Transcription:

Maximize Your Tax Refund 00:16:47

Announcer:

This is Blue Money, a finance podcast made for cops by cops with us, you know your money’s safe. Lieutenant Jim Donnelly of the Ben Salem Police Department and co-host Kevin McGarry of Valley Financial Group, come together to help protect and serve your financial needs. This is Blue money.

Jim Donnelly:

I want to welcome everyone back to the Blue Money Podcast. This is your host, Jim Donnelly. I’m here with my co-host, Kevin McGarry.

Kevin McGarry:

Jimmy,

Jim Donnelly:

What’s up, Kevin? And today the topic we thought we speak about today is, you know, tax seasons coming up and everyone knows the federal and PA taxes are due by April 18th. So with that, we decided to have, we asked one of our guests to come on, Bruce Goldstein, who’s a CPA, he does a lot of value, taxes, a lot of our clients when we need some information. So, hey Bruce, welcome to the show. Can you give background information on you, Bruce?

Bruce:

Certainly thank you for inviting me and allowing me to participate. I am a partner in the firm of Chris Smith Associates, CPAs. We’re located in Huntington Valley, Pennsylvania. Between Chris and myself, we have a combined years of experience. 85 years.

Kevin McGarry:

How many years you say? 85.

Bruce:

85 years. I’ve been practicing since June, 1970. Believe it or not Chris has been practicing since 1985. And we’ve been together for that period of time.

Kevin McGarry:

So you’ve seen a lot of changes, huh?

Bruce:

We, I, I’ve seen changes from 1970 when the, the rates were 70%. Um and now they’re down to 35. And, and sometimes what’s old again, is new again. One of the things we’re going to discuss is now there’s an energy credit for the New Year 2022 for efficiency. And I remember they put that in, in 1975. It was up to $2,000 then. So sometimes what’s old is new again.

Kevin McGarry:

Wow. Right. Yeah. So let’s get started. Bruce, like a quick question. You know, we deal with a lot of law enforcement. A lot of her listeners are police officers. You know, what’s a good tax planning checklist for them to get started prepared for this season?

Bruce:

We have put together and created a tax deduction list for police officers and law enforcement employees. And I’d be more than happy to provide that. It’s a five page list and it’s, I, my experiences dealing with law enforcement of police officers is that 99.9% of them are missing these deductions. Now, the deductions are not available under the federal because they’ve eliminated unreimbursed business expenses. However, Pennsylvania and local allow you to deduct dollar for dollar for these expenses. Just giving you a few of them. Association dues, union dues grips for your service, revolvers ID cases. I mean, I’ve got five pages of things that are, you’re entitled under the law as unreimbursed business expenses unreimbursed from your employer that you can take advantage of. And very, very few people are aware of it.

Jim Donnelly:

Well, that’s great Bruce. And we’ll do, Bruce, is we’ll put your contact information at the show notes so they can email you directly.

Bruce:

Awesome.

Jim Donnelly:

Get a copy of the checklist.

Bruce:

I’ll be more than happy.

Jim Donnelly:

All I need is contact information.

Bruce:

And I’ll be more than happy to send that along. And you, it’s used as a guide to kind of rattle your head. I mean, you know, when we talk about organizing and planning and getting ready for the preparation and return, most people don’t realize how life events have an impact. I got married this year, I got divorced, my wife passed, my husband passed away. I have new children. I’m now supporting my parents. I mean, all of these items have impacts under childcare credits, education, learning credits, support dependent credit, and that some of the things that are missed are valuable things that are impacted in the law.

Kevin McGarry:

Bruce, do you think some of the biggest mistakes or law enforcement personnel missed these potential write-offs?

Bruce:

I am a hundred percent positive based on my experience in preparing returns for law enforcement. Many times what I do is I send them an email and I give them a brief list because it’s so far in the tax season that they have forgotten what they spent. And, and you know, if they have any kind of insurance, if they have a second job, and most of them do, they’re entitled to automile deduction from one job to the other. Most of them forget that. Some of them have security, you know jobs afterwards. So, you know, that’s another foregone opportunity that they can take advantage of that’s contained in our list. And I think that’s why it’s important guys, to Bruce and Kev and I try to tell everyone in law enforcement that I work with, it’s worth, listen, you know, get your taxes done might cost between two to $300, but it’s well worth it.

Don’t try to do it yourself. Don’t have your aunt, you know, Uncle Jack do it. Because they’re missing all these deductions. So, you know, sometimes its way better just to get a professional to handle your taxes, to make sure you’re getting all the tax breaks that you’re, you’re eligible for. You see that Bruce and a lot of people try to do taxes themselves. A lot of people, what they do now is, you know, when I started out, we used to do them by, pencil and hand. Now we, the advent of TurboTax, things like that, and turbo, that’s, they’re great tools, but you’re not getting somebody who’s trained and who’s schooled and, you know, it’s kind of a responsive situation. What’s your income? You put your income in? They don’t, they don’t prompt you for these kind of deductions and they don’t know they’re prep preparation software.

It’s not somebody who’s actually it’s like going on Google to find out, you know, if you’re going to do surgery on yourself, you’re not, you don’t have a trained professional. And for that cost, I assure you, one credit loss far exceeds the amount of the fee that you may pay. In addition, when we, when we complete a return, we send it to the taxpayer with all the pre-addressed envelopes, with a binder copies for themselves. And it’s, it’s required now to e-file. We’ll send the form to return to us, we’ll e-file the return. And if they have a refund coming and they want to deposit in their account, if they send us a void a check, we can go on the IRS protect protected website, get all information in, and they don’t have to do anything. All they send that back to us. And it’s a seamless process right now.

Jim Donnelly:

Now what about, Bruce? Do, what did common tax planning mistakes to avoid? What do, what do you see a lot of people out there? What, what tax to avoid?

Bruce:

Well, if the tax planning is very difficult now, for example, cause the new, the new act that they signed, the, you know, inflation reduction Act of 2022 wasn’t signed off and effective until the end of October. We didn’t get notice on much of the changes until after the year ended because of congress. So planning is a difficult thing. But for example, just as a few small things. For example, this year they’ve increased the standard deduction from 25,900 to 27,000, you know, going forward.

Kevin McGarry:

Bruce, Bruce, real quick on, just before you dive into that a little further, can you just explain the standard deduction to our listeners?

Bruce:

So you’re entitled to either itemize your deductions or the government gives you a standard deduction. Now, the standard deduction for the year is going to be 25,009. Now, if you choose to itemize, and we do both to see which is more beneficial and if we can enhance the return, it’s medical expenses. It’s real estate taxes, it’s state and local taxes from your w2, it’s your mortgage interest, and it’s your contributions. If the aggregate of all of those items that I just named with certain limitations exceed 25,900, you don’t have to, you don’t opt for the standard deduction. You take the specific deduction. Last year they allowed you an additional married $600 for contributions in addition to standard deduction. This year, the new act has eliminated that. So if you take the standard deduction, you are not entitled to any specific charitable contributions. So many times it, it, we always do both to see which is more beneficial for the taxpayer and give them the opportunity. And next year it’s going from 25 9 to 27 7. And once again, eliminating that charitable deduction. It’s churches, it’s ray cro, it’s all of the things a normal individual in their way of life gives charitable contributions. They’re no longer specifically allowed to take them unless they itemize. Does that help?

Kevin McGarry:

That helps, yep.

Bruce:

Yeah, Absolutely.

Kevin McGarry:

Like the other thing is, Bruce, like, you know, for our listeners, and we get a lot of calls from our own clientele, you know, just trying to organize the documents, right? Trying to organize the documents.

Bruce:

So I also have that I would more than happy to pass on a tax organizer that’s not, it’s a five page list that provides all the information. Your tax repair is going to need names, addresses social security numbers, dates of birth of your children, which is important for the child tax credit that we can talk about. Cause it’s a big change this year. It also gives you 20 questions about things, life events. It gives you all the things potentially that you might not think about why you’re getting your documentation together. Because these are things that are you, you’ve lived the year, you’re now looking back 12, 13, 14 months ago. And it may have, you know, escaped your mind with your day-to-day, you know, life. So it’s a way to kind of rattle you and sit down, Hey, I did have that. What’s the impact? And we talk about it,

Kevin McGarry:

Right? Well, I think the other thing is we’ll get calls from here and, you know, our clientele and we try to educate them with your help. And our team’s help. We don’t, we definitely don’t want to give the IRS any gifts, but just a, a plain understanding of what documentations they need. They’ll call here and say, well, I’ve received the 5498, I got a 10 99 [inaudible] and, and you asked them, do they understand what that is? And they don’t. Could you just explain paper wise, like the, the things they should be looking for?

Bruce:

Well, and W twos obviously from your employer. And if you have more than one employer and you’ve exceeded, you may get a credit for Medicare tax that most people in Social security access Social security, most people are not aware of that. If you have there’s a maximum social security tax you have to pay if you, but each in, the employer is required to take out the seven, the 7.65 of your wages. So once you exceed that maximum that is considered like taxes paid in. And you get a refund for that. Most people are not aware of that. The second item that they’re going to have is 1099s for interest for dividends. Third is 1099 Gs for any stock transactions and, you know, sales. And this, you know, entitled capital gains, capital losses. And that’s preferential tax treatment over ordinary income, if that makes any sense.

Anytime you get a 1099 r distribution from a retirement plan a qualified, there are many times you get these documents and they just say what the balance is. They’re just confirming by law, they have to give you a statement that whoever the fiduciary is, but that’s not really a tax item that is needed because it’s just confirming what their balance, what your balances, what your contributions are. Right. In addition, if you’ve taken a distribution and if you’re fifth from 59 and a half, you just start taking distributions. Or if you’re 72 and you’re required distribution, we need to have that because that’s going to play an impact for federal government only State of Pennsylvania does not tax distributions from pensions or retirement plans. So we need to have that. And that’s going to be increasing from 72, you know, going forward.

And any document you receive that has a government, it is provided in accordance with the requirements by the government, we need to take a look at it because that could play and could have an impact on your tax return. Many of the problems and mistakes that are made by people is they try and file too soon, believe it or not. And all, we’re still getting 1099s from, for, for our clients and they’re providing information already. And we know based on previous years, they still haven’t gotten a lot of the brokerage statements. Or the brokerage statements are starkly known for errors in computation of sales and cost spaces, which has an impact on the gains or losses. So they, towards the second, third week of February send out amended forms. Well, if we filed the return already and there’s an amended form, it represents a problem because if you e-filed, you have to wait until you get acknowledgement from the IRS because you can’t, you can only e-file a return once, then we have to wait after tax season and file an amended 1040 x, so that’s a, challenge making sure you get the proper, eturn from your brokerage house.

Kevin McGarry:

Right. So, and it’s the 18th of April this year, correct?

Bruce:

Yes. Cause it falls on a Saturday the year 15th. So is there, Kev, anything else you want to add, Kev, before we wrap this up, Kevin?

Kevin McGarry:

Yeah, I think the one thing is like what you’re hearing from Bruce, there’s a lot, right? There’s a lot of information clients and, and you know, workers get really overwhelmed during tax season. And to take a lot of that stress away and free up time for yourself, it’s good working with a team, a financial planning team, and with a CPA like Bruce, he’s done a fantastic job for our clients. And I think the big thing is, Bruce, your takeaway is just three bullet points on what the listeners can take away from this podcast.

Bruce:

I would say make sure you have a comprehensive place that you keep all your documents so people don’t stick them in the drawers, they don’t get behind the bread box. Make sure you have everything you know, organized when you come to either meet with your tax repair or you send them the information. The second thing is be cognizant of all the available opportunities. And you know, as I said, we’ll be more than happy to send abduction lists and organizers to anybody who requests that through Kev will just send me an email and I’ll send it to you. And the other thing is, don’t wait too long because the earlier you file, the sooner you’re going to get your refund. And you know, then, and then you’re done with it. And it gives us a more opportunity then to spend more time with each individual’s, you know information. And if we have questions to go back and forth to respond to them,

Jim Donnelly:

[INAUDIBLE] Bruce. I have some great information and we really like to thank you again for calling on today and giving us some tack advice and hoping some officers out there got some good information. And like I said, once again, all the listeners were to put Bruce’s contact information in the show notes, especially if you want to get that tax planning checklist for police officers, which would be very valuable to you. So I just want to thank everyone for tuning in today. Listen to Blue Money Podcast. Until next time, be safe out there guys.

Kevin McGarry:

Be safe and thank you Bruce. Thank you.

Announcer:

Thanks for listening to Blue Money. To learn more about Jim and Kevin or for a free financial assessment, visit valley financial.com or click on the link in the podcast description or show notes. Until next time, safe investing. This material is intended to be educational in nature and not as a recommendation for any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended for any form of substitute or individualized investment advice. This discussion is general in nature and therefore not intended to recommend or endorse any asset, class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own Before participating in any investment program or making any investment clients, as well as all other readers are encouraged to consult with their own professional advisors, including investment advisors and tax advisors, valley Financial can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.