Well, it’s April 9th. In a few short days participants in our self-assessment tax system (that would be you and me) will perform our patriotic duty and render unto Caesar his share of our earnings. And, as I’m sure was equally true in Caesar’s time, the rendering will be accompanied by much wailing and gnashing of teeth.
W-2 forms, mortgage interest statements, brokerage statements. Time to dig through the records and pull ‘em out. Will I owe or get a refund? Same old question year after year. Time to promise ourselves better recordkeeping next year. This time we’ll pay those quarterly estimates.
I am amused at how much mental energy people waste worrying about taxes. It’s really pretty simple. Taxes come around at the same time every year, just like clockwork. The amount of tax is not hard to estimate. So, we know when it’s due and have a good idea how much it will be. Get it paid and bypass all the whining and moaning.
What amuses me about paying taxes is that the same folks who get so stressed about a tax bill are usually the same ones driving around in a luxury car and living in the big house on the hill. Do you suppose they whimper and get sweaty palms when the payments come due on the car and house? Not likely. Those are status symbols and offer bragging rights. Not true with income taxes.
I made a decision many years ago that has served me well. Having been self-employed to some degree or another for over 30 years, I have signed tens of thousands of checks paying every conceivable type of business expense. Every one of those payments reduced my take-home pay. However, once I am obligated to pay a bill, I never think about it again. I owe it and I pay it.
The decision to which I refer was to consider income taxes as just another cost of doing business. Thus, just like salaries and rent, I figure what I owe and pay it. No whining and no fussing. Just pay what I owe and keep what’s left.
As comforting as this strategy has been for me, it has subjected me to some ridicule from friends and business associates. At the occasion of any unusual transaction or a discussion of profits in general, I always think about the tax implications and frequently mention of the forbidden (tax) subject. “Don’t forget about taxes,” seems to be my personal mantra. Several have accused me of worshiping at the alter of taxes.
Now, let me tell you the bottom line. I don’t enjoy paying taxes any more than anyone else, but I don’t want to get blindsided by unexpected tax obligations. I like knowing that what I have in the bank is mine. So, if I want to spend extra money on some frivolous thing or other, I don’t worry that I’ll spend money that will be needed for taxes. They’re already provided for and the funds will be ready when I need them.
The choice is up to you. Taxes aren’t going away. No matter what kind of tax system we have, ultimately, the citizens are going to pay the bill to keep government governing. So, either provide for taxes and enjoy life or, alternatively, play like it isn’t true and spend up everything in sight and face the taxman with empty pockets. It’s entirely up to you.
Thought for the Moment
Tax loophole = a deduction that the other guy gets.
— Malcolm Forbes
Joe D. Jones, CPA (retired), is publisher of the Mississippi Business Journal. Contact him at email@example.com.