Taxes are DUE!

Your personal income taxes are due on April 15!  Good ‘ole Uncle Sam must get his Due!

Or did you file an extension to delay the pain?  (Of course, business taxes were due last month!) In general, we can probably agree that we do not like taxes, or at least do not like paying any more tax than is our fair share.  And there are some who probably do not like to pay what the federal and state governments have deemed as a fair share.  I’ve even known people to turn down overtime opportunities, because they thought it would bump them into the higher tax bracket and they would begin to lose money.  If you know people like that, politely explain that there are seven tax brackets, with the lowest tax bracket at 10% and that covers couples income up to $23,200.  That means a couple making no more than $23,200 would pay (10% * $23,200) $2320 in federal taxes.  And if a couple makes more than $23,200, but less than $94,300 then they move up to the 12% tax bracket.  This does not mean they pay 12% on all of their income.  It means they pay $2320 on the amount up to the $23,200 level (that’s the 10% tax bracket), then the couple would pay 12% times ($71,100 which is 94,300 less $23,200).  This is $8532, plus the $2320, for a total tax of $10,852 total tax.  Of course,  this is for couples.  There are similar approaches for singles, married filing separately, or Head of Household. And don’t forget the standard tax deduction that  reduces the overall income.

Enough about the numbers!  

Good Things about taxes:

• Federal taxes fund our national defense, Social Security,  Medicare, federal highways, education.

• State taxes fund local schools, roads, police fire departments, parks, and other community service

• Unemployment (This can be both good and bad)

• Healthcare (Medicaid/Medicare)

• Food assistance

• Public housing

Bad Things about Taxes

• Financial Burden - Some people feel that they pay too much in taxes.  This may depend on whether you are or will ever benefit from those extra services.

• Complexity for filing

• Inefficiency and wasteful spending; poorly managed programs

• High taxes can discourage work or investment

• Some people believe that taxes can stifle innovation or entrepreneurship

So - Are we, you, I paying too much?!  I think the only way to answer this question is to recognize that there are many perspectives to answer this, lol.

The worst situation for me once, was when I was younger and even more foolish than I am now.  I was not well advised on what to expect for taxes for the coming year, and when the next year came, I had a huge bill.  I vowed to better prepare myself for the taxes I would owe.  I may not, personally, understand the best way to minimize taxes, but I do consult a CPA that does, and I definitely do my best to set aside appropriate dollars to cover my tax liabilities.  If you would like to better understand and prepare yourself, you can consult your tax advisor, or if you are looking for someone to walk alongside you throughout the year, and make a better overall plan, we can sit down together to develop a better practice of leading your money to do what you want; and reduce the stress that often comes at this time of the year!

True wealth does not come solely from our cash and retirement accounts; though, it certainly does give one a huge emotional and even mental advantage when we know we have money set aside for taxes, as well as any other emergency that comes along.  Because, try as we might, emergencies will happen.  The hope strategy (Hope I never have an emergency) is a futile way to live.  However, when we have the appropriate dollars stashed away, these emergencies are more like inconveniences, then true emergencies.  

If you experience negative emotions when the unexpected happens, and you want to protect yourself from those feelings, without having to pack up and leave town in the middle of the night to try to avoid the collectors, then let’s sit down and develop a strategy to put those kinds of emotions and fears behind us.  Reach out to me at brian@leadershipharbor.com or text me at 402-310-7500 to start the process toward freedom, financial freedom, financial security, etc - however, you would like to describe this feeling.

Brian Peterson, Leadership Harbor Coach, Lead Your Relationship with Money