Hustling all year for a nice salary is part of the American dream. But the head-scratching feat of trying to do your taxes is always a nightmare. From forgetting to do your taxes, to not knowing what on earth an exemption is, it can all be confusing. But CASSIUS has you covered thanks to CPA, tax planning extraordinaire, and author Michel Valbrun with a few tips, tricks, and answers to some of the most commonly asked questions when it comes to that time of the month.
CASSIUS: First off, Why is financial literacy so important?
To quote Jay-Z, “Financial freedom is our only hope.” When it comes to financial freedom, the first step to financial freedom is to be literate, which means acquiring the skills and knowledge you need to be financially successful. The lack of knowledge can lead to many costly mistakes and missed financial opportunities.
Michel Valbrun: What really happens if you avoid doing your taxes for too long?
MV: If you avoid doing your taxes too long, you’ll be at risk of incurring several fines, penalties, or even worse, jail time. Unfortunately, I’ve come across business owners that have lost their business due to taxes as well. I recommend everyone to be proactive as it relates to getting their taxes done.
C: Is there a difference between going to a CPA vs. an H&R Block (or other tax chains)?
MV: The basic IRS requirement for all paid tax preparers is to get issued a PTIN. As it relates to tax preparation, there are several options to choose from. A Certified Public Accountant (CPA) is a qualified accountant who met several educational and experience requirements in order to obtain the designation. Since HR Block (or other tax chains) do not require their tax preparers to obtain any designations (or even a GED in some cases), the quality may vary. Generally speaking, it makes sense to hire a CPA if you are a business owner, investor, or making more than $75,000.
C: Biggest misconception about paying taxes?
MV: The tax code only benefits the wealthy is a huge misconception. The tax code benefits those that are aware of how to use it to legally and ethically reduce your taxes. Learn the tax code, and you’ll save thousands on taxes. Generally, the tax code favors business owners and investors.
C: What are the most common mistake you see when people are filing taxes?
MV: Not taking write-offs that you’re entitled to or overstating expenses. Not reporting their business (even if it’s a loss), using round numbers on their tax return (can be seen as making up numbers).