Three Reasons Why Your Income Tax Return May Look Different This Year

Well, friends! It’s that time again. Tax filing season is upon us. Many of you are seeing big changes in your tax returns this year. Some to the tune of tens of thousands of dollars. And, you may be wondering why.

While I’ve never seen any two returns that look exactly alike, there are several things that they all have in common. In this post, I’m sharing three things that’s might be impacting yours to help you understand how to move forward.

Factor #1: Taxable Income

The “Income” section on your tax return is where you report your taxable earnings. And, yes, this is where reality sets in.  At this point you get to see, in black and white, how your job promotion, fast-growing business, or lucrative passive income streams are causing your tax changes.

In an ideal world, the goal is to keep an eye out on income increases and have a strategy to manage the tax on them. This includes finding ways to keep more of the money you make so that you can enjoy more savings.  But, if you’re like many others, tax planning probably didn’t make it to the top priority list. So, you end up surprised by the amount you end up paying.

The question to ask yourself is “How much did your household income change in the previous year?”

This is the beginning of tax awareness — to understand the amount of income you earn so you’ll know how much tax you’re paying.

Factor #2: Life Events

Did you get married or divorced last year? Were you blessed to add a child to your family? Is a member that you claimed previously no longer in your home? If either of these took place, then your tax filing status might change.

For example, consider a married couple whose daughter is in college. The child worked throughout the summer and received more than half of her support from her parents. Her mom and dad want to know, “Should she file her own taxes?”, “If she does, will that negatively change their return?”, “When she graduates, does that disqualify her to be claimed as their dependent?”  These, and other questions like them, are part of the tax planning process. Unfortunately, tax savings that come in the form of choosing the right filing status is often overlooked. The result? Filers who are paying more taxes than they should.

The question to ask yourself is “Has there been a change in my marital status or the number of people that I can file this year?”

Change #3: Lifestyle Adjustments

Another part of the equation is adjustments you can claim to lower your income. Think of it as getting income as low as possible before you take deductions. Just be sure that you understand the rules and know how to apply them.

If you’re spending in the category of college, career, or self-employment, then there’s probably some adjustments you can make. The Educator’s Expenses for teachers, or Health Savings Account Deduction, Self-Employment Pension Plan, are all examples of ways to lower your gross income.

The question to ask yourself is, “Where does my income go throughout the year?”

As you can see, tax savings opportunities abound for those who are proactive. You can legally cut your tax bill by knowing what strategies are available and how they apply to you. The greatest benefit comes from starting early and following a plan throughout the year.  And, if you’re wondering how to get started with a tax savings plan, post a comment with your question below.

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How to Live Life on Purpose in Your Finances This Year

We’re here, friends!

A brand new start to making life even more amazing.

This could mean getting a better job or applying for a promotion. You may also be diving deeper into self-employment. Or, perhaps, you’re thinking that now is the time to launch out and start a business of your own. Wherever you are in the mix, you likely have some personal or business financial goals that you want to meet.

Ready to get going? Follow Steven Covey’s advice and “Start with the end in mind”.

Sounds simple, right? But it’s not always an easy task. Just ask anyone whose relying heavily on debt to stay afloat. Like the business owner who takes a cash advance to make company payroll or the contractor who uses credit cards as working capital. It can be quite a challenge turning your spending habits around.  The good news is the right plan can make it happen.

Recently, I was as a panelist for an online conference where I shared my story of being a recovering shop-a-holic and overcoming financial depression. I had such a good time with the host and participants that I want to give you a peek into the After Party. In this video, I share eight of my secrets to eliminating debts. Be sure to grab a pen and paper to jot down notes.

Now that you’ve had a chance to take notes, tell me, did you find the tips useful? What’s one strategy that you can use to reach your financial goals this year?

How This Simple Secret to Success Changed My Entire Business

 

When you’re an entrepreneur you get to design your business exactly the way you want.

You have choices. You get to choose what products and services to offer, the market that you’ll serve, the method of delivery and everything in between.

A few years ago after attending a conference for women business owners, I came back to my business with a fresh perspective. While reviewing the notes from that weekend, something hit me. I finally realized how much control I was giving away by not creating the ideal company that supports my ideal life. You see, I was allowing others to dictate what my company should be by not honoring my vision that I had for the business. As a result,  I was literally giving my dream away.

Once I wrapped my mind around this, I drew a line in the sand and said to myself, “No more.” It took me looking at my vision and asking myself one tough question. Why? Why hadn’t I created the business and life I love? Why had I settled for the middle of the road when I have a choice every day to be more and do more. And, friend, that’s when things shifted. I stopped letting time slip by and started paying closer attention. I made a list of what I wanted to in life and what I wanted to let go and stapled it to the front page of my journal. With it in plain view, it serves as my reminder of the life I am creating.

It’s been several years since that conference and I’ve turned the game from good to amazing. Some of the decisions that I had to make were simple but many of them were downright hard. For instance,  I cut back hours, ended my office lease, and put qualified people in new roles. I even ended contracts that weren’t a good fit for me.

We’re the decisions easy? Some were. Others weren’t. But all of them were worth doing to create my best life.