Brunch & Budget

b&b244: The Unavoidable Tax Talk with Darren Liddell

March 12, 2021 Brunch & Budget
Brunch & Budget
b&b244: The Unavoidable Tax Talk with Darren Liddell
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Brunch & Budget
b&b244: The Unavoidable Tax Talk with Darren Liddell
Mar 12, 2021
Brunch & Budget

It's time for our annual tax episode! This year, we sit down with Darren Liddell, one of our See Change coaches and a seasoned tax preparer (he shows off his 10 year VITA pin on the show!) who breaks down taxes through a news lens. By the end of the episode, you'll learn how to take advantage of the tax changes during COVID (and make sure you get that stimulus payment!), how to maximize your deductions, the biggest tax mistakes people make, and why refunds are actually a total scam.

Music Featured in this episode:
Stay [Income Tax] feat illmac by OnlyOne
Income Tax Party by BIG SUB OG
Income Tax Money by Scrap Easy

Show Notes Transcript

It's time for our annual tax episode! This year, we sit down with Darren Liddell, one of our See Change coaches and a seasoned tax preparer (he shows off his 10 year VITA pin on the show!) who breaks down taxes through a news lens. By the end of the episode, you'll learn how to take advantage of the tax changes during COVID (and make sure you get that stimulus payment!), how to maximize your deductions, the biggest tax mistakes people make, and why refunds are actually a total scam.

Music Featured in this episode:
Stay [Income Tax] feat illmac by OnlyOne
Income Tax Party by BIG SUB OG
Income Tax Money by Scrap Easy

Dyalekt:

When filling out that TurboTax feels like it's pushing a boulder up a hill and you're looking over your shoulder because auditors have no children they're lying to you on social you're just looking for something real can get down with brunch and budget when the IRS is all up in your grill are going to brunch and budget the show about personal finance and racial economic inclusion with your host how to look at a certified financial planner and accredited financial counselor here to take the pipe out of your budget brunch and budget as part of the race and wealth network. Now I'm gonna sound provided dialect. And here's your host, Pamela Capella.

Pamela Capalad, CFP, AFC:

Thank you, dialect. Thank you, everybody, for tuning in today, our annual unavoidable

Unknown:

tax talk like your theme,

Dyalekt:

we shouldn't let you do

Unknown:

double tax. No, no, no, no, no, no.

Dyalekt:

Yes. Out West. So I'm talking about taxes. Sorry about taxes. And luckily, why don't why do we have to do this? Because we had a tax talk last time. I know like, because we also like to do yearly stuff about boycotts, and all these kind of things. You know, it's good stuff, we change it but like taxes like they have the whole thing. It's like death and taxes, right? That's our unavoidable inevitable. So like, what do we buy,

Pamela Capalad, CFP, AFC:

but the details change every year? The details now COVID everybody, so many things are different, right? Because like

Dyalekt:

tons of people freelancers have been taken unemployment, unemployment, PPP

Pamela Capalad, CFP, AFC:

loan stimulus checks,

Dyalekt:

what of that stuff is taxed? And when it's I know, it's just some of that, but I don't know the answer to all of it. So it's true. That's why we have experts and we're gonna bring on one of our favorite people.

Pamela Capalad, CFP, AFC:

We're gonna bring on Darren Liddell, who is also a French and budget see change coach?

Dyalekt:

Yes. Also, for y'all who don't really know the game like that. He's a superstar in the financial world. One of the last times that we actually got to be around people remember, we're at fpps annual conference. Yeah. And Florida prosperity partnership. They do a really great stuff. We did the film festival with them. And we're doing a music festival, which we haven't really shattered out on the podcast, but we'll talk about that a little bit later. But we're at the thing and we just mentioned down the Dell on the Microsoft.

Pamela Capalad, CFP, AFC:

So we're super excited to have him on. We're super excited to get to work with him on the regular. Let's bring him on. I'm going to share his BIOS a little bit. Darrin is a seasoned financial coach with over 10 years of experience in financial empowerment I Garin you'll find him working to help clients achieve their financial goals partnered with nonprofit and government organizations to reach those in need of educating clients about COVID policy changes that impact their finances. Thank you. He is passionate about racial wealth, equity and tax policy and prep and using technology to achieve financial goals. Thank you, dad for joining us.

Unknown:

Glad to be here,

Pamela Capalad, CFP, AFC:

y'all. Oh my gosh, we're so excited. We're so excited. So like we said, we've been working with Darren Darren is one of our sea change coaches where our pre financial planning program for people of color, and he's also a tax repair. He's been a vida tax repair For how long?

Unknown:

over 10 years now. It's crazy.

Pamela Capalad, CFP, AFC:

Oh, Darrin, we what is Vita stands for? I

Unknown:

guess so. Yeah. So Vita is Volunteer Income Tax Assistance. And it's a national program that happens all over the country to help folks do taxes for free. And like actually for free, not like with a cache for free like many other programs do.

Dyalekt:

Yeah. And with that, like, how does one know whether or not they qualify for getting help from Vita? Yeah, that's

Unknown:

a good question. So most sinusitis, viruses typically have an income and income limit of around $50,000. There's a little bit of flex in there. So like, you know, he made $50,000, or something like that, but you lost your job, you're not working now, most people take you on. And they've got a few other ways to help folks to make a little bit more than that. But generally, it's about $50,000 for free. And then that might change, like, our practice is in the Bay Area. They're like, we do way more than that, because folks just make so much more here. But no, there's a little bit of flexibility, but for the most part, it's about in general.

Pamela Capalad, CFP, AFC:

Cool. Cool. And then if you wanted to go to them, but you didn't qualify for free tax preparation, can you pay them to do taxes, too?

Unknown:

Oh, no. So leida is a pretty strong partnership with IRS and Paris is pretty intense around like, there's no tipping, there's no like paying for like a higher level of services, legitimately free and then if the virus I can't help you, essentially, they do an intake process and tell you, sorry, you don't qualify. But you know, here's a place you can go in the community. Probably like a local compare or someone kind of reputable locally. That's cool, though. I

Pamela Capalad, CFP, AFC:

love that. I feel like that resources just like untapped and underutilized and a lot of places, so

Unknown:

shout that out. Yes. So

Pamela Capalad, CFP, AFC:

thank you for doing the tax talk with us. Thank you for being a tax preparer, so we don't have to be tax preparers

Unknown:

appreciate so much

Dyalekt:

as people were talking about money, but just like as lifetime freelancers because many of us have been preparing, preparing. Yeah, we've been preparing our taxes because we've mostly been tearing ourselves apart. killing them.

Pamela Capalad, CFP, AFC:

It's true. It's true. So you know, we use the word accountant a lot. We've been using the word tax repair with you. I guess my first question is what are the first things that someone should think about when they're looking for an accountant or a tax repair? And I guess really my first first question is, what's the difference between an accountant and tax repair? Now to Darrin,

Unknown:

so I don't think that I am an accountant, but I will say that I am a tax repair. In my mind, accountants are folks that either like they may be CPAs or which is a certified public accountant, but they may not be there folks who specialize in accountants can either focus on the tax side or kind of the audit side. In most corporate accountants are folks that folks have a master's in accounting and accountancy typically are like more versed in all of it, but we'll get to have like professional specialty. So like while I am not an accountant, I will say that I'm like inexperienced tax preparer, like fun little nerd like actually brought this on to show you guys in case it came up. This is my 10 year tax preparation 10 of vitae, like what am I like little proud this little ciments. And since we're in COVID times, you don't get to like wear blazers, we can put stuff on our shoulders, don't show it off on the podcast, but all that to say, after Paris, someone who's going to focus on doing the best job they can on your taxes, preparing a detailed, thoughtful tax return, they're going to ask you all the questions. You know, they're really there to to make sure you get everything you're entitled to and make sure you're doing everything right. And I would say that I'm squarely in that box.

Pamela Capalad, CFP, AFC:

Gotcha. Okay, cool. So basically, if you're just looking for someone to prepare taxes, you don't really need a CPA, you don't need a bookkeeper. You just need a tax preparer like

Dyalekt:

yeah, don't even need necessarily an accountant. I'm trying to see like the different gradations of because there's a tax for fair, there's a callin and there's an accountant with a CPA. Yeah. And you may not need any of those other things. In theory, though, because we're told, like, we need an accountant. And we want them to have a designation because the designation proves to us that they're legit, and they know their stuff. So how do we find out if they're not a CPA? Or if they're not an accountant? Like, how do we know whether or not they're legit?

Unknown:

Yeah, so I tend to ask a P, I encourage my clients ask a few questions. The first thing is, can I contact you beyond the factories and with the information that you provided me with? I've had a lot of clients who will say they come to me and say, they might have come home with three of those repair aspects. And they were gone. I had no, no way to contact them through what the attackers were self repair on the return. Immediately, I don't know what to do now. Can you please help me? So the first thing is, you know, like, confirm, we kind of asked for them? Do you know someone who worked with them in the past? Was it in a different tax year? And if so, you know, that's already a strong foundation and something good. And then I think from there, in the same way, you would ask if someone is a fiduciary, and they do what's in your best interest, but also like, within the confines of the law, you know, kind of tell the path of repair, I want to get the best refund possible. But I don't want to be doing anything shady, you know, are you going to be upfront about that, like, I want to understand why taxes first and foremost, before anything else. And I know when I do talk to your folks, I make it my job to in the last 1510 minutes of the session, we're going to go through the return together, I'm going to explain it to them, they're going to walk away with an understanding of both how the tax return works and the choices that I made that was informed by them and the information that they gave me. So that way they feel comfortable signing and saying like this is right, because in the end, the repair prepares the taxes. And even though it'll say the repairs name at the bottom, and where are you prepared? You are the client is always actually like responsible for the tax return in the end, and that's why you signed this day. I believe that this is all true. And and I'm basically like a testing.

Dyalekt:

Okay, okay, so if a tax payer runs their business, like a Halloween costume store, that you shouldn't trust them.

Unknown:

No, that's good. That's a good

Pamela Capalad, CFP, AFC:

pair from like, January through April. And then they're like a notary and driving school the rest of the year.

Dyalekt:

Nice wrapper. Egg painter, they're just like, seasonally, whatever you need, what's people's need at the time?

Pamela Capalad, CFP, AFC:

They also saw Halloween costume.

Dyalekt:

Same cat. So

Unknown:

those those are no, I love that. I love that. I guess if we did what you thought about that, though?

Dyalekt:

I would think like it's okay to go to see some old person.

Pamela Capalad, CFP, AFC:

Right, right. Because it's like, oh, that's like that. That makes sense. Like tax season is over. But like, if you think about it, especially because we have advised a lot of clients in the past to like file for an extension if they feel like they're running out of time, right to wait to file their taxes. And then you have until September October to do it. What if your taxpayer disappears after they file your extension? Right?

Unknown:

It's okay to have someone who like you know, a lot of prepared will focus and do most of their work in the heart attack season and then like slow down a little bit, but everything's slowing down and just disappearing. Yes. Oh, my gosh, oh, my

Pamela Capalad, CFP, AFC:

gosh, yeah. I feel that. And then to go back to the original question that I asked how do you know when you need an accountant or a tax preparer? Yeah.

Unknown:

Good question. So most folks, I'd say like a large majority of folks have relatively simple taxes right? They, they maybe work a job w two job, they get one w two, a few WCS per year. They're not individually itemizing things, they don't have small business expenses. Those are the kinds of folks that I feel like can possibly like, won't need an accountant or maybe even a tax preparer that maybe can do taxes on their own, they can use the free software. You know, in some cases, you can take a picture of your W two and upload it and the returns mostly. So essentially, like there's this kind of like simpler tax bucket. And then I think there's like for freelancers, and folks that are small business information, or maybe they own a home, or maybe they have like a large medical expenses this year, I think they're a bit more complicated. And maybe they're considering itemizing, or they donated a lot, a lot of money to charity, and things get more complex. Or if you're doing your taxes with the software, and you're like, I'm not actually sure if this is right, or I've been doing this for two hours, and I have questions about whether I'm doing it correctly. That may be the point where you start to think like, Okay, let me talk to a paid preparer about this, who can really come back and for me what's happening, and then on the like, CPA level, I'd say like, most folks don't need a CPA, until you get past a certain point, like you got a larger business or business with multiple employees, or some employees. You know, maybe that's the point where you start to begin to think more seriously about working with someone, either nation, because without higher definition comes a higher cost, but also potentially a deeper knowledge.

Pamela Capalad, CFP, AFC:

Hmm, gotcha. Okay. So it sounds like most people either can do it on their own, or they can hire a tax preparer like you. So I have a question.

Dyalekt:

Oh, I wonder I had, like, I think that it is useful to remember that even if you're competent and protect preparing your taxes, really throwing the T's in there, even if you're confident with it, then it still is helpful. If you're paranoid about where you're at, to talk to somebody to let you know that you know what you're doing,

Pamela Capalad, CFP, AFC:

even if you just do it for one year, and you're like, Okay, good. I've been doing it. All right. Yeah, yeah. So how much do you charge? Darrin? Can I ask that?

Unknown:

No, super, super good question. So I typically charge, I tend to like how it's like to work, because I'm always trying to be inclusive of folks that aren't terminals away. But I'm like, kind of starting points around $100. And I basically try to take $200 per tax return. Unless there's something unique there, I try to do that. Because I want folks to understand, like, a lot of prepares will have this like kind of menu of if you've got a Schedule C, if you've got a Schedule E, rental income, if you've got all these individual little things, then it kind of adds up into being this, like the whole order is $500. And I feel like that's just hard for folks to understand, starting at $200. Assuming that I'm going to do take two hours to do someone's return. If it's shorter than that, then I'll basically like give folks that money back. But I'd be transparent about tracking my time. Kind of telling them what's expected and what's going on that page for like the software that I use page for my kind of professional experience. But I'm also not trying to, I'm trying to really come from the background or from the place of educating folks and having them understand. So at the end, there's always going to be that time for us to go through the return together and do what I kind of mentioned before,

Pamela Capalad, CFP, AFC:

I love that. So do you do the tax return with people? Or are you like gathering all their documents, and then you give it and then you give the return back to them and say, here's what I did.

Unknown:

So we tend to have, I tend to some beautiful, fun, different things, right? So some folks want to do the taxes with you and to see what's happening, what you're putting into the software. And if you explain to them as you're doing it. So for those folks, we do the whole thing together, they typically we have a free session where they kind of give me their documents, talk me through what's going on and ask any questions before and then we actually get on in a second session and do the taxes right, then that gives them a chance to bring in your follow up documents that maybe we're missing. And for us to just kind of knock it out right then then there are other folks who are like, I definitely don't want to see that piece. I do want to see the actual turn at the end. And then for those folks who tend to go through the return together, and then as we're looking at it if they identify something or I have a question for them, like, Hey, I didn't see this in here. But our books typically have this business expense, for example, but I didn't see it for you. Then we'll go back and add it in. I'll pull up the software, they'll see it as I added and then they can see the changes to the tax return the results

Pamela Capalad, CFP, AFC:

of that. Wow, that is some of the most transparent and clear pricing I've ever heard you basically charge 100 bucks an hour. Yeah, I

Dyalekt:

mean, I've looked at those menus before and it looks like you your first time when you're looking at a French restaurant. You're like wait a meal schedule, Leola? Oh, it's just mayo.

Pamela Capalad, CFP, AFC:

It's just another form that actually only takes you 10 minutes to do, right? Yeah. Wait, so Okay, are you booked?

Unknown:

I am very booked. And I have been intentional not to take on too many clients because tax season is already stressful enough as it is. So I have a very limited open window where I take on new clients. I'll be transparent around that.

Dyalekt:

This is I guess, is clearly gonna be too late for a lot of heads. But like, yeah, we need to start hollering at somebody because I know. You start feeling like you need to do it yourself. And I feel like this has happened to me where I've gotten into it and it's now March 28. And I'm like, Oh, I should probably call somebody but

Unknown:

do it with someone when like

Dyalekt:

is it too early to do it in January to reach out like Wouldn't we call the restroom?

Unknown:

Yeah, so good question. So most folks starting to start getting booked up, I'd say in January some cases December in some cases as early as November. For most folks, that's even have as employee This seems a little weird because of the pandemic and taxis and starting late. But the typical the typical flu is January's, like kind of the pre time like folks are waiting for tax documents to come in, that's typically a good time to reach out and kind of schedule your appointment with your prepare the kind of insurance that they're probably not booked up for the whole season. In some cases, it may be but essentially January, like a good place to start. And then like things you've been deferring to prepare in February, everybody's got their document, there's an event to them. March tends to be like busy, but a little bit of a slowdown, because like, at least at invita sites, folks who want to get their returns kind of they want to get their refund of like they packed in February and March is a little bit of a slow down. And then there's the folks at the end who want to do their taxes, but are gonna wait to the deadline, maybe because they Oh, maybe because it just sort of you have other things to do. And then April picks up and it's super busy. So like, there's like a sweet spot in the middle of March. That's like not super duper crazy. And then you're back to like the end of the access of the end of tax season again.

Dyalekt:

Can I ask a potentially dumb kind of question, can I just reach out in May and lock it down for next year?

Unknown:

Especially if

Pamela Capalad, CFP, AFC:

you miss it or like you're like like, I want to get a Darren's calendar. Well,

Dyalekt:

I'm just saying because I'm pretty sure what you're saying. is simple mobile app these cats like is that cool? Or is it doable? Yeah.

Unknown:

Yeah, I think so the short answer is, in most cases may be a little too soon. But I think in like early fall, most folks are starting to put like either think about their calendar and have them available and will kind of send an email to clients of like, Alright, guys are ramping up again, if you want to go ahead and lock it in, you know, here you go. But I think reaching out earlier as always better universities to say, I want to get with you as soon as I can possibly when's that going to be? At least in you know,

Dyalekt:

I think that sounds great, I guess on that tip then so if you reach out and like May or June or whatever, say like can I get on your mailing list so that you're ready to start taking?

Pamela Capalad, CFP, AFC:

Yeah, yeah. Or like just did my taxes Can you put me on your

Dyalekt:

email list kind of thing and tax preparers who don't have email list because you think no one wants to listen to your newsletter get an email list so you can tell people when tax season starts yes okay if we just get one a year from

Pamela Capalad, CFP, AFC:

exactly that's that's all we need really to like fill up to fill up your schedule

Dyalekt:

my schedules open a my schedule is almost full.

Pamela Capalad, CFP, AFC:

Yeah. Yeah, all right. We should go to a song so people can go book their tax appointments right now.

Dyalekt:

Is the soundtrack to you booking your text ones this one's actually a little bit difficult to be this is like a little bit of privilege as a underground hip hop person. I always say that I want to play the India stuff. Yeah. And while I was finding this, there was a collaboration between someone who's super indie, another one who's also super indie, but like, has a little bit of knowingness and I found myself asking I don't know does our audience know immaculate too much? No right underground artists so you know fucking pulling through it's great song This is called state income tax by only one featuring illmatic Produced by chase more and we'll check y'all in a minute.

Unknown:

King chase you you killed in his name and he blamed one day they love you when the next day Hank, omnipotent I and lives in the sky 100 bullets take 100 innocent lives sift through the propaganda because history laws to speak up about the truth then you mysteriously die. Because I believe that doesn't make it a ruse just because I can't prove it. That doesn't mean it isn't true. 1 million miles away So who would say a friend of gifts has to Demolition Man who's the one that benefits the king have person's frame murdered in his name the kingdom burns in flames with passion insurance claim. We've had 100 Kings funding Bob buddy go anything to crime case takes back 100 fault. Kill 1000 natives like railroad pay what I love to paint this road to rich painting. 100 faces call through 1000 changes in 10,000 transformations someone's very rich. As long as your money less my God my hands bloody. You'd only be 100 less the world hunger less where everyone is fat. Just the foolish dream. 2000 years of men still Robach A billion puppets to the masses as they pull the strings colonize conquest conquered human beings to machines start to drown someone takes me far ahead when I woke there wasn't any footprints aside to sin there will never be a day where the poor in my heart commend the devil that we fight is the devil in the arm Submit. We've had 100 Kings funding Bob buddy go anything to crime case takes back 100 foe kill 1000 natives like railroad paint what I love to pave this road to rich painting thank you to look for probably misfortune use our blood and bone is brick and mortar and build a throne that we fail before we hit an apprentice and bliss anymore list of resorts so get this Allah wisdom when they miss a form no forgiveness form game are empty storage getting started dying live according to the system's orders have lived on for lives beyond countries and they close the ears of fear. My words will crumble Kingdom's underneath of warning next our ages the worldly waves and the fathers living their bodies like this already caged and going voices whose meanings they don't comprehend. They don't understand the love of God. So they follow.

Dyalekt:

Yeah, that was state income tax that was only one Portland, Oregon featuring illmatic, also known as Bill Mac. Yeah, I see from Akela is from the battle rap scene. I know like way back and scribble jam, where Oh, that's like a great hip hop thing that we missed, we should come back. But like, it's great seeing these battle rappers being like, I want to battle these things that actually pissed me off rather than other artists.

Unknown:

I love it.

Dyalekt:

There's a quote I wanted to say about anything that crown gives it takes back a hundredfold taxes are a weirdly emotional thing. Because there's this idea that like we're stealing from each other. There's like I know a lot of young people I met when I was young, I went through the semi libertarian phase of the idea of like taxing stuff, like on taxes are also given to the military or it's given to the liberals I don't believe

Unknown:

in

Dyalekt:

tax, right? So you're like, how am I even a part of this? How do I benefit and you just like, it makes it really easy, especially when you're not making a lot of money to just be like, I'm just want to receive from this whole thing, right and put ourselves in a horrible position. We have like good questions about this stuff. But I want to ask you like stroke quick, like for those folks who get themselves in that situation, and then realize that you do need to be part of the system to get to where you want to be. How do you unravel that with somebody like both like financially and emotionally because you feel stupid?

Unknown:

Yeah, this is? This is a good question I have, I have a little story to go along with that example, out of mine from from a few years back, I was working at this nonprofit in Miami, and there's uh, I guess semi famous in circles, like employees who basically served in the military, while he was in the military military was like, I'm not about this now. And basically, it led to a bunch of actions but once he got back to the States, and kind of like, had his case and all that he was like, Okay, I'm not paying taxes, that's my way to fight back and kind of like, you know, re you know, buy back against the man and essentially about three years into working at this nonprofit together. He walked up to me and knocked on the door. I was like, hey, Darren, I haven't. So heads up, I've got this letter from IRS and the HR just gave me this letter to go along with it. There's my wages are about to be garnished, how can you know what's going on? How can we stop this but I said okay, let's take a look at this. Basically, he had filed taxes in a few years but had been withholding you know, had chose to withhold his withholding super high so that he would get as much money as possible IRS kind of caught on to it said, you know, we want you to pay taxes now. So you have to follow taxes, we have to call IRS figure out what's going on and in the end, have a kind of conversation around like okay, so you know, like taxes do help a lot of folks right, like you you contribute to your taxes and the health and a lot of the folks in low income communities that we're working with, but at the same time, like it's understandable that you know, you would make this choice kind of what's the middle ground and kind of how can like, Are you okay with this and like, let's just have a kind of warm conversation around it. And then the end, you know, he both decide to do it taxes with me and understood that like Like, although you'd have the kind of beef with, with the government that he would ultimately be doing good by folks that we're serving, and folks that will never see a man into the system. So that's one way to think about

Dyalekt:

that. That's great. That's really helpful.

Pamela Capalad, CFP, AFC:

Yeah, that is really helpful. And I think to it, I understand where like all of it is coming from. And I feel like at the end of the day, this stuff does catch up to you. And then you feel even more stuck. And you feel even less like you can do anything about it.

Dyalekt:

Yeah, one of the real things is, and we talked about this a lot about personal finance being allowed nothing that allows you to make revolutionary acts. Yeah, right. Because if you're in a situation where your wages are getting garnished, or you're getting taken away,

Pamela Capalad, CFP, AFC:

or you keep getting letters, there's like threats to like, come out at your stuff.

Dyalekt:

Like actually locked up and stuff. Oh, I, you know, there's

Pamela Capalad, CFP, AFC:

Oh, like, you go to jail.

Dyalekt:

I mean, you know, when we think about taxes and their power, like, those are the things that took down our home. They couldn't get out on another note, but the IRS is like, all Nah, we'll get you on your taxes. Yeah, you know, so it's one of those things where if you do want to make significant changes, including in terms of these things, of taxes, you have to be able to be in the game. That's one of the things that sucks about capitalism, it's pretty ingenious that you have to be in the game and doing well in the game to have any kind of voice when they call it free speech. All right. Anyway, axes is necessary. Let's bring it a step back. And let's talk about these taxes that were proposed. Yeah.

Pamela Capalad, CFP, AFC:

So I actually want to start with the big tax changes that happened from COVID from the last year was changed in 2020, as we prepare 2020 tax returns that we anticipate that we should look out for.

Unknown:

Yeah, so super great questions. And I think this is kind of the hot topic, both bad tax preparation sites ever prepared doing taxes virtually is what's changed. And what should I know, the first thing I want to start with is the question most folks ask about is I got the stimulus check for the stimulus money? is a taxable, like, what's my responsibility with it? What should I be doing? Or if I didn't get it? What can I do? And the short answer is, if you haven't received your stimulus money yet, I would really encourage you to file your taxes, because that's the only way to get any semblance check. Or of course, notice, and most likely you didn't receive from IRS and one of either their direct payments, don't take a step back. For folks that don't know there were stimulus checks, one in late spring, early summer, that one recently in January. Typically, if you're a single person, it was 12 $100 in the spring, and then $600, in the fall with a little bit added for dependents as well, if 500 or 600, asks for dependents, they do some retroactive things to change the law. So like if you are married to someone who has an ITIN number, or, you know, like it is an undocumented, basically, you weren't allowed to get stimulus checks with the first round, but you couldn't get them in the second round. But you may not have gotten either of them, all of that to say, for anybody who didn't get it for whatever reason, either check, you can do your taxes now and get them. There's something called the recovery rebate credit that allows you to get those to get those stimulus checks now.

Pamela Capalad, CFP, AFC:

Cool. So you didn't lose out? You just had to wait.

Unknown:

Exactly. Yeah, it's been interesting, too, because some folks maybe didn't get it in one year, because they were dependent, but in 2020, they actually weren't dependent. Now they're getting the stimulus. And, you know, I thought those are some of the most excited folks folks who were students in 2019. But in 2020, they were on their own and didn't get the stimulus, but now are like, you know,

Pamela Capalad, CFP, AFC:

the other thing was like, a lot of people lost their jobs or their income dropped to 2020. And they technically didn't qualify based on their 2019 income. But now in 2020, you actually do qualify for the check. So this is also the only way to get is to file your taxes. Right?

Unknown:

Exactly.

Pamela Capalad, CFP, AFC:

Nice. And so our stimulus checks, taxable,

Unknown:

or non taxable. There was like a little bit of time or focus, like if it's going to be taxable. We don't know transfers, no, not taxable.

Pamela Capalad, CFP, AFC:

Yay. Okay, good, because there are tax credits, right? They're not income.

Unknown:

Exactly.

Pamela Capalad, CFP, AFC:

Oh, my goodness, my goodness. Okay. So what about things like unemployment because I feel like an unprecedent amount of people, not only were, quote, were eligible for unemployment, because they open it up to freelancers, but they fell in employment for the first time ever.

Unknown:

Yeah, so unemployment is something that is taxable. And maybe that'll change in the future, there's talks kind of in Congress that maybe the next bill will have unemployment will become will not be taxable. But for now, and in the past, it almost always is taxable for everybody. So what that means is, if you earned, let's say, 20k, over all 2020 and unemployment checks, IRS is going to want you to pay tax on that 20 on that $20,000 that you made, and any other w two income that's normally taxable. So you have the option to take taxes out from your unemployment. And I think a lot of folks don't know that this option exists, but you can basically tell them, yes, take out federal taxes and take out state taxes. What that means in our day to day is you'll get a smaller check every time your unemployment comes. But at the end of the year, when it's time to do your taxes, it will likely make the burden of doing taxes less burdensome, because you will pay those taxes in advance and are now you know, kind of like almost benefiting from paying them a little bit early.

Pamela Capalad, CFP, AFC:

Yeah, that makes sense. That makes sense. It's just doesn't make any sense. I'm like wait, this is not actually earned income but I have to pay taxes on it. Yeah. Well, it's, it's like the government gave you the money and they're going to take some of it back.

Dyalekt:

Yeah, cuz I didn't have enough money. You're giving me money. This should be a credit. But it's a designation thing, right. And I think that's the thing with the IRS is like, it doesn't even matter if like about me

Unknown:

that County's income

Dyalekt:

was something big came in. And it's income, because that's what slots, right? I know that the IRS is known for being very dry and rigid. And I think that's one of the examples, right? Yeah, like, that's what I was just trying to look up, I saw when they were debating and talking about the new stimulus, they were saying something about trying to get a credit for unemployment, it was like some like Band Aid thing on top of the where you would still have to pay, you still have to pay taxes on it. But if you got unemployment, you'd end up getting money back through. Again, okay, they originally do this system, but I don't think that

Pamela Capalad, CFP, AFC:

he did see that the Senate passed a bill where unemployment, the first $10,200 of unemployment you'd collect is not going to be taxable. So that was part of the bill at the Senate passed. So I don't know if that means in 2021. I don't know if that means like going back to 2020 every year.

Dyalekt:

That doesn't happen. Now.

Pamela Capalad, CFP, AFC:

Everything is now everything's always big with the stimulus package. Until we actually see that I'm like, I'm not even counting on the stimulus checks until we see them in our hands. No.

Dyalekt:

Wrong, the real like in case that you're concerned about that kind of thing. We're not even sure if that's going to be enforceable right now. Because it may be too late in the game to put that in.

Pamela Capalad, CFP, AFC:

Yeah, don't expect anything

Dyalekt:

expect that this year.

Unknown:

There is a little bit of a precedent for sometimes things happening and mid tax season like changes that are retroactive. And as a trucker, it's a little like, oh, man, this is terrible. Because it means you got to do a minimum for people that did their taxes early and like they didn't really like you know, just it makes things a bit more complicated. So it could happen but i i think Pam's logic is perfectly right. So let's kind of stand by and see what we call this official and

Pamela Capalad, CFP, AFC:

there's too much speculation. So speaking of confusing things, a lot of freelancers got PPP loans last year, they're applying for them. Now. There's been a lot of back and forth with Congress in terms of like, is this money taxable? Is it deductible, blah, blah, blah, all this stuff. So what's the final verdict on PPP loans, if you got a

Unknown:

PPP loans like there, again, there were some back and forth, but the final verdict is not taxable, most likely. It's like even fail even the final version a little bit messy on federal taxes, it shouldn't be taxable period. But the kind of thing was happening with all these tax changes is federal policy changes, it's implemented, but then state taxes aren't always changed quickly, or aren't changed at all. So in some cases, in some states, your PVC alone may be taxable to your state. But that's so systemic in the states that I pay, like, just make sure you ask for your prepare in your state is a taxable, they'll be able to help you out

Pamela Capalad, CFP, AFC:

isn't taxable in New York, they did they fix this or no,

Unknown:

I think I think New York and good. As far as I know, it's good. If that changes, I'll let y'all know. But

Pamela Capalad, CFP, AFC:

I never know what New York is ahead of or behind on. So I'm like, did they fix this? Or no, I don't know.

Unknown:

Oh, my gosh. Okay.

Pamela Capalad, CFP, AFC:

So what else do we need to know with this crazy year of COVID? with taxes?

Unknown:

Yeah, so a few other things to kind of keep in mind is, so we talked about unemployment income being a taxable income, but it also is unearned income. So for like some clients who I work with, they qualify for the something called the earned income credit. And then most folks who have kids get the child tax credit. And basically what kind of Congress approved in the like the late December, early January kind of changes is, you can now look back into your 2019 taxes and use your 2019 AGI, or modified AGI to determine if you qualify for the earned income credit, or the child tax credit. And you can use whichever is better for 2020 or 2019. So for regular focus you should do is just make sure that when you're doing your taxes, if you're going to renew prepare this year, tell them like hey, here's my tax return, they'll look at that, see your AGI see if you qualify and which one is better than once you know, and if it's someone you don't have to deal with before they'll have the information already, just make sure you point out to them that hey, what's the deal with this etc? Look back and do I qualify for that doesn't affect my child tax credit and the amount that I get per child but I have on my taxes about?

Pamela Capalad, CFP, AFC:

Yeah, okay. Yeah, I didn't even think about it. So unemployment is income but it's unearned income. So you don't qualify for the earned income credit.

Unknown:

And rigid. It's tricky. Another thing, too, is a lot of questions thinking like, well, IRS pushback that tax deadline last year was April 15. Until it wasn't that made me get on with it. And it was July. Right now the deadline is still April 15. So you know, plan for April 15. It may change things can always change where it kind of unprecedent a year but the suspicion is that we'll probably say the same as April 15. This year, right? corriander

Pamela Capalad, CFP, AFC:

welsby Okay, so if the deadline is April 15. Everyone's tax calendars are full Can't get an accountant. So what's the deal with filing an extension?

Unknown:

So great question. He basically can file an extension. And what the extension allows you to do is it basically tells IRS, I'm probably going to be late with filing my taxes, you have the option with the extension to pay the money that you think you're going to owe. And you may say, like, well, I don't know how much I've been, oh, I haven't done my taxes. yet. That's literally why in the center of the IRS is eyes and in most states is what they say is the deadline is still the 15th. So regardless of whether you file extension or not, you're supposed to pay your money by them. So you're basically supposed to make an estimate a guess and pay it with the extension. You can of course, choose to pay nothing, but then they then charge you penalties and potentially interest on that money, if you do end up paying them. And a lot of folks don't know this as well. But if you actually get a refund, and IRS owes you money, but you bought an extension, essentially kind of short, but if you wait a year or two to do your taxes, they actually are responsible for paying you interest on that refund money that they're supposed to pay you back as well. So it's not like it's meant to be fair to both sides. So you're paying interest, but then you owe time, if they're paying interest to you, because you're just to get a refund earlier. But didn't you also can be able to look at that.

Dyalekt:

Yeah, I wanted to ask about that too, because I got messed up a number of times. But that because I remember I was taking a lot of spring trips for work. And I was like, I can't deal with this right now I'm going out of the country to do this. And let me just file the extension, cuz I know you can. And no one ever told me that I had to pay and I might pan so much every time never I file these extensions, you shouldn't call an extension.

Pamela Capalad, CFP, AFC:

Things extended,

Dyalekt:

not as the money part is an extended recall where they were just like when you

Pamela Capalad, CFP, AFC:

file it later, yeah, but give us a bunch of money. Now take a guess.

Unknown:

folks to a lot of folks don't know that the penalty for filing to penalty for not filing is is typically so much more than the penalty for filing, but then not paying. So it's always better to like your taxes. Even if you go back and change it later. You know, file something. And then if you can't pay it, just don't send it but you basically save in some cases, it's like 100, it's like 5% versus half a percent kind of thing. Just know that there's a big saving and doing your taxes, even if you can't pay it, right? They don't want you to

Dyalekt:

not file is there a big easy way to guess? If you have like, Oh, I need to extend and I've never extended before and I actually don't know how much I should be paying What should I do? Is there an easy way to figure out a guess for like a big number, what

Unknown:

I'd recommend is so there's a bunch of thoughtful tax calculators online, I just Google tax calculator, pull up one, the one that I've used in the past for folks that are small business owners is the books that eicc outreach, or the Center for Budget and Policy Priorities have something called like a rideshare tax calculator, if you google Roger, not calculator above is the first thing. It basically lets you put in your income from your freelance income and from your W two income and an estimate how much taxes you'll have to pay over the course of the year. And it will tell you for each quarter, you should be paying this much in advance. So like worst case, if you were 14, you haven't done anything, I'd say hit up that calculator, type in, enter all your income information tips, there's like a two minute version like a 10 minute version. If you need the two minute version, you know, do that get the amounts, you can then either right by paper, land, fill out the extension form or go online and fill it out. And typically you can pay the money in advance, either with IRS or with your state, from your bank account. You can pay it with no fees directly to their website, or using your credit card or something that they like card. Your processing fee is a little bit you know, a little bit more of a headache, but it's still possible.

Pamela Capalad, CFP, AFC:

Yeah. So pay if you can, but if you can't pay at least file because the penalties will be like 10 or 100 times less than sounds like

Unknown:

back way. Right?

Pamela Capalad, CFP, AFC:

It's like 5% to not file versus 5% of half a percent to not pay.

Dyalekt:

Yeah. And if you can pay and even if you don't know how much put something

Pamela Capalad, CFP, AFC:

Hey, a little bit so you don't end up paying penalties on that. Yeah, pay what you can pay what you can

Dyalekt:

what you can because you can end up paying more later. Exactly, exactly.

Unknown:

Okay, but

Pamela Capalad, CFP, AFC:

unavoidable. Oh, my goodness. Oh, extension. Okay, so let's talk about Freelancer stuff. Because I feel like everyone has Freelancer income nowadays. So the thing that I'm wondering is, how much freelancing Do you need to be doing for it to be worth it to hire an accountant?

Unknown:

Hmm, good question. The short answer is, wow, that's a really that's a really simple question I have asked before. I think it can be as like if you earn a few $1,000 every year, but you've got lots of expenses. So let's say you you're starting freelancing. The example of a hot topic right now is like you're launching a YouTube channel and a lot that YouTube channel you invested heavily and bought a bunch of equipment. And because it's your first year, you didn't get a lot of views. So you haven't started have you on that income yet, but you did like invest in a computer, you got the editing software, you invested in a green screen, you made all these big investments to like, essentially, if you spent a bunch of money, then I think it's worthwhile because you may not know where things qualify because so much things don't talk with the prepare. thing kind of like explore that. And a lot of folks are kind of like what if I had more Losses than income like, Then should I be talking to a preparer, probably because it can get a little complicated. And if you had a lot of losses, you can only claim so much losses per year, typically around $3,000 in losses, and then everything else kind of curious forward to future years, if you just have longer than no income. versus if you have income and losses, they kind of offset each other $30,000 in income and $1,000 in expenses, which is a lot of expenses, but can happen, you then would like break even and have zero, but you know, if you have $1,000 in expenses, but $5,000 of income, not $45,000 of losses, and you can't get you can't get all the losses in one year. So the interest, it just becomes a bit more complicated.

Pamela Capalad, CFP, AFC:

But the carry forward actually didn't know that. So basically, if you had losses this year, but next year, you have profits, then you can still take those losses you have this year and count them against the profits for next year. Yeah, the abuse.

Dyalekt:

Corporations abusing that one, it's like

Pamela Capalad, CFP, AFC:

carrying forward losses, right, tax loss, every word, whoo. That,

Dyalekt:

I know, as a creative freelancer, artists are often told, like it's okay, if you do that, you know, that's like the way cuz you know, next year you're gonna blow up. So just, you know, keep doing that and like, lean us into that when that's not great.

Pamela Capalad, CFP, AFC:

Is there like a limit to that? Like, is there a certain number of years where the IRS is like, Alright, is this a real business? Because you've been losing money for like, 10 years?

Unknown:

The short answer is, at least in my experience, no, there's no limit to that. I think there is a question of like, you know, should you still continue with the business like, you just keep losing money money, like over and over again, but well, you know, yeah. Real,

Dyalekt:

really a business?

Pamela Capalad, CFP, AFC:

Are they really a business? Is Uber really a business there?

Unknown:

I mean, yeah.

Pamela Capalad, CFP, AFC:

That's so interesting. Okay. So really like if you're a freelancer, and you have a lot of expenses, and also you don't know what expenses are business expenses, that can be deductions, like, don't try and do it yourself, right? Don't spend a whole day trying to like, go through your bank statements. And like, guess what, you can actually deduct, like, talk to a professional because they're actually going to save you money in the end, ultimately. Yeah,

Unknown:

exactly. Yeah, exactly. furniture that in worst case, you do it in this one year, you learn a lot from them. And then you try to do it the next year on your own. I think a lot of folks you're like, kind of think I've worked with someone not going to work with them forever. And typically, like, if the goal is education, you learn what you need, and now you feel more comfortable and can do it on your own. That's great.

Pamela Capalad, CFP, AFC:

Although I think that once someone does it with someone versus doing it on their own, it's like, oh, I just should never do this on my own.

Unknown:

Right. It's like, it's like, it's like going to a laundromat when you realize there's like the wash trifold service and you're like, wait, don't get my back. And it's not that that much more.

Pamela Capalad, CFP, AFC:

Oh, that's a good analogy. I love it.

Dyalekt:

I feel like we need to go to a song but like, I think I've been noodling in my head on if you see the blank expression while we're talking about that, but like is a yenta a business? Or like an auntie? Cuz like, Uber is really right. is like a yenta it's like I know some people over here who need a ride and then some people over you gotta ride. We just match the ones together

Pamela Capalad, CFP, AFC:

cheering is really just matchmaking.

Dyalekt:

Yeah, ride sharing is just matchmaking but I want to pull up this song we go all the way from Portland, Oregon coming down to Houston Texas. I'm excited about this because it's a very Houston kind of song from big sub cannot he has got this one where I love this song that they're talking about what they're gonna do when their income tax returns come in. They're gonna have an income tax party. So check this out. We'll be back with you in a moment.

Unknown:

We also clean and we also pray right now we all fell in the same tracks on the house and single people married folks so you know your spouse is a home folks. I got a knife in my pocket with a cough baby mama got some kids you got some? You got some new ones? I've seen my sisters and brothers. No nuts rival crazy. homie nigga pay me a man my son Bobby waiting for you. I just got my rubber band from a JC to say a sound to my basket is off to the marshmallow ladies so what else or against the new some new kicks in babies babies on the run with the Osmo we can't afford a DVD so we go get the VCR again the biggest fan should be saying is the real holiday the real enjoy your time the real time to celebrate the money in the work Trump's up he switches on the clock posts old school 3d soup the soup sub and global trees used to be in the sea alphabet jam extremely well protected by some real oh geez for me to start doing things fake things come out of pocket on the money and the party gay stop and get the whole club rockin new day it's hard to see

Dyalekt:

Oh, that's the income tax party. Big sub and friends I actually I don't have the names of the artists who brought with big sub on that really don't join where they get really honest or real about like even even see the covers said income tax in the hood. The poor man's Christmas. Yeah. Because like they're like, that's our celebration. And it's so ill because it's a savings. And it's a thing that we made for ourselves. Right? That's their money.

Unknown:

Yeah,

Dyalekt:

they're like, Oh, I'm so happy to be getting this money from the IRS. But that's their money. And this is amazing.

Unknown:

Oh my god,

Pamela Capalad, CFP, AFC:

I just like had a thought that I've always I always have every time we talk about this. It's an unpopular opinion. refunds are the biggest scam, the biggest scam but big scam and like affects everyone. It's like it's it's this thing where you're like, Oh, I hope I get money back. And it's like

Dyalekt:

you heard about all these things that these cats were excited to spend money on but they already had the money for the IRS was just hold

Pamela Capalad, CFP, AFC:

Girish has held it and the thing too is like the reason why I think that it's such a big scam is because it obvious gates, how much you're actually paying in taxes, percentage wise, right? So like no one's paying attention to like, this percentage of my income is going to taxes. They're all they care about is the refund, right? He paid less taxes one year, but you didn't get a refund. You're like, Oh, my taxes are fucked up because I didn't get a refund, even though you actually paid less in taxes. Overall.

Dyalekt:

That's what I hated when I first started freelancing. Yeah, you ended up paying taxes rather than getting some back even if like I look back and I was actually great. I paid less taxes.

Pamela Capalad, CFP, AFC:

Yeah, yeah, I

Dyalekt:

made more money.

Unknown:

Yes, exactly. That kind of happened in that in that year after the Trump tax cuts are super controversial. Everyone like lost money is you Teddy, we did pay less taxes that year. But it's just the way they change the withholding it like mess it up. So everyone owed and then everyone was like what is you know, and

Pamela Capalad, CFP, AFC:

it's like, but you actually paid a lower percentage in taxes than you did before. The IRS just messed up the withholding. And so now everyone's like, I'm so mad. And it's even just the concept of a refund where you like overpay and then you get the money back? And that being like something that we look forward to and that is celebrated.

Dyalekt:

You know what, you wouldn't do that with anybody else? No. Can you imagine if you let somebody hold a couple of stacks for like, yeah. No, it's like, No, you better have my money, you better have my money on time. And that's what it is. Right? Yeah. But we'll just hold it.

Unknown:

I mean, we're

Dyalekt:

excited about it again, we just talked about how the IRS is this scary death and taxes, inescapable kind of thing. So it's like, well, I can't mess with them. They will, they'll give me back whatever they feel like they should give me back. It feels it's all of this stuff together. It just makes it feel like we have so little agency.

Unknown:

Yeah, this is real. I feel like Oh, man. Oh, one last thing I'll add to this is, I mentioned those Trump tax cuts. And I feel like a lot of folks don't realize that, like, the way those were designed was to like, you pay less taxes in the beginning. And then like, you know, if Congress had a four year term, it would have been, by the end, you're under paying more taxes than ever before. And like, you know, technical beats can be designed to take advantage of poetry, you feel this immediate, like gratification. And then later on, you're, you know, you've slowly ramped up into paying more taxes than ever. And then you're kind of like, Well, how do we even get here, designed that way by the folks behind the scenes,

Pamela Capalad, CFP, AFC:

right? And well, and then as long as you get a refund, you're not even questioning how much in taxes you're paying, right? You're just like, refunds, so I must be doing my taxes, right? We must be paying less in taxes because I got a refund when like, no, that's not how it works. Maybe you just inched up your withholding every year, maybe the IRS has instructor withholding every year, and didn't tell you and you don't even notice, right. It's so oh, my God, I can go on for days about this. But yeah, yes, yes, yes. But we only have seven minutes left, six minutes left?

Dyalekt:

Well, you know, I think we're gonna go into a little bit of overtime here, let's continue to talk about these things. I think this is really important. If you are watching us on video on spondylus. If there's something coming up after us, and there often is a lot of great financial literacy content on spawn boolits, the streaming channel put together by Fpp, then you're going to get cut off before we get to the end of this to go and check out the rest of the information on our podcast.

Pamela Capalad, CFP, AFC:

Yes, spreadsheet budget comm slash podcast to listen to the rest of this, because I want to ask a couple questions. Actually, Darren, I want to ask a little bit about you, who spent all this time like mining you for information. But I think you are such an interesting combination of things within this profession. You're a tax repair, but you're also a financial coach. And I feel like that combination is really rare in a lot of ways. I'm curious, what drew you to these two professions in particular? And how do they work

Unknown:

together for you? Yeah, so interesting question. What drew me to them is fine. I like I was in school, I went to University of Georgia, there's a there's a bulldog up there. A Bulldog over here. And, you know, while I was there, I studied financial planning. And basically, I took a class and in the intro to financial planning class, the professor said, you all have two options, right? If I page paper, or learn to do taxes, of course, being the student who wanted to avoid as much work as possible, I was like, yo, let me learn the new taxes. A little bit, I know that that actually was going to probably be just as intensive. So essentially, they had to buy the site. So the first you know, I learned I got certified to do taxes learn to do it went to the right hand side, my very, very first client with a teacher from Clark County, and in Georgia. And you know, I had this cool experience of like doing taxes or urban also kind of asking her questions to like, kind of do it together. And I liked it, but was kind of like, I'll be great if I never do this again. But then I never actually stopped doing it. Like the next year, I came back to volunteer. And then once I graduated, I volunteered in the community. So my first job had me doing taxes. And essentially, like, My first job was as a financial coach in Miami, which I was really, really grateful for, because they had a tax program. And they, they, they wanted someone to like look after it and do some work with it and expand it a little bit. But I can be that guy kind of took this classic training of the financial planner, began to work in low income communities and really think about comprehensive kind of coaching and planning for them and like what would help them the most, and oftentimes, taxes was that thing. And I think from that I continue to get more and more experience and kind of from my coach skills and learn more and kind of before I knew it was ingrained in both like the deep personal financial knowledge that comes from providing coaching to folks and the tax side of thinking about like, once a year, and you've got this big thing going on, how can you plan for every month? Can you change your withholding to get a little bit max back more now? just it just kind of became this whole synergy, really between the two and like, I feel like in my mind, I this is my bias. But I think the best way for coaches and financial planners think about taxes, and how they impact the rest of your financial situation. And that's the lens that I try to come at when I'm doing both services.

Pamela Capalad, CFP, AFC:

Yeah, I totally agree. I mean, I feel like that taxes have so much to do with building and protecting someone's wealth. But if you don't understand taxes as a financial planner, then it's hard to really go any deeper into financial planning or financial coaching. Because that's something that we all have to deal with and affects us all so much. You know,

Dyalekt:

yeah, tax taxes is that that special extra thing in knowing your finances that if you don't have a lot it can tear you down. And if you do have a lot, it can bring you to the next level.

Pamela Capalad, CFP, AFC:

Yeah, yeah, exactly, exactly. So I love that just like the combination of the two also, because I mean, Darlene said earlier in the show taxes are so emotional, right? And like, we all have feelings about our taxes, whether we're getting refunds or having to, oh, we're not filing or whatever it is, we all have these fears around taxes. And if there's a way to just like, assuage some of that a little bit, I feel like coaches are the way to do it.

Unknown:

Yeah. I also feel like I'll latch on to the add on this point a little bit, is it? I don't, I both do taxes and financial coaching. But I think my dream is a world where folks who would need either one, like in a world where folks don't need to prepare their taxes, taxes are prepared. And like in a lot of countries, they they send you a form that is here, we hear that we think your taxes are going to look like you kind of opt out and change it if you want. Like Imagine a world where this country does that as well. IRS already has IRAs and phase five, most of your tax information already in for the average show, they could do that. But as you guys know, you know, there are these big corporations that incentivize and lobby for the proper preparation software's and in person preparation to be essential in this country. And I just feel like, man, imagine if there was a different way. And and a world where folks are, you know, have vital education available to them. Maybe it's taught in schools, like whatever it may be, where folks need to lean left on me as a coach to get information and can stand taller on their own. Like that just speaks over it.

Dyalekt:

So like, when it's time for your iTunes, I know Simon called iTunes anymore to get a YouTube album that you got to opt out of. Right, but taxes slightly more essential than Donnelly. Yeah. up into Yeah.

Unknown:

Oh, my God, Dan

Dyalekt:

vs opt out stuff. That shouldn't be like a whole, you do a whole show just talking about how people will actually opt in, opt out, so make it harder for folks to be able to do it.

Pamela Capalad, CFP, AFC:

Yeah, I mean, that's so real. And I'm so glad that you brought that up. Because I think that a huge part of like, we're big believers that our job shouldn't exist, right. And it's the system that makes it so that our job is not to exist. And I feel like there's so many people holding on to the system, because because they built their careers on it.

Dyalekt:

exists job, we can keep this guy where we like we just talked to there, and then we would have time to play more song. Yeah,

Unknown:

there you go. That would be so fun.

Dyalekt:

A lot of good songs that came up. I like the ones that I didn't get to play today about income tax, which really be talking about this.

Pamela Capalad, CFP, AFC:

Yeah, no, again, because it's so emotional, like people are making art about it, because it elicits these emotions from people. And it doesn't have to do right, it doesn't have to elicit these kinds of emotions, and this kind of fear. And I think that's something that, Oh, my God, I don't even know where to go with that. I'm just, I feel like this tax conversation doesn't need to be so intense every time but it is because even just seeing all the changes of COVID and the stimulus and the tax cuts and jobs act a couple years ago, like it just continues to get more confusing, and it continues to be more confusing for the average person, you know.

Unknown:

So yeah.

Pamela Capalad, CFP, AFC:

So I guess it just the the question that I have that leads into that is what are the some of the biggest mistakes that you've seen people make with their taxes?

Dyalekt:

Oh, yeah, let's get over that.

Unknown:

Interesting question. I think, going going to the prepare the disappearance is probably like one of the is one of the biggest ones. Just make sure that you're both like that you have way to contact the person and hopefully someone who's watching for them that you know, or that their testimonial, something like that. Other big mistakes, I will say that their mistakes as much as I think sometimes clients come to me to get their taxes done. And they're like, Oh, I didn't know that's how it worked for I didn't know I was eligible to get this credit or to like have these expenses included, or that kind of thing, like matter which I've been doing this for the last two, three years? And the short answer is you can actually go back and change your taxes. But a lot of folks don't know that you can do an amendment, a lot of folks are kind of like, how do I even change something? Or what if I change something once? Can I change it again? Yes, you can amend an amendment, it becomes a bit like inception, where it's like a dream within a dream within a dream. But But technically, you can change your taxes as many times as you like, or as many times as necessary, what the goal is to always do it as best as you can and the first time and if you happen to catch something that you miss out on that makes a big difference for you, and those that are in your taxes that are going to look at doing kind of that change. And

Dyalekt:

so you don't have to do a whole big thing just to be to go in there again, you can say, Hey, I made a mistake. Because one of the things I worry about is when you take your taxes to somebody and they prepare them. And then instead of I know they're supposed to sign their name thing that they're the ones who prepared it. And there's been a number of cases where people don't sign their name, they put your name. Yeah. So then you're on the hook for it. And whether like before I even go through it. I'm like, Well, now I'm thinking something shady or some mistake or something not good as happened. So what do I do that?

Pamela Capalad, CFP, AFC:

Right, right? Well, I think too, this is like where again, it sucks that professionals even have to be involved. But this is where a professional can really step in and advise you on whether or not it makes sense to amend it right? I will say that before you go in and decide to amend your return, I would definitely talk to a tax preparer or an accountant. Right, and just like get their opinion on whether or not you should do it.

Dyalekt:

Is there a statute of limitations for amending your return?

Unknown:

Yeah. So there, there isn't a statue limitations around a minute, you know, you can always remember to return regardless of how old it is. But there intersexual limitations on how long you can get a refund from an amendment to be three years, essentially, just about three years. So we're in 2021. Now, you basically can go back as far back as 2017, through April 14 of this year, one day before teens comes, you'll miss out on a chance to get that refund and period, it's kind of gone.

Pamela Capalad, CFP, AFC:

So if you do have back taxes, and you're supposed to get a refund, just don't wait that long,

Unknown:

especially this year of 2017. If your tax preparer is booked up to the fourth 15th of April, like make sure you get in there and talk to them before the 15th because otherwise, that window will close and you'll miss it.

Dyalekt:

If you're a several years past, like we were talking before, about like, Oh, I didn't want to do this, and you know, it's been more than three years, it's fine. Still amend those taxes is important, but you're not going to get that report.

Pamela Capalad, CFP, AFC:

Yeah, exactly. Yeah. Got it. Okay. Whoa, oh, my gosh. Okay. And then, I guess the final question that I have is, is there anything in particular that freelancers of color need to watch out for with their taxes?

Unknown:

Hmm, that's a good question. I feel like so the thing that I always tell folks is, so typically, what I do is, you know, at once a month off, I'm a freelancer as well. So I freelance and, you know, work for a bunch of different places. So I like pulled together my taxes this year. And the thing that I always try to do is I use the taxes as an opportunity to go back and look at like both my expenses for every month, that related to business expenses, and personal expenses to to see if there's something that I missed out on. So like, once a month, I go and like kind of have my little calculus, I put my stuff in my spreadsheet, good to go. And then at the end of the year, when I'm doing my taxes, I'll go back and look at everything once again, and just kind of see and sometimes I discover new things that I can deduct, which is great. But sometimes it's just like the personal finance information I gain out of it. So like if pandemic I had, like died, like had my spreadsheet for all the places that I spent money at. And I felt like the restaurant I went to most was actually in the brewery that's down the street from my house. Because I have people would come and say, Let's hang out, I'd say we can all hang out in the park because of the pandemic, we would then get bruised, go to the park and watch the sunset over Manhattan views. And it was great. So all that to say, use taxes as an opportunity to look back and reflect on what you did the past year, to think about what you want to do differently, or what you want to be intentional about in this upcoming year. That's probably my biggest advice to freelancers of colors, that and don't be afraid to just have conversations about it to like ask your friends, your family, folks in your community, who are also freelancing, what they're doing what they have discovered, I feel like this kind of pool announced that we all have been often taken advantage of and really like maximize. So if we can begin to have some of these conversations, and really spread the knowledge that we're getting around taxes i think that it can become a bit less mysterious, and more easily understandable by easily understandable by all of us.

Dyalekt:

I love it. I like I also love the accidental bars or you heard what he was talking about paying your taxes and meet up with your crew get some brews and watch the sunset with the Manhattan view.

Unknown:

Oh,

Pamela Capalad, CFP, AFC:

Derek.

Unknown:

I love it. I love it. Oh my gosh,

Pamela Capalad, CFP, AFC:

this was so helpful and so informative. And I also feel like just your approach to it takes a lot of the like fear around it. There's so much like practical stuff that you had us walk away with in this. And things where I can tell you like prepare people's taxes, right? Just talk about it. You're like, I'm in the weeds with people. So we really, really, really thank you for sharing a lot of your knowledge with us for joining us on the show for being a sea change coach. And just yeah, being a part of our stuff.

Unknown:

It was an honor to be here. You guys are delight and it's always good to talk taxes with folks that enjoy the nerdiness involved with it. Ya know, you love it. Thank

Dyalekt:

you for breaking it down, making it make more sense making it more simple. Michelle, one more song. We're going out to Philadelphia for this last one. And before we were talking about the income taxes and morals and we're talking about the income tax party, and this time we're talking about income tax money, and this is a cautionary tale. This is in line with all the other stuff that we've been saying about how people will look at this income taxes this big gift that comes from above. It's a cautionary tale. We talks about what people could do with their income tax money. That's not a good thing. Oh, yeah, yeah, yes. Wow. So Oh, by the way, again, as usual haters rate us data on all the places that you can check us out. And also we should mention before we go here my pull us back on the screen. We also should mention that we're part of a hip hop financial literacy concert that's going going down on spawn Deluxe on April 8. Oh, you're putting together a little banner there. I'm just gonna go to hip hop fin fast.com you make a rap song if you are between the ages of 14 and 18 about personal finance we have lessons on how to make a song lessons on how to talk about finance and other talks about the racial wealth divide and all these good things make a song maybe you win if you win, you get to be on an album and get to perform ftps annual conference and get a free trip to Disney World. Check that out. And again here's a rap song about money to give you some inspiration about doing that this is the p3 Entertainment Group scrap easy talking about income tax money we'll check you next time but this

Unknown:

you tax money like a hood stimulus maybe using a shifter since you're not supposed to use it for no man listen to this income tax stimulus benefit working for the check April nigga wonder cheney was a food so we got a job washing the dishes washing the tables and it wasn't much but he was on the payroll and he filed taxes as well as an extra six days is enough for him to mess with this man and so to his man because he was so cold walking back next week say he went to number two she was getting crazy. Turns out last week homie got picked up with him in a tank because he tags money for the chase Money money money money money money money money shortage surfing I mean surely a trip for new bags on your flip through since she started working though office job answering phones she getting sick many nice and tight treatment in the past she was drinking but she tried to live decent enough to come in this weekend. She was saying she doesn't know nobody thinks that he talks he does bad pitches no bank can really sit in on their agenda. Thinking damn I'm gonna show up every business store still fucking over. Now what happened next minute not even pharmacy counters you know beggin tags Money money money money. Money she got a job but they go chase money even more. name tags My name but she takes money