• Bridget Sullivan Mermel CFP(R) CPA

Tax Returns Done: Now What?

Updated: 7 days ago


You got your tax form back from your tax preparer or printed it out from Turbo Tax. Now what? That’s we cover in this episode.


You will learn: Our number one tip for how to save money after your taxes are done.

Specific items that you should look for on your return.

Why you should anyway.

Why you might not want to look at your return.

What to do if something doesn’t seem right.


TRANSCRIPT


What to Look for on Tax Return


Bridget: Don't pay more in taxes than you're legally obliged to. This is Friends Talk Financial Planning. I'm Bridget Sullivan Mermel, and I've got a fee-only financial planning practice in Chicago, Illinois.


John: And I'm John Scherer. I run a fee-only financial planning practice in Middleton, Wisconsin.


And Bridget, taxes are one of the biggest expenses that most people have when you look at what they pay. And yet we find so many people -- I know I do in my practice -- that they leave money on the table. They're wasting money on taxes that they don't need to pay. And it's a great, a timely topic to talk about this. Is that what you see in your practice?


Bridget: Yeah, absolutely. I think what happens is that people don't want to pay more taxes than they're obliged to. But then when actually encountering a tax return, they feel a lot of different things and they don't want to look at it.


So they might feel inadequate because the income is lower than they think it should be. Or they might feel confused because, geez, I look at a tax return and all the language on it. And I'm pretty confused and like, how does that all work?


John: Right!


Bridget: And I've been doing taxes for almost 25 years.


John: If it freaks you out… right?


Bridget: It is an understandable confusion! And so I think that it makes people avoid actually what our #1 tip is. So, John, why don't you start talking about that?


John: Yeah, that's great. Thanks so much for sharing that here. As a CPA with 25 years of experience. Like, of course, there's 9,000,000 numbers on two pages. What do you want, right?


Bridget: Exactly.


John: And it's just such an interesting thing. And the other thing that I thought of: we look at tax returns for all of our clients. And the first 1 or 2, it's sort of like, “Oh, there's all these numbers.” And then I suspect for you, too, after you've done your 25th one, you kind of go like, “Oh.” You get in a rhythm. But most people, they see their tax return, right?


Bridget: Yeah. Right.


John: It's all brand new for them. So that's part of it. It's totally natural. And I'll tell you, there's one thing that I think is really the one critical trick or tip. And it's so basic, like so many things that are effective. It’s just simply looking and comparing last year’s return to this year's return. And just look at the numbers. And you don't even need to know where those numbers came from, necessarily, right?


Bridget: Right.


John: If there's a problem, we need to dig into it. But when a person takes a look at it and say, listen on line 3, last year was this, this year is that. And to think about, were there any changes? And just in big picture, that one line is for wages. Did our income change? Another line is for capital gains. Did we sell any investments? And just to look at those.


And you don't even need to dig into it other than to say, “Oh, Yeah, that's right. We changed jobs last year, and so we should expect to see a change in income.” Or, “We had a child. And so we should see a different child,” right?


Bridget: Right.


John: Just these really basic: how do the numbers look? Did we get a raise? And to say, “Oh Yeah. This number matches up with that number.” And if it doesn't match up, yes, that makes sense. And it's amazing to me. And I assume you see the same thing, Bridget. But that folks, the vast majority of folks don't review their taxes themselves, and their tax preparers don't review it either.


To me, it just seems so basic. What did you have last year vs. what did you have this year? If there's differences, does that resonate? And we see even the pros, that they don't go through it. And just to at least know and have some control. And it sounds so simple and it is. But golly, just looking and asking, “Hey, these numbers are different.” And ask your tax person, “Well, why? Does that make sense?”


And maybe then you need to dig into the third line on schedule C goes over to line 42B and look at it. But you don't have to get there. Just looking at the numbers… It seems so basic and, golly, there’s hundreds if not thousands of dollars on a regular basis that are missed on those things and causes people to pay taxes they don't actually owe.


Bridget: Right. And the IRS is pretty good about notifying you if they think you owe them money. But if the error is in your favor, they sometimes do notify you, but it's a lot less likely. They're expecting you to be on top of that. So it's important to take a look. I recently just had a bank… make sure your bank account is right.


And there's a couple of tips, other tips that come into play, too, that I would say to particularly look for. If you've got kids now… And it depends on what income level you are at. But there's… many people can get a $2,000 tax credit for each child. So that's a lot of money, and make sure you got that.


And then this year, right now we're filming this in 2021. And so we've had rebate checks go out in 2020. And some people didn't get rebate checks, but they should have gotten rebate checks.


John: But they should have. Yeah.


Bridget: Yeah. And so if you're not high income and so you think, “Maybe I should have gotten a rebate check,” then you should be getting more money on your taxes. And there's a line. And that one you can probably figure out where that is, recovery rebate. So you can take a look at that and make sure there's a number there. Because that's the part where you're getting more money back.


John: That's the thing. I love what you said. It's not, “Run the calculation and figure it out.” It’s “Is there a number there?” And if there's not a number there then take a look and say, does it make sense that there's not a number there?


Bridget: Right.


John: And if not, and those are the things that are simple basic things, but when a tax person – we were just talking this morning -- when a tax professional is doing hundreds of returns a year, there's just limited time for that person. So it is up to you as an individual, for me to look at my tax return and say, “Is there a number in that tax rebate section? And should there be?” Those sort of things.


And that's great, like so many things, basic. It's not complicated. You don't need to dig in. You don't need to be a tax expert by any stretch. But just looking at that is going to put you in a position of power when you get your taxes done every spring.


Bridget: Yeah. And the other thing I would -- as somebody who does some taxes -- I would say is: if you do find something that is… you think you've got questions on, be patient with your tax preparer.


John: Yeah.


Bridget: Because it's kind of a production line. And so they're really trying to get a lot of things done at the same time. And so anytime that there's something incorrect, you can always change it. So you can file an amended return. And you can do that up to 3 years after the due date of return and get more money back.


So you may feel outraged, ripped off, ignored or whatever. But it's like, don't… just make sure that you put it on your list to take care of and ask questions about. And realize where the other person is coming from if you're asking these questions in the middle of March. Or in early April.


John: Yeah, that's right. Focus on the results, right. What are you trying to accomplish with things?


Bridget: Yeah. Exactly.


John: Well, great. I think that's a great place to wrap up this episode. And as always, remember to hit the subscribe button if this is interesting information and valuable. The more subscribers we have, the more our message gets out and helps other people. And then Bridget and I are also members of the Alliance of Comprehensive Planners that do tax-focused comprehensive financial planning. And if you're interested in learning more about how people that think like us can help you, visit their website at acplanners.org.


Bridget: All right.


John: Until next time, Bridget.


Bridget: With that, let's wrap it up.



At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.

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Chicago, IL 60613

Ph. 773-404-9344
Fax: 773-327-1461

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