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You Don’t Have to Worry: Tax Answers from Jeff Schnepper

You Don’t Have to Worry: Tax Answers from Jeff Schnepper

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    No matter how prepared you are for tax season, you probably worry at least a little whenever April 15th is getting close. We’ve covered your last-minute tax options in the past, but no matter how close that deadline is getting, we want to reduce your worry. Jeff Schnepper, MSN’s tax expert, agreed to answer a few questions for us, and offered a little reassurance.

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    Tax Misconceptions — and Problems

    One of the major reasons that our taxes keep us up at night, according to Jeff, is that there are so many myths and misconceptions about taxes: topics like who you can claim as a dependent and what you can take as a deduction involve as many urban legends as a bad horror movie. And it doesn’t stop there. Jeff says: “The most common misconception people have about taxes is that everybody else is cheating and getting away with something….giving them the “right” to fudge. Cheating is wrong and I’ve found that the taxpayers I work with understand, and want to do the right thing. The problem is that the law changes every year, and sometimes three and four times in a single year. The professionals are overwhelmed and the average taxpayer completely lost. It’s not that people are cheating – they’re making errors because they don’t know the rules.”

    The past few months have shown the truth of that statement. If you consider just the appointments that President Obama has made (or attempted to make), it becomes obvious very quickly that even politicians who can afford the best tax preparers in the country can’t get their taxes done correctly.

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    What We Can Do to Reduce the Worry

    Just because the tax system is complicated doesn’t mean that the average taxpayer needs to spend the time between now and April 15th cringing, however. Even the biggest tax bogeyman of them all — an audit by the IRS — isn’t something you should spend too much time worrying about. While you can minimize your overall chances of being audited by following the rules as closely as you can, and by having the right documentation, there’s a certain element of chance.

    “You can’t avoid an audit. Returns are selected randomly as well as based on the IRS DIF computer program,” says Jeff. If there’s nothing left that you can do to make sure that your tax return is filled out accurately, you can stop worrying. If the computer picks your number, you may have to sit down with an auditor, but there’s nothing else you can do to affect the process.

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    A Few Last Minute Options

    Even though you’ll get the best results for preparing your tax return by starting as early as possible, Jeff was able to point out a few last minute deductions that you can pick up after December 31st: “Do you qualify for a deductible IRA or would a Roth be better. Can you contribute to a SEP?” He suggests looking into your IRA options if you’re still searching for deductions.

    Jeff also notes that there are a few extra things to consider this year, if you’ve been affected by the current economic situation. Jeff says, “Sit down with a tax pro if you may lose your house. Congress passed a law that wipes out any taxes on debt discharge income on a principal home. But, you have to do it right and file the appropriate forms.” He also pointed out that if you’ve refinanced your mortgage, you can deduct any points you pay over the life of the refinance. You can even deduct any unamortized points on your original refinance if you refinance a second time.

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    “The laws are in flux and are changing as you read this. For example, now the first $2,400 received in unemployment benefits escapes tax. You can get a $1,000 deduction for real estate taxes even if you take the standard deduction. For 2009, you can deduct sales tax on a new car even if you don’t itemize. If you don’t know the rules, you’re going to have a hard time playing the game,” says Jeff. He makes it clear that if you aren’t staying up to date on the changes in tax laws, you’re going to have a hard figuring out your taxes.

    Getting Ready for Next Year

    You can make your 2009 tax return easier by starting now. The secret to making tax season simple is setting up a system to document both your income and your deductible expenses throughout the year and keep it up to date. Jeff described one system his clients have been known to use: “For substantiation, I have clients who throw all their checks and receipts in a box. Once every month or so they sit down and put those checks and receipts into envelopes with tax classification. So, there’d be an envelope for contributions, investment expenses etc. At the end of the year, they add them up, don’t double count, and put the number outside the envelope. Those are the numbers they give me for their tax returns. And, they never have to fear an audit. An audit can only ask them to substantiate the numbers on the return. They already have the backup available in each envelope!” It doesn’t matter exactly what system you use, though, as long as you have one in place — and you keep it up to date throughout the year.

    If you have a question about your taxes, Jeff Schnepper is MSN.com’s Tax Expert. You can find him at money.msn.com, where he answers questions every day. In addition to his MSN columns, Jeff is the author of How to Pay Zero Taxes, which is now in its 16th edition, as well as several other finance and tax-related books.

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    Last Updated on September 10, 2019

    How to Master the Art of Prioritization

    How to Master the Art of Prioritization

    Do you know that prioritization is an art? It is an art that will lead you to success in whatever area that matters to you.

    By prioritization, I’m not talking so much about assigning tasks, but deciding which will take chronological priority in your day—figuring out which tasks you’ll do first, and which you’ll leave to last.

    Effective Prioritization

    There are two approaches to “prioritizing” the tasks in your to-do list that I see fairly often:

    Approach #1 Tackling the Biggest Tasks First and Getting Them out of the Way

    The idea is that by tackling them first, you deal with the pressure and anxiety that builds up and prevents you from getting anything done—whether we’re talking about big or small tasks. Leo Babauta is a proponent of this Big Rocks method.[1]

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    Approach #2 Tackling the Tasks You Can Get Done Quickly and Easily, with Minimal Effort

    Proponents of this method believe that by tackling the small fries first, you’ll have less noise distracting you from the periphery of your consciousness.

    If you believe in getting your email read and responded to, making phone calls and getting Google Reader zeroed before you dive into the high-yield work, you’re a proponent of this method. I suppose you could say Getting Things Done (GTD) encourages this sort of method, since the methodology advises followers to tackle tasks that can be completed within two minutes, right there and then.

    Figure out Your Approach for Prioritization

    My own approach is perhaps a mixture of the two.

    I’ll write out my daily task list and draw little priority stars next to the three items I need to get done that day. They don’t need to be big tasks, but nine times out of ten, they are.

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    Smaller tasks are rarely important enough to warrant a star in the first place; I can always get away without even checking my inbox until the next day if I’m swamped, and the people who need to get in touch with me super quickly know how.

    But I’m not recommending my system of prioritization to you. I’m also not saying that mine is better than Leo’s Big Rocks method, and I’m not saying it’s better than the “if it can be done quickly, do it first” method either.

    The thing with prioritization is that knowing when to do what relies very much on you and the way you work. Some people need to get some small work done to find a sense of accomplishment and clarity that allows them to focus on and tackle bigger items. Others need to deal with the big tasks or they’ll get caught up in the busywork of the day and never move on, especially when that Google Reader count just refuses to get zeroed (personally, I recommend the Mark All As Read button—I use it most days!).

    I’m in between, because my own patterns can be all over the place. Some days I will be ready to rip into massive projects at 7AM. Other times I’ll feel the need to zero every inbox I have and clean up the papers on my desk before I can focus on anything serious. I also know that my peak, efficient working time doesn’t come at 11AM or 3PM or some specific time like it does for many people, but I have several peaks divided by a few troughs. I can feel what’s coming on when and try to keep my schedule liquid enough that I can adapt.

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    That’s why I use a starred task list system rather than a scheduled task list. It allows me to trust myself (something that I suppose takes a certain amount of discipline) and achieve peak efficiency by blowing with the winds. If I fight the peaks and troughs, I’ll get less done; but if I do certain kinds of work in each period of the day as they come, I’ll get more done than most others in a similar line of work.

    You may not be able to trust yourself to that extent without falling into the busywork trap. You may not be able to tackle big tasks first thing in the morning without feeling like you’re pushing against an invisible brick wall that won’t budge. You might not be able to deal with small tasks before the big tasks without feeling pangs of guilt and urgency.

    My point is:

    The prioritization systems themselves don’t matter. They’re all pretty good for a group of people, not least of all to the people who espouse them because they use them and find them effective.

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    What matters is that you don’t fall for one set of dogma (and I’m not saying Leo Babauta or David Allen preach these things as dogma, but sometimes their proponents do) until you’ve tried the systems extensively, and found which method of chronological prioritization works for you.

    And if the system you already use works great, then there’s no need to bother trying others—in the world of personal productivity, it’s too easy to mess with something that works and find yourself unable to get back into your former groove.

    “If it ain’t broke, don’t fix it.”

    In truth, this principle applies to all sorts of personal productivity issues, though it’s important to know which issues it applies to.

    If you thought multitasking worked well for you each day and I’d have to contend that you are wrong—multitasking is a universal myth in my books! But if you find yourself prioritizing tasks that never get done, you might need to reconsider which of the above approaches you’re using and change to a system that is more personally effective.

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    Featured photo credit: Sabri Tuzcu via unsplash.com

    Reference

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