Toph CPA - December 2020

Toph CPA - December 2020

DECEMBER 2020 VOLUME 4, ISSUE 12

T O P H ’ S TAX RESOLUT ION T I M E S

513-342-4000 513TAX.COM

Why Pay More Taxes so You Can Increase Your Debt?

I have a lot of clients who come to me with their sights set on large purchases. They’ve been trying to qualify for loans in order to buy a house, a car, or other major purchases. Indirectly, they want to essentially increase their debt. The problem is, they’re running into a wall. Banks and lenders are going to look at your tax returns before approving any loan. This is especially true if you’re self-employed. They need a complete picture of your financial history before they say yes to handing you money for that big purchase. Here’s where the problem arises: Many clients implement strategies in order to keep their tax burden down. This is ultimately reflected on their tax returns. Or they simply make so much a year. Either way, the bank refers to your tax returns to see what you earned and how much in tax you paid. If you implement good tax strategies, then your taxable income will be lower, but, the end result will be a smaller loan — or you might not even qualify. To get around this, I have clients ask me to show more income on their tax returns. If the tax documents show they made more, they can then, presumably, qualify for a bigger loan — the loan amount they need for the house or property they want. Or the car. Or RV. Or whatever else they have their sights set on. It goes without saying, claiming more on your tax returns than you really made is a bad idea. From a personal finance perspective, it drives me crazy. All I can think is why would you want to claim more income if you don’t have to, and consequently pay more in taxes and take on significantly more debt? I help a lot of people who are in trouble with the IRS for one reason or another. Some people are simply behind on their taxes because life got in the way. Other people are in trouble because they claimed something they shouldn’t have or made a mistake on their return. Beyond that, most people hire me so they can find a way to legally reduce their tax burden. They may feel they owe too much to the IRS and need someone to verify that. But to want to owe more to the IRS? That could be asking for trouble.

Granted, most of my clients aren’t trying to commit mortgage fraud, but this is something to consider if you apply for a loan and don’t get the loan amount you needed or expected. It’s not uncommon for people to seek out alternatives or further advice to get the loan amount they really wanted. There is a lot of bad advice out there, and it’s important to be aware of what that advice looks like. At the end of the day, you should be focused on legally paying as little in taxes as possible. This way, you can take your savings and reinvest it in your future. Put that money back into growing your business or another growth vehicle. Focus your attention on ways that legitimately increase your income and overall wealth in the long term. Avoid looking for shortcuts that can end up doing more harm than good.

–Toph Sheldon

513TAX.COM

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WHEN THE IRS COMES KNOCKIN’ ... LET US ANSWER THE DOOR!

The 2 Biggest Mistakes You Can Make When Setting Sales Goals for 2021

Needless to say, 2020 has been a crazy year for everyone. Many businesses and self-employed individuals had to scale back their goals for the year. They had to change and adapt. Even we had to make several adjustments as the IRS backed off on collections and postponed the end of tax season. Looking forward, 2021 is a year to lay new foundations. Businesses learned many lessons in 2020, and now we have to apply those lessons. I’ve been thinking about my goals for the year. What do I want to accomplish in the coming months? One of my biggest goals is to provide more resources for clients. This may mean hiring a new team member. Going into 2021, we know the IRS is going to kick things into high gear. They are going to go after anyone who owes money. The reason is simple. In 2020, the government issued a number of handouts to individuals and businesses. The government still needs to pay for these programs (such as the Payroll Protection Program). As a result, the IRS will be aggressive, which means many more people will need professional tax help. Bringing on a new team member will allow us to help those people. Setting Our Sights on 2021

Regardless of how 2020 treated your business, 2021 is fast approaching, and this past year is about to become a closed chapter. It’s time to examine both the bad and the good that happened in 2020 and set tangible sales goals for 2021. Just be sure you don’t fall into these two traps. Mistake No. 1: Making Your Goals Unrealistic Setting an unrealistic goal for each quarter is sure to lead to failure. The trick is to push the limits

of what has been done without settling on a number that is completely unachievable. Remember, if your team begins to exceed expectations, you can adjust and increase your goal! It’s far better to overachieve than to underperform. Finding that perfect goal number means that sales leaders will have to sort through a lot of >Page 1 Page 2 Page 3 Page 4

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