Dadvice Weekly #32 / Tax Season
Dadvice Weekly - #32
“In this world nothing can be said to be certain, except death and taxes.” -Benjamin Franklin
I remember graduating college and starting my first “real” job. Everything was exciting. I was finally earning my own money, starting my investing journey, managing my PTO and budget to take fun trips. Everything was awesome, but I knew the other side of that same coin was having to figure out taxes.
All I really knew back then was that every year when you make money, you have to pay taxes. Looking back on it my situation was really simple. I basically had 2 forms I needed.
My W-2
My Robinhood account
Super straightforward. I remember picking up a TurboTax box at Sam’s Club because it was on sale, and honestly, it met my needs perfectly. Easy, simple, and done.
Since then, a lot of things have happened in my life to make my tax season more complicated. I have gotten married and we have a baby. My wife had a W-2 but now has her own business so there’s a different form that we have to file. I have broadened our investment portfolio to have an HSA, i-bonds, and an investment property. We have gotten into the credit card points game so we get forms for the points sometimes. I can’t tell you which specific account or investment pushed me out of doing Turbo Tax but at this point I have a tax advisor who files our taxes for us.
My tax situation isn’t impossible, but it’s definitely more complex than right out of college. At this point I’m perfectly fine outsourcing to a tax advisor. The peace of mind, time saved, and accuracy are worth it for me.
I have no idea where everyone is at reading this. You might be a pro and should be writing this post for me. You might be in your first year out of college and filing solo. Regardless of where you’re at, here is the advice I would give to make this stretch of time smoother and simpler. -SW
Consolidate Accounts As Much As Possible
Consolidating accounts leads to less forms and paperwork. Let me give you some concrete examples of how we have done this.
When you leave an employer your 401k will stay at the company your former employer used. “Roll over” your 401k into the new employers 401k program. It just leads to less accounts and less forms.
When you were little maybe you were lucky enough to have a parent or grand parent open an account for you. “Roll over” that money into whatever institution you are investing in. The investment is still there, but its now consolidated leading to less credentials to remember and less paper work at tax season.
Have a Place for Your Tax Papers
Every January I just know we will start to get slammed with physical and digital paperwork for tax forms. I like to have a system where I put everything in one place until mid March. Once I hit mid March, I cross check what I have with what I have expected to receive (more on that below). If I have everything, then I’m good to send everything to my tax advisor. If I don’t have everything, I start to upload all of my documents and notify my tax advisor of what is remaining.
Create a List of Expected Tax Forms You Receive
This might be the best tip I can give. After you are done filing, leave a note for yourself to find next tax season of every form you expect you need to file based on the current year. So leave a bulleted list of forms you received this year, and if you’re expecting any new forms the following year notate that too. This makes filing the next year significantly easier. It takes maybe 10 minutes after you’re done filing but it saves so much mental load the following year knowing what forms you’re waiting on V what forms you have already received.
Use TurboTax Until You Can’t
Hiring a tax advisor is more expensive than TurboTax. For that reason, if you’re tax situation is really straight forward then keep using it. But as soon as you’re unsure if you’re doing it right, or you’re unsure if you’re maximizing your return, then go through the process to find someone who can do it for you. Its really nice to have someone I can call during the year if I have tax questions come up. Its also nice knowing that if something were to happen with an audit that I have a professional who has tied their name to filing my taxes that can go to bat for me.
Dadvice Weekly is Kyle and Skyler—two friends in their thirties, living in Colorado, settling into fatherhood and trying to stay sane. Every Tuesday we share what’s working in our homes: gear we use, routines we’ve tested, ideas we’re trying. It could be a recipe, a product that solved a problem, or just what we’re thinking about as dads.
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