The tax forms (or the extensions) have all been filed, the mad April rush has come to an end, and you breathe a sigh of relief. You mutter to yourself, "Thank goodness I don't have to think about taxes again for another year."
Wrong answer!
The only effective way to control and deal with your tax issues is to review them throughout the year. Was your refund too large? Why have Uncle Sammy hold on to your money without paying you any interest? Fix it now. Did you have a large balance due with some penalties attached? There are methods that you can use to rid yourself of these penalties. Did you fail to take a credit or deduction because you didn't know about it? Or worse, didn't maintain the appropriate records? Then now is the time to look forward to next year so you don't make the same mistake again. But it takes thought and planning and attention.
What's my take on planning your tax issues throughout the year? I guess the best way to make that obvious would be to give you a small excerpt from The Motley Fool Investment Tax Guide:
You might think that taxes are simply a chore, something to attend to once a year. Anyone with that attitude is likely leaving money on the table, though. This is particularly true for investors, because investing is much more than just deciding which stocks to buy or sell.
There are many tax-related matters that investors should learn about and consider in order to strategize effectively. How long you hold a stock or security makes a difference. Your cost basis for various securities may have to be adjusted on various occasions. If you're giving a gift to a child or a charitable donation to a cause, you should consider giving stock instead, as you could come out ahead. If you're generating sizable capital gains this year, you might be expected by the IRS to file estimated taxes each quarter. If you use your computer for investment purposes, you might have some deductions available to you. If you sell a stock for a loss, you should think twice before repurchasing it within 30 days. Got employee stock options? You can minimize your taxes by exercising and holding them for certain time periods. Heck -- even your home is an investment, and a big one at that. Learn about the massive tax benefits available to you if you plan your home sale properly....
We expect that when you turn the last page, you'll be brimming with confidence and raring to make decisions that will minimize your tax liability. Come February, March, or April, whether you decide to prepare your own tax return or to pass the work on to a professional, you'll be doing so as a much more informed Fool.
And now you're probably trembling with excitement at the prospect of learning about taxes. (Well, perhaps dreading it a little less?) We won't tarry much longer. We close with a little verse from one of our favorite doggerel mongers, Ogden Nash:
Indoors or out, no one relaxes
In March, that month of wind and taxes,
The wind will presently disappear,
The taxes last us all the year.
Nash meant these words as a frivolous joke, but they're really quite true. If you take a Foolish approach to taxes, you'll tend to them all year long, a little at a time. Wherever you are, at any hour of the day or night, you can visit The Motley Fool online for the latest in tax advice. There you can post questions and receive answers on our message boards. You can build on what you learned in this modest tome, and come tax season you won't be left to deal with the aftermath of regrettable decisions you made during the year. More power to you, Fool!
So there you have it, proper planning will make tax filing in April 2004 much less "taxing" on you and your family. The obvious next question would be: How? Well, you can visit the Fool's Tax Center, where you'll find more than 100 articles. Heck, right now in the Tax Center you can find an article on year-end tax tips. Why wait until year-end? Review those articles now in order to get a head start for 2001. Check it out.
And if you do have a tax question, visit the Tax Strategies discussion board to post your question, receive your answer, and/or participate in a discussion of taxes and tax strategies in general.
Tax planning isn't a passive activity; it's something proactive that you can (and should) do to take control of your taxes and your tax outcomes. Remember: It's your money and your taxes, and nobody is as concerned about your money and your taxes as you are (or at least should be). So get to it, Fool. It's never too early to deal with your tax issues, and we'll be here to help you through the process.
Roy Lewis lives in a trailer down by the river and is a motivational speaker when not dealing with tax issues, and he understands that The Motley Fool is all about investors writing for investors. You can take a look at the stocks he owns as long as you promise not to ask him which stock to buy. He'll be glad to help you compute your gain or loss when you finally sell a stock, though.
