollar gift card
to pay for it a hundred percent. That's how a
tax credit works. If you owe a thousand dollars
in taxes, if you have a thousand hour tax credit,
it will wipe out your tax bill. If you have a
deduction though, that's like having a coupon.
So if I have a hundred dollar purchase and I
got a 30 % off coupon, then I'm still going to
pay money, but I'm going to pay less. And so
it's important when people are looking for how
to lower their tax bill, they don't focus strictly
on deductions because generally they're still
paying something. And many times they're going
to be worse out of pocket if they just go buy
stuff, just get a tax deduction. That's what
we have to get them aware of. But it's important
that if they had a carry forward from the prior
year, that they don't forget about it because
it could allow you to lower your tax bill in
the current year. So to me, tell me a little
bit about, obviously you started filing taxes
this year. What were some of the conversations
or what were some of the things that maybe people
didn't know about that happened the prior year
that you discovered on their tax return? So one
of the things that and I would put myself in
here that we didn't know Was truly the difference
between the two the language. That's a credit
and a deduction Right the credit and a deduction
Didn't know the difference between the two one
of the things that you will often hear some of
the people That are listening would probably
say is I want to claim this on my taxes They
said I could claim this on my taxes. So that's
really the language that is centered around a
credit or deduction. They don't typically come
and say, hey, can I get this tax credit or hey,
can I get this deduction? Usually the language
is, can I claim this? And from a small business
standpoint or people who are sole proprietors
or LLCs with an S corp designation, they just
want to avoid paying taxes. And what you're saying
is that we need both. We need to understand our
deductions, which lowers the income that I have
to pay taxes on. And we also need that credit,
which helps us subtract from the amount that
we owe. And so that's what I've experienced myself
as well as a sole proprietor LLC coming to me.
They just say, I want to claim this or send me
that box load of receipts. Right. Exactly. that
and for me to figure it out what is deductible
versus what is a credit that they could take
advantage of. Gotcha, gotcha. Well, cool. So
let's dive into a few deductions. So these are
things that will reduce your income in the current
year that happened in the prior year. So the
first one is what is called a net operating loss
or an NOL for short. And this is effectively
if you own a business and you had a loss from
that business. So you Spit more money than you
made it create a tax loss now depending on the
business and a type We've always we've been going
over a series around real estate and we talked
about how some of those losses can't be used
That isn't gonna be this thing. We'll get into
that later. This is gonna be more an active business
So an active business that has a let's say a
ten thousand our loss Well that ten thousand
our loss because I actively worked in it. I can
use that to offset my income. However, I If you
spend a lot of money, let's say, and you have
maybe 10, 15, 20, 30, a hundred thousand dollars
in losses, sometimes you may not have enough
income to utilize that against. In fact, this
year, a business loss can only be used to offset
80 % of your income. So if I had, let's say I
made a hundred thousand and I invested in an
oil and gas deal, right? And we'll get into maybe
the dynamics of that in a future episode, but
let's say I lost a hundred, $20 ,000 on paper
on this deal. Well, 80 % of my income is $80
,000. So if I had a $120 ,000 loss, I can only
use $80 ,000. The other $40 ,000 would carry
forward to the next year. So you think about,
all right, if I'm in 2025 and I got a $40 ,000
deduction against my income, that would impact
my planning, because I know that if I make another
$100 ,000, I'm only going to pay tax on $60 ,000
of it, if that's the only carry forward that
I had. Okay. Now, as a matter of fact, I know
many of you have talked about, you know, our
current president and his tax situation. In fact,
there was a rule between 2018 and 2020. So post
COVID, there was a lot of stuff that's happened
and COVID brought a lot of rules that were just
shocked to the system. One of those came from
the cares act. So in the cares act, it basically
said, Hey, you have this net operating loss.
Normally, you can just carry that forward until
you use it. So if I can't use it this year, I
can use it next year or the following year until
it goes to zero. Well, in the CARES Act, they
let you actually carry back your losses three
years. So that just meant, hey, if I had a $50
,000 loss this year I wasn't able to use, I can
go back and amend my tax return from the prior
year or two years prior and reduce my income
from then. So that basically said, hey, if I
paid taxes in the past, I now can reduce my income
from that year, which means I'll just get a refund
for the amount of taxes that I paid. So that's
actually something that President Trump took
advantage of. And whenever he was paying a lot
of taxes, because people say he didn't pay, which
is half true. But he actually paid a lot of taxes
at one point, but he had a big tax loss. He actually
carried back and he actually got a seven plus
figure refund from the government. So imagine
you getting a seven plus figure check from the
government. Right. How would that treat your
Christmas there? But anyway, that's what you
look at as far as a net operating loss. Next,
we have what's called a capital loss. All right.
So to me, are you familiar with the capital loss?
So a capital loss is the what ordinary income
or something, a deduction against the ordinary
income that that carries forward. Is that what
you're referring to? Kind of enlighten me, enlighten
the people. Gotcha. Gotcha. Okay. So if you invest...
Before you get into that, I will say about the
net, the NOLs, the Net Operating Laws. One of
the things, again, that you'll hear us say is
you got to look at your previous tax return and
you got to know your business. This is where
you have to know what's going on in your business
because people don't take advantage of that or
don't know how it works or really don't even
know the limitations of it. And this is why you
use a tax preparer versus trying to do this on
your own. because you really could be paying
more taxes. What's the name of this podcast?
How to lower your tax bill. You really could
be paying more taxes than what you need to if
you know about your NOLs and if you know what
can carry forward. And if there's any tax bills
that work in your favor, i .e. current administration,
that you can go back and help you get a refund.
First, it's just breaking even. For sure. So
with the capital loss, if you invest in Generally
stocks and bonds is where this normally will
come from So if I invest in stocks and bonds
that's considered a passive activity unless I'm
a trader So we will get into that right now But
if I go in I have a Robin Hood account and I
go buy a stock in this year We've seen the stock
market has taken a step back. So if I decide
hey, I wouldn't bought a stock for $5 ,000 and
It goes to zero hypothetically. I have a $5 ,000
loss Now, if I go and I do no activity for the
rest of the year, when I file my tax return,
the IRS will only let me claim $3 ,000 of that
loss. Even though I lost five, they'll only let
me take three. The other $2 ,000 is going to
get carried forward to the next year. Now, alternatively,
if I had, let's say another stock that I had
made, let's say $7 ,000, I could have used the
$5 ,000 to offset the seven and I would have
only paid tax on two. So you have to net out
your losses against each other. And if you have
a loss that can't be used, so more than $3 ,000
in a year, then it'll actually care for it to
the next year. So this is important because you
really just have to look at your tax return because
there's nothing on the tax return that will show
this. In NOL, there's a form 1045 that will show,
Hey, here's how much the NOL is going to happen
for the next year. With this, There is nothing
that suggests that it'll just show you Hey, what
is your total loss and it'll show you the loss
that you're allowed to use But there's nothing
that will specifically say hey, you're gonna
carry forward $20 ,000 to the next year so if
you overlook this you actually will lose this
deduction and it'll Create to where you're actually
gonna be paying more taxes than you should Okay,
so we have a few more we have passive activity
losses So that's where we've been talking about
real estate if you are not a real estate professional
or you make more than $150 ,000 and you own real
estate, you probably are going to have some kind
of tax loss as a result of the real estate that
you own. So if you earn that situation where
on paper your real estate, your rental loses
money, you're actually going to have what's called
a passive activity loss. And that loss is going
to be on form 8582. If you look at that form,
it's going to show you, Hey, this is a loss that
it let you use this year. Here's the loss that
was considered unallowed. That unallowed loss
is gonna need to be carried forward. And this
is very important because if you own a rental
and it's been losing money, let's say every year
on paper, that loss doesn't go away, but it's
gonna accrue. And that accrual of loss can then
be used to offset once the rental starts making
money. Or if you sell the property, you could
use that entire loss to offset the gain that
you had. So if you don't keep... Track of this.
I mean, I've had other preparers that said, Hey,
they found a client who had over a hundred thousand
dollars of losses and his tax preparer the next
year when they switched didn't really look at
it. And so that hundred thousand loss was just
forfeit it. Now you can go back and amend and
all that, but you just don't want to have to
do that. Um, and I just saw the IRS took another
$20 billion budget cut. Uh, so it's going to
take a long time. If you don't get it right the
first time, just know it's going to take a long
time to get it corrected. So we've been talking
to we talk about NOLs. We talked about passive
activity losses. We talked about capital losses.
Okay. Now we have charitable contribution carry
forwards. And so this one here, the charitable
contribution carry forward is interesting for
me because again, mother Kelly, I pay my ties.
Right. So when you think of some of the soul
or the LLCs or the S corporation, this is something
that I've seen when they send me their taxes
and their documentation is, hey, I've paid my
ties or I've been the infamous $500 to Goodwill
or some organization that doesn't require documentation.
And usually their goal is to say, I've given
as much as I can to, again, decrease their tax
high ability, but really you only get to include
so much of that charitable contribution. and
60 % of your AGI can carry forward. I think you
give the example of, say you donated 100K to
charity, but only deduct 50K, and then you can
carry forward the rest. And so this one here
is important. I will also say, from the sole
preparer standpoint, if you have paid tithes,
which is a very popular charitable donation,
you, from a strategy standpoint, it would be
best to put that... not necessarily on schedule
C, but on a, we talked about standard deductions,
but on an itemized deduction standpoint to help
you lower your tax liability. Because if you
don't have enough from your C schedule, it's
not going to be beneficial for you. So you want
to put that on your 1040 itemized. So that's
my low two cents on there. Terrence can clear
up the rest of it. Gotcha. Gotcha. Yeah. So basically
what she's saying, the standard deduction is
what, as she educated us earlier, started back
in the forties where you just had a $500. The
IRS didn't tax you on the first 500 bucks that
you make this year. If you're single, they don't
tax you in the first 15 or if you're married,
they don't tax you on the first 30. So your schedule
A is going to add up all the potential deductions
that might eclipse that standard deduction. So
on your charitable deduction, let's say you make
$100 ,000. The IRS is only going to allow you
to deduct 60 % of your income. That would be
a charitable giving. So sometimes people might
just have like stock or stuff that they give
away, or maybe they're just in a really low income
year and maybe they have a lot of investments.
And so they want to give away a lot of stuff
in that year. Well, the IRS says, Hey, whatever
your income is, we'll only let you deduct 60
% of that income. So if you make a hundred, you
can only deduct 60 ,000. anything over that is
going to get carried forward to the next year,
which is important because if your standard deduction
exceeds your itemized deductions, then you might
not want to give away all of that in one year.
Okay. And so those are just things that will
be important to evaluate to say, Hey, I don't,
if you're, if you're planning and it has a tax
implication, you want to try to get guidance
ahead of time just to make sure that you don't
do something. Cause it's, it's not that you can't
undo certain things, but It's hard to put the
toothpaste back in the tube, as they say, with
certain tax situations. And so you'll actually
cost yourself more money doing it without guidance
versus maybe even paying somebody to help you
structure things a little bit more judiciously
for your pocketbook. So we have a few more deductions.
So we have what's called the section 179. And
I won't go too much into this, but effectively
the government will give you a deduction up to
about a million to five on equipment that you
buy. So if you have equipment, they will let
you spend a whole lot of money on equipment,
but they'll tap you at how much you can deduct
in a given year. Okay. You also have the interest
or investment interest carry forward. So if I
have investment interest, which Julie will come
from things like if I borrowed money to invest
in something, then I may have investment income
that is generated. And if I have a deduction
against that income, I can take that deduction
to offset. So for example, let's just say I borrowed
money to invest in a project. That project doesn't
really net me any money yet, but I have interest
that I paid as a result of this investment. If
my interest exceeds the income I received, then
that interest is going to get carried forward.
So if I start making money from that investment,
I'll be able to use that Interest deduction against
it in future years now one point I will say on
the last one here is the home office This is
actually something I just had here recently that
if you do operate your business from your house
and You have two methods to deduct that you have
what's called the simplified method I should
say where you can actually take five dollars
per square foot up to 300 square feet. So that's
fifty hundred dollars So if I have a home office
and my home office is 200 square feet I can stick
a thousand dollars of a deduction without any
documentation. Or I can compare the size of my
office to my house in total, and I can take the
percentage of the expenses that it takes to maintain
my house. So if you think about, hey, what does
it take to maintain your house? Well, you got
your utilities, you got your interest on your
loan, you got insurance, you got taxes. So I
can take a percentage of those items and deduct
them. Now, in this case, if you're operating
a business and you got a little side hustle,
like many of you might, and someone told you,
hey, you need to start a business to save on
taxes. Well, number one, you start a business
to make money, but secondly, if you're not making
money and you do have a tax loss and you do operate
out of your house, you have to use the actual
expense method to, in order to incur this carry
for it. So if you have, let's say $3 ,000 of
home expenses and you had a business loss, If
you try to use the simplified method, you actually
just are going to lose the deduction. If you
use the actual expense method though, and you
say, Hey, I have $3 ,000 of expenses, but my
business took a loss last year. I can take that
3000 and carry it forward to the next year. Okay.
So any questions to me on that? Anything we prior
to the clear up for the people? Um, let me see.
So for the home office deduction, I would just
kind of put a little note in there because to
your point about the side businesses, the side
households, when people are like, hey, I need
to do this for tax purposes or whatever. I would
just say you have to actually now we have no
way of proving this or tax repairs. You can tell
us anything, but it really means that you are
using your home exclusively and regularly before
this. Again, we can't prove that you don't use
your home, but keep in mind that every once in
a while you There isn't such thing as an audit.
So I would say this is one of those deductions
that a lot of people who are not business owners
who don't have a real business, just more of
a side hustle is the most common thing that I've
ran up against this year doing taxes that people
try to use as a tax strategy on their individual
tax return. And it doesn't work like that. So
just kind of put that out there. If you're thinking
about a strategy, this is not one. Okay. So in
other words, the minute says she's not going
to go to your house to verify your office. However,
if you were looking to document against an audit,
you probably would just at least want to take
a picture of the space and keep that on your
record so that you have something to back up
the stuff that you're doing. Okay. So we went
over these seven tax deductions. Now we got some
tax credits. So tax credits, as I mentioned,
that's better than a deduction because it's going
to reduce your tax bill dollar for dollar. All
right. So I'm going to run through a few of these.
On the business side, you have business credits.
So that is going to go into form 3 ,800. And
you have a few of those. You have the R &D credit.
So if you have a product or a technology that
you developed or improved upon another technology,
you can actually get a tax credit for developing
that for the cost of the materials or the labor
that it took you to create the item that you
did. If you don't have enough income though,
that credit can get carried forward. You also
have like the work opportunity tax credit. One
of the things that I see a lot this year is like
the retirement account credit. So basically if
you set up a 401k account for your staff, there's
really three types of tax credit you can get.
a result of that and if you don't have enough
income you can actually use that to carry forward
to future years and Some of these credits you
can carry them up to 20 years some of the other
ones they will carry forward indefinitely So
it's important that you kind of know I mean granted
if you don't have enough income to offset after
20 years You probably are doing something wrong
But they do give you that period of time to do
that. Now you also have credit on the personal
side. Okay, and So you have one is the adoption
credit So if you adopt a kid, you can actually
deduct up to a certain level based on your income
on the expenses for that adoption. Now this one
only carries four for five years. Okay. Now you,
if you adopt scruffy, these, these are only humans.
Okay. I know. I don't know if Tamiya is a dog.
Are you a dog person Tamiya? I am not a dog person.
Do not come for me. Please don't come for me.
I do have a quick question before you get into
this one. I actually had a question about that.
So with the adoption credit, we know that employers
are now adoption savvy, are friendly, if you
will, and they give credits, resources to support
adoption. Are you aware if this plays into that?
Because you know, for a W -2 employee, we can
see if they've received any type of additional
support. for this particular credit. So is it
what we've been doing in terms of just need to
ask the customer, the client, how much did you
contribute towards your adoption? Is that correct?
Yeah. So similar to Like childcare, for example,
if your employer is giving you money towards
an adoption or childcare or like your education
expenses, then you'll need to reduce the amount
that your employer gave you towards that amount.
So let's just say in the adoption, the max credit
is around 16 ,000. So let's just say your employer
gave you $5 ,000 and then you ended up spending
12 ,000 total. So you fit seven out of your pocket
plus the five that the employer gave you. The
max credit could be 16. Well, if they gave me
five, the IRS isn't going to let me take a credit
for that five. Right. The employer took a deduction
for that five themselves. They're only going
to allow me to count the seven that I actually
put out of my own pocket. That's a good good
question, because I know people will try to double
dip. Yes, they will. And so the IRS isn't hip
to giving you money and giving someone else a
tax deduction at the same time. OK. So there's
a few other credits that are important. So one,
you have the foreign tax credit. That is if you
had income overseas and you paid taxes there
and you weren't able to use the entire credit,
you can use that in future years to offset future
income that you have. And then you have the residential
clean energy credit. So I'll park here for a
second because many people are looking at solar
panels right now. And oftentimes if you're sold
solar panels, the person that's selling them
to you, is going to be giving you tax information.
Let me set this up, Terrence. Okay. Hey, knock,
knock. Hey, Terrence. Hey, I want to sell you
these solar panels. They're amazing. They will
save you so much money on your energy bill, yada,
yada. All you need is just some sun and they
work, right? Okay. Not to mention you get an
amazing tax credit. I mean, like almost a refund
if sometimes. So this is something you want to
do. Wow I don't know but you will get one You
will get a tax credit so so you're telling me
I pay this high fee It might save on my bill
and I definitely I'm gonna save on taxes. Okay.
I just need to know where to find rebates Yeah,
I'll tell you right now and then we'll come and
you know all these hidden fees No worries about
that, but you will be able to get this on your
taxes get a huge refund huge so Great sales fits,
by the way. Great sales fits. So just to give
you some context on this credit, the credit is
30 % of the cost of the solar panels, including
installation. So if you spend $50 ,000 on solar
panels that qualify, you can actually get a $50
,000 tax credit. However, if you're number one,
I will tell you just a rule of thumb. If the
amount of your credit is exceeding the amount
of taxes you pay in a year, unless you've been
working with someone like myself, and we've gotten
your tax bill down really low, you probably need
to really assess, is this something I can afford,
okay? But if your tax bill, let's say in that
case, if your tax bill is less than $15 ,000
for the year, then what happens is, they will
apply that 15 ,000 against your tax bill for
the year. So let's say your tax bill for the
year is 12 ,000, and they'll say, hey, the credit's
15, we'll apply 12, and then you have 3 ,000
that's gonna get carried forward to the next
year, all right? That's important because the
difference is between this and let's say an electric
vehicle credit is that an electric vehicle, the
credit does not carry forward. This one is actually
better. It does carry forward, but you're going
to be capped at what your actual tax bill is
for the year. And so you have to be strategic
with this because there may be multiple things
you do in a year. And if you decide to get solar
panels and it's December, November, whatever,
it may make more sense to maybe carry it into
the next year. Depending on what other things
you had going on because you'll eventually get
the money You just may have to wait a lot longer
time to get it. Okay? So we've gone over seven
different tax deductions. We've gone over some
tax credits We talked about you know where you
actually find that information. Okay, so what
to me? Do you feel like we're a few great takeaways
that the people should be aware of just from
our conversation? So a few great takeaways is
one if you are a business owner be very in touch
with your losses one of the things Terrence mentioned
was we mentioned a couple of different losses
that Carry forward right your net operating losses
your capital losses and then your passive activity
losses So you've got to be very in touch with
what you're making and anything that you've lost
and understanding how much you're able to deduct
from your current tax return, because everything
that you can carry forward doesn't tell you in
black and white on the actual tax return. And
so you really need to have a sit down with your
taxpayer. If you use someone like us, like parents,
you would know, right? But if you don't and you
use someone that's inferior, then I'm just teasing.
No, no, I'm not talking about any other taxpayers
out there. But if you, sincerely though, if you
use someone who maybe doesn't communicate a lot
with you, this is your responsibility, right,
to go and look and see what they've deducted,
the amount that they deducted, and also, again,
what's going on with your losses and your carry
forwards. And then the things that you can see,
I think you mentioned Form 1045 or something
like that. If you can see the loss, take note
of that. and what you can get. The other thing
that kind of stood out is the charitable contributions,
of course, understanding how much you can carry
forward, understanding how much you should be
giving, right? At the end of the year, the last
quarter of the year to make sure it makes sense.
And then when you think about any tax credits,
and again, when you think about the... Tax credits,
the goal is to subtract from the taxes you owe,
right? So when you get through with your deductions
and you want to say less than that tax bill is
too high, what tax credits can we get? You want
to see if you do qualify for say the work opportunity
tax credit or the general business credit, right?
The last thing I will say to you is we mentioned
at the top of the hour, our tax acts, bills,
whatever. can change based on the administration
that's in office. So we know that it may change.
So be in the know. I think you mentioned that
some of these expire. You gave an example of
someone who lost money. Don't lose money, people.
We're not in the business of losing money. Don't
miss out on money. Don't pay too much. And make
sure you can get your refund if you can. So with
this current administration or with any administration,
it's going to be important to be in a know -to
-know. what tax credits or deduction are expiring
and what's new that's coming in the pipeline
that you can strategize and be able to take advantage
of in your next return year. Awesome. And so,
you know, I wouldn't say that any other prepare
is inferior necessarily. OK. However, if your
prepare is not asking you, especially if they're
new, if they're not asking you for a copy of
your prior year, then they're probably not someone
that's really up to the task. And if you're doing
your own taxes, it's important that you just
do a quick review just to make sure that you
are familiar with what happened. And because
oftentimes you may even have forgotten stuff
that maybe happens every year that the last year
will show you, Hey, I actually did this. I did
this this year. Hey, I got interest from this
bank. Did I maybe have interest from that bank
this year? Because If you leave something off
your taxes, it's probably going to be 18 months
later, the IRS is going to send you a notice
and tell you what you left off your taxes. And
they're going to want you to have paid them more
money plus some interest in penalties. So it's
important that you're aware of what happened
in prior years. And especially if you have these
deductions or credits that impact you, hopefully
documenting that at the time when you file. so
that you can go into the year knowing that you
have, you know, something in your back pocket
to utilize to ultimately help you save money
when you're filing your taxes in the following
year. OK, so hopefully you guys took away some
good information to me and I'll be back on a
future episode. We'll figure out what we're going
to talk about and maybe we'll get another history
lesson in there. So as we say, keep more of what
you earn and we'll talk to you guys soon.