Happy New Year - But!

Posted By: Larry Stone ICOR Blog & News,

The new year is here and most of us cannot wait to get moving into 2021. If in November you attended the presentation by Tracey Wilson (from IXP 1031), you learned about the economic and political issues facing our nation. If you missed it, you could check it out at https://bit.ly/3nC0Cf0. Maybe you caught the recent forecast by Rich Wobbekind, Associate Dean and Economist at the University of Colorado Boulder Leeds School of Business, which provided insight into Colorado’s different business sectors- Loveland Reporter-Herald: COVID casts long shadow over Colorado economic forecast for 2021.*

No matter where you get your forecast, the same issue appears - unknowns that exist make forecasting difficult. Combine these unknowns with pending tax changes, and many variables emerge which complicate running your business. Focus on the one expense that directly affects you - Your 2021 tax obligation, which directly reduces your profit and your ability to accomplish your goals.

You might think it is January and I have plenty of time to look at my tax bill, it’s not due until next year. But you really don’t. As they say on real estate contracts—“time is of the essence”. No matter how good your tax preparer is, if you bring them a box of receipts on April 15, it will be too late to save you money. Tax planning is the only legal way to reduce your taxes and save cash, it works, and you can measure the results of the cash saved.

Along with saving you cash, tax planning assists you in preparing for an IRS examination. A detailed tax plan will document why you can take the deduction. It should refer to the IRS code (the tax law), IRS revenue procedures (their guidelines to follow the law) and tax court cases (which sets boundaries on interpreting the law). Tax Planning provides the documentation of what, when, where, why and how.

Does your tax preparer provide you their recommendations in writing? Does he or she calculate your cash savings? No matter how much you like your preparer, you should heed President Ronald Reagan’s advice when signing the Russian missile reduction treaty—“Trust but verify”. For those looking to verify the effectiveness and efficiency of their tax planning, a Discovery Session is just the tool to get that second opinion. If your doctor proposed to perform brain surgery, you would want a second opinion; Isn’t your financial health that important too?

Don’t let these forecasts get you down. No matter what the 2021 holds for us, one thing is true: Implementing a detailed tax plan will bring in extra cash to help you accomplish your goals. Let Stone CPA & Advisors assist you in getting your new year off to a good start with a Discovery Session.

Join our free Community Q&A every Thursday beginning 10:00am MST or ask for a Discovery Session by emailing info@coloradotaxcoach.com. May your 2021 be awesome.