Hopefully the tax forms (or the extensions) have all been filed, the mad April rush has come to an end, and you are breathing a sigh of relief. You mutter to yourself, "Thank goodness I don't have to think about taxes again for another year."
Wrong! I can't believe True Fools would have such a view of things! After all, the only way you can control your tax issues is to review them throughout the year.
Was your refund too large? Why let Uncle Sammy hold your money all year without paying you any interest? Fix it now! Did you have a large balance due with some penalties attached? You can take steps now to rid yourself of these penalties next year. 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 at your year 2000 finances so you don't make the same mistake again, but it takes thought and planning and attention. So let's get started now that everything is fairly fresh in your mind.
What's my take on planning your tax issues throughout the year? I guess the best way to say it is with a small excerpt from The Motley Fool's Investment Tax Guide 2000 (conveniently available in FoolMart):
People often 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.
By 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 2001 much less "taxing" on you and your family.
The obvious next question is: How? Well, you can certainly
begin with The
Motley Fool Investment Tax Guide 2000. It was written
to help you through tax year 2000. You can also visit my
the Archives area, where
you'll find more than 75 articles dealing with tax issues.
Heck, right now in the Taxes FAQ area you can find a series
of five articles on Year-End
Tax Planning Tips. Why wait until year-end? Review those
articles now to get a head start for 2000.
And, you can certainly sit tight and read more about taxes in this very weekly series. In the weeks and months to come, we'll discuss the tax issues of interest to you, your friends, and your family that will have an impact on your tax lives. So, you'll not be wanting for information.
But it'll require some effort on your part to take the information and use it. 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 no one 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. We'll be here to help you through the process. I'm looking forward to it and I hope you are too.
If you like the way Roy Lewis simplifies confusing tax issues, check out his just-published book, The Motley Fool's Investment Tax Guide 2000: Smart Tax Strategies for Investors. This handy 360+ page guide covers just about every tax aspect of a typical Fool's life: investing, marriage, children, education, homes, home offices, retirement accounts, medical expenses, and much more.)
April 21, 2000
