Just like people know that they should be getting into fitness for their health and well-being, many also know that they should be working on getting more organized with their finances, but both are harder than they seem. Physical and financial fitness are the same in the sense that it’s not easy to build good habits. It takes a lot of discipline and motivation. But just like physical fitness, the path to financial fitness comes one small step at a time. In this episode we welcome back Shannon Weinstein (previously on Episode 91) who teaches us five tax tips to stay financially fit at the end of the year, whether you are a business owner or fitness professional. Although Shannon is a licensed CPA, the information she provides is intended to educate our audience of Action Takers and is not intended to replace individual tax or financial advice. Shannon’s tips do not necessarily apply to everyone and your individual tax scenario is crucial to how effective these are. Just like if you were to say a good starting point for weight is 8lb dumbbells, it depends on the person and how they use them whether they will effectively implement what you teach. Best to confirm with your accountant if something in this episode piques your interest and figure out how you can apply these strategies.
What You’ll Learn from this Episode:
• What you didn’t know you should be doing to best prepare for tax season next year
• Tips on tracking your deductions
• How to face your fear, uncertainty, or lack of knowledge around your personal or business finances
Here’s the Complete List of Tips:
(04:00) Tip #1: Estimate your Adjusted Gross Income (AGI) and tax bracket
If you don’t know where you stand with your taxes and aren’t sure what to expect in April, add up the income that you’ve made up through the year. As fit pros, we likely have income coming from different places, where we may or may not have paid taxes! Form 1040 and Tax Bracket below!
The fix: get an estimate of how much you made, and compare it to what you made last year to get a rough idea of if you’ll owe more or less in taxes.
(09:45) Tip #2: Time your remaining transactions for the year
Are there any payments that you are owed that you can defer to next year? That will relieve some taxes that you will owe in April!
(12:00) Tip #3: Put away money for retirement
It’s best to see a Certified Financial Planner to help you decide how to save for the future, but make those contributions before the end of the year for the deductions you can make on your taxes.
(13:00) Tip #4: Donate cash or goods to a 501(c)3 organization
You can make donations for a tax benefit. It’s best to work with your accountant to determine if you can take advantage of charitable deductions. If you can, make sure you’re donating to a recognized non-for-profit 501(c)3. If you donate goods, take a photo of what you’ve donated, and log that in a dropbox on your phone, so there’s physical support for what you’ve donated.
Unfortunately, time is not something that can be deducted. Time cannot be valued in the eyes of the IRS for a deduction. It’s nearly impossible to prove if you’re audited.
(19:35) Tip #5: Meet with your accountant
Many people only meet with their accountant to file their taxes once a year. You should take advantage of their knowledge and meet with them during the year to make sure you are taking advantage of all the tax savings possible.
When selecting an accountant, be open to actually shopping around for someone you are comfortable with and want to meet with as opposed to the person your parents use. Find someone who understands what you do and is willing to explain things and ask thoughtful questions.
(22:00) What to do if you face fear, discomfort, or a lack of understanding around looking at your financial records.
Think about one of your clients who would say they are fearful, uncomfortable, or have a lack of knowledge around fitness and are therefore not going to do any at all. How would you coach them?
References in the Episode:
Form 1040- Determine your deductions
2019 Income Tax Bracket
Shannon’s Course: Financial Fitness For New Entrepreneurs