Tame the Tax Chaos: Get Organized & Confident for Tax Season | E58
Tax season doesn’t have to be overwhelming, especially when you’re armed with expert tips and a solid system. In episode 58 of the Beyond Budgets® Podcast, host Deb Meyer breaks down what parents need to know about getting organized for tax season. From estimated taxes to state-specific credits, this episode is packed with practical strategies to reduce your stress and increase your confidence before the April 15th deadline.
You'll walk away with actionable steps to get your paperwork in order and avoid costly mistakes … whether you're a W-2 earner, small business owner, or self-preparer using TurboTax. We also debunk common myths (like what extensions really mean) and highlight when it's time to call in an Enrolled Agent or Certified Public Accountant.
Episode Highlights
(00:35) Extensions ≠ Extra Time to Pay – Understand the April 15th deadline, even if you file late
(02:45) Estimated Tax Basics – Avoid underpayment penalties using IRS "safe harbor" rules
(09:30) How to Organize Documents – Stay tax-ready throughout the year
(06:40) When to Hire Help – Consider a tax pro if you’ve moved, inherited assets, or run a business
(15:08) OBBBA Deductions – Why 2025 could be the first year you itemize in a while
✨ Don’t forget to leave a review if this episode helped you! It makes a big difference and allows more parents get the support they need to build wealth wisely.
🔗 Listen to Ep 48 New Tax Breaks for Parents: What the One Big Beautiful Bill Act Means for Your Family
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Founder of WorthyNest®, helping faith-driven parents build financial plans that reflect their values.
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Full transcript
Deb Meyer (00:03.31)
We're in the new year, and I know taxes can be a big stressor for a lot of people as we enter tax season. This episode is to help you get organized for taxes and bust some of those myths you might have about taxes, making it a more peaceful, easier process for you as you head into that April 15th deadline.
Let's first start with extensions because I know a lot of people get confused and hung up on this. Even if you end up extending your individual income tax return, that doesn't mean you have extra time to pay the tax. If your deadline is April 15th, like it is with most individuals, you're gonna have to pay the tax you think is due by April 15th, even if you're getting an extension until October 15th.
That's really one important distinction I want you to keep in mind if you can't quite get everything organized from a tax standpoint, and you're looking for a saving grace. Just try to come up with that cash to pay any expected tax due. If you think you're going to be in a refund position, obviously you don't need to be doing anything. But if you think you'll owe, go ahead and pay in what you think you're going to owe.
And one of the other things to keep in mind as you get ready for tax season is, especially if you're a small business owner or you're self-employed, there are some important deadlines to be aware of. If you're a small business owner and you're filing either as an S corporation or a partnership, the deadline for that tax return is one month earlier. It's going to be March 15th. Okay.
If you end up getting an extension for the business return, that would be extended to September 15th, a six-month extension. If you're self-employed and maybe you're just operating as a sole proprietorship, even if you're an LLC taxed as a sole proprietor, your deadline is still gonna be that April 15th because you're going to report your income from the business on Schedule C of your individual income tax return.
Deb Meyer (02:21.548)
With the small business owners that have elected like an S corporation or partnership taxation, they're going to get a Schedule K1 to put onto their personal tax return. But if you're not organized that way, let's say your business isn't as profitable or it doesn't make sense to be having those kinds of special tax selections, then you're going to be filing on Schedule C the income and expenses of the small business.
One other thing to keep in mind … this is especially relevant for small businesses or self-employed people, is estimated tax. If you're in a traditional corporate role, likely your employer is going to be withholding enough, generally speaking, on your wages to help support tax liability. But if you have other sources of income, maybe you had an inheritance with some IRA distributions or annuities or whatever, like extra income that you're not used to getting, then likely your employer withholding is not going to cover that and you might need to pay some estimated tax to account for the extra income.
For self-employed people, it's a pretty standard process that most self-employed or small business owners, especially if they have an S-election for the business, that they're going to be making estimated tax payments throughout the year based on some extra tax liability that's likely coming. The first thing to be thinking about with estimated tax is to look at any of the overpayments that might have been applied from a prior tax year. So in this case, if you're getting ready to do your 2025 taxes, you're going to look at the 2024 tax return and see if there was an overpayment. And if there was, see if it got refunded or if it got credited to estimated tax.
You do that both for federal purposes and then also see if your state has income tax, if there was any kind of overpayment that got pushed to estimated tax for the state for the following year. Another thing that a lot of people get hung up on with estimated tax is the safe harbor calculation. Basically in a nutshell, the IRS can penalize you if you haven't paid in enough tax based on these safe harbor rules.
Deb Meyer (04:42.414)
And the rule is in this case, if you're filing your 2025 tax return, you're going to be looking at your 2024 tax return, whatever the tax liability was there. If your income that year was over 150,000, then it's going to be 110 % of that tax. So let's just use round numbers and say your tax was $10,000 in 2024.
and then your income was over the $150,000 mark, then you would be trying to make sure your tax withholding for 2025 is at least $11,000. Now, we're past the point where you can really be making estimated tax payments and apply them to the 2025 year. So I'd rather use an example now of looking ahead for 2026 and what you should be thinking about for estimated taxes for 2026.
So once you get your 2025 tax return finalized, you would look at that tax liability. And let's just use the same numbers from our prior example. Let's say our 2025 tax liability is $10,000 and our income was over $150,000. Then we would want to make sure our payments for 2026 are gonna be at least $11,000 to avoid the underpayment.
Or if you think it's going to be a considerably low tax year in 2026, maybe your income has changed drastically because of retirement or something else. Then you could look at what's called the current year projected liability and estimate like 90 % of that and make sure that's paid in for estimated tax. So the calculation does get tricky. And I would say if you're confused at all by it,
probably worth getting a tax advisor, especially if you're getting into needing to pay estimated tax on a regular basis. Having some kind of tax advisor that can take a more detailed look at it is going to be beneficial. All right, so the deadlines, if you do end up having to pay estimated tax, they are quarterly, but they're not the traditional quarters you're thinking of. So the first quarter is actually due April 15th in conjunction with your individual tax filing.
Deb Meyer (07:02.894)
then the second quarter would be due on June 15th, the third quarter on September 15th, and the fourth quarter would be January 15th of the next year. So if you're trying to pay 2026 estimated tax, you would have until January 15th of 2027 to make that last Q4 payment, okay?
Having said all that, I'm throwing a lot of numbers and details at you. Maybe you've been used to using TurboTax or some other kind of program in the past to self-prepare. The time to be thinking about getting help, like professional help with taxes would be maybe you moved from one state to another and you went from one state that has income tax to a state that doesn't or vice versa.
You're going to want to make sure that that tax preparer can capture the right prorations of income and Really get it right for state income tax purposes when you file now if you move from one state That's no income tax to another state that's no income tax not a big deal because you're only filing a federal return But this would be more if you're moving from a state with income tax to another one with or you're moving
You have at least one state with income tax and you need state tax return assistance for that partial year. Another example would be, let's say you have an inheritance in 2025 and you're not quite sure of the tax treatment of some items. You have some new income items and you just want to make sure a professional can look at it and include the stuff that needs to be included, exclude the stuff that needs to be excluded, or at least inquire about it.
The other thing to be thinking about is if there's additional complexity with your return, maybe you're self-employed or you're a small business owner. I almost always suggest having a professional prepare in those situations. Even if the business income is minimal, there might be some opportunities for additional tax savings that you don't know about, additional deductions that you can take. Those are the scenarios where I'd consider hiring a professional tax preparer.
Deb Meyer (09:20.346)
That could be a CPA or it could be an enrolled agent, an EA. Those enrolled agents are trained to represent clients before the IRS, so they also go through additional training on the tax prep side. You don't just have to focus exclusively on working with a certified public accountant or a CPA. Let's take a quick break. If you're finding this show helpful, would love it, love it, love it if you leave a rave review.
Anything that you can do to support the show is greatly, greatly appreciated. And even if you wrote a review a long time ago when the podcast first launched, fresh reviews are always helpful and will get the word spread out further for additional people, additional parents who really want to save money and build wealth in a wise stewardship focused manner. Okay.
Enough of the break, let's move on to the actual organization of your taxes. So one of the things I do personally is have little subfolders for these different income categories, especially as you're getting into the new year here, you're gonna get lots of mail, lots of electronic notifications. I find it personally helpful to be printing out copies of things I even get electronic just to have everything in one.
folder visible that I can go through and make sure I'm not overlooking things when preparing my taxes. So the first thing I would start with is income. What kind of W-2s do you have from traditional employment? Or maybe you have some investment income. You have a brokerage account that's taxable. I'm not talking about retirement accounts because those aren't going to really have any reportable income unless you're taking distributions from that. And then in that case, you would be getting
a separate tax form to show those distributions. But for a taxable brokerage account that generates interest income or dividend income, maybe even some capital gains if you sold a position, those types of things are gonna get reported on a 1099 from that particular financial institution where you hold the account. So it's important to make sure you have those and usually those come in waves. So.
Deb Meyer (11:42.38)
The first wave, a lot of the financial institutions will issue by the end of January. And then usually a second wave comes in like mid February and typically the third wave. And this could be, you know, as late as like March 15th where they're issuing another 1099 because they realized they miscoded something for tax purposes. Maybe they coded it as taxable interest when it should have been a qualified dividend.
Those are taxed at different rates. So we want to make sure whatever version we're using is the most up-to-date version when we're reporting the investment income. So I would say, generally speaking, it's great if you can file taxes early, but if you have any kind of taxable brokerage account or maybe it's a trust account that's a brokerage account that you're going to have reportable income, just make sure you wait a little closer to those deadlines where
The financial institution may still delay sending corrected 1099s. So you don't have to go back and amend a return later. Sometimes it can just pay off to be a little more patient and wait for all the forms to come. All right. Another area of income for some people might be an IRA distribution. Even if you're not of a retirement age yourself, maybe you have an inherited IRA where you're taking distributions.
That's all reportable income if it's coming from a pre-tax IRA or I'm sorry, pre-tax dollars, which is like a traditional IRA or a IRA rollover account. If you're taking it from a Roth IRA, that's not going to be taxable because those were already after tax dollars that you're receiving. Pension or annuity income is another area of income you might be getting, especially if
again in an inheritance situation if you're inheriting an annuity and cash it out or taking it maybe over a five-year payout something like that. You'll want to make sure to report that as income as well and you should have a form that you receive from the financial institution to support it. Social security income could be another source of income for you or your family if you're retired. Self-employment income that's going to get reported on schedule C.
Deb Meyer (14:03.958)
So you'll not only show the income, the cash receipts, but you'll also show the deductions to offset it. There's home office deductions for schedule C filers if you're running the business out of your home. There's lots of different opportunities there again to work with a professional and make sure you're taking advantage of every deduction.
Rental real estate would be another example that's going to get reported on schedule E of your personal tax return. So let's just say you own a investment property and you're getting rental income from it. You have some rental expenses to offset it. That might be another situation again, where it makes sense to have a professional preparer because that's some complexity. I would say the basics that you can handle on your own are likely the W-2s, the 1099s, even
You know, some IRA pension distributions, those kinds of things could still be something well within your reach. But when you're getting into like the schedule C or the schedule E, usually it's best to have a professional take a look. All right, now on the deduction side. So the big question becomes, are you going to take the standard deduction this year or take itemized deductions?
And if you do end up itemizing, it's going to get reported on schedule A of your individual tax return. Now, when I say individual, even if you're a married couple filing jointly, it's still called an individual tax return. So when I'm using that terminology, just know I'm speaking to you, whether you're single or married, whether you're married filing jointly or married filing separately. I'm just using individual more in a broad sense, because that's what it says on the tax return.
Okay, so going back to deductions, the standard deduction in 2025 for the 2025 tax year, it's $31,500 for married couples filing jointly. That number will be increasing in 2026 and the new standard deduction for the 2026 tax year will be $32,200. So not much movement, but it's still a pretty large dollar amount overall.
Deb Meyer (16:21.614)
people who aren't taking the standard deduction, that's, I'm gonna be speaking to you especially because there's a lot of nuances to the itemized deductions for this tax year, for the 2025 tax year. And all of this is part of that one big, beautiful bill act legislation. I did do a separate episode.
a little while ago just talking about some of the provisions of one big beautiful bill act and I will link to it in the show notes if you're interested in diving deeper into those concepts. But I will also mention some of the nuances on the itemized deductions now. So the cap used to be $10,000 for a combination of income tax or sales tax if you live in a state that doesn't have income tax.
real estate tax and personal property tax. There used to be a cap overall of $10,000 that was the most you could deduct on Schedule A. That was part of the Tax Cuts and Job Act and it's been going on for several years now. With the One Big Beautiful Bill Act, I'll just abbreviate it OBBBA.
things change and the cap is now $40,000. So let's say you're in a high income tax state and your income is high. In that situation, you're likely gonna be able to deduct quite a bit more on schedule A of your tax return than you had been able to in 2024 tax year, or I think it was 2018 is when that $10,000 cap came into effect. So it's been multiple years where we've been under this old,
cap and now that's it's like the floodgates have opened and we're lifting the cap to forty thousand a year. Real estate taxes if you're in an area where real estate taxes are large maybe like ten thousand dollars a year again this could be an area where you weren't itemizing in the last couple of tax years but you will be itemizing for the twenty twenty five tax year.
Deb Meyer (18:29.454)
So collectively, again, think about all the different types of tax, whether it's income tax or real estate tax, personal property tax, and those together can be up to $40,000 on schedule A. That rule is going to apply not only into 2025, but it's going for the next couple of years as part of the OBBB A.
The other piece to be thinking about is mortgage interest. So if you own a home where you have mortgage, you're going to be able to deduct that interest again if you're doing the Schedule A itemized deductions. If you're not itemizing, unfortunately you don't really get much of a tax benefit from the mortgage interest. On charitable contributions, there are some really different changes as part of the One Big Beautiful Bill Act legislation.
So I'm gonna do my best to explain each of the nuances there. So in 2026's tax year, you are now gonna have a 0.5 % floor on charitable deductions if you itemize. So let's just say your income for 2026 is gonna be $200,000. In that case, the 0.5 % floor means the first thousand dollars of charitable contributions
will not be deductible on schedule A for you. At the same time though, there is a new rule for 2026 and beyond where let's just say you're a married couple filing jointly, you'll be able to get up to $2,000 of a charitable deduction on a different schedule, a different line item, not on schedule A.
for the charitable contributions that you're making. That's only applying to you though if you don't itemize in 2026. So you can see there's a lot of weird nuances to charitable deductions in particular and whether you're going to be itemizing or taking the standard deduction. So for those who are charitably inclined, who are really generous with their money, stacking charitable deductions or contributions is going to be more important than ever.
Deb Meyer (20:42.434)
figuring out which tax years you're gonna take advantage of the charitable and then which tax years you won't, it's gonna be a much more crucial part of your overall tax strategy, especially if you're a high income earner. So there are some limitations with super high income earners on the deductible taxes, like the income tax, real estate tax and so on, if your income is so high and reaches a certain threshold.
You might be more limited on some of those deductible taxes. But on the charitable side for 2025, if you made a lot of 2025 charitable contributions, you were able to take advantage of that in this tax year and then you might not take any advantage of it in 2026. And then you might swap again in 2027 and take more charity deductions, itemize them.
So there's some practical ways of doing that, but again, I won't get into the details on the podcast. That would be more of an advisory relationship where I'm helping give a very specific strategy on maximizing the charitable giving. All right, another piece of your tax return could be dependent care expenses. And one important distinction there is to look at whether you're contributing to a separate dependent care.
FSA flexible spending account through your employer. So let's just say you are let's say you have $2,000 going into a dependent care FSA in 2025 and you Didn't pay any tax on that. It was a pre-tax deduction and then you took the 2,000 out You know as you were paying these expenses Well that same 2,000 can't go on your tax return as an extra deduction. Otherwise, it would be double counting it
So let's just say your total expenses of dependent care were 3,000. You had 2,000 through that dependent care FSA account. Well, then you have 1,000 that remains that you haven't had any kind of tax break for. That 1,000 you could be reporting on a schedule on your personal tax return. You're not going to get the full 1,000 as a tax credit, but you'll get a percentage of that. I believe it's 20%.
Deb Meyer (23:01.358)
In this case, it would be like a $200 tax credit up on your personal tax return. So again, there's a distinction there between whether or not if you do have dependent care expenses for like daycare or special camps that enable you and your spouse to work, those kinds of expenses are going to be looked at both through the lens of the flexible spending account and then also the ones that weren't paid through the flexible spending or weren't reimbursed through flexible spending that could get an additional deduction. And then the other thing to be thinking about is like health savings account. So if you're contributing to, let's just say you have a traditional employer and you're doing a high deductible medical plan contributing to a health savings account through that employer,
You want to make sure the tax reporting is right when you go and report your W-2 income and then also make sure you have the right contributions and distributions listed on the tax form. So those are going to be the vast majority of items to be thinking about, income deductions and then some of these other supplemental forms that you might be getting in the mail.
The other thing to be thinking about before you file your taxes is a record of any estimated taxes that you paid. So if we're talking now about 2025 tax prep, we're looking at the payments we made for 2025 estimated taxes. That includes any overpayment from 2024, and then also the Q1, Q2, Q3, and Q4 payments. So those Q1, Q2, and Q3 would have been paid in 2025.
And then the Q4 could have been made last quarter or it could have been made by January 15th of 2026. The other thing to be thinking about if you're in a state with income tax is some state specific credits. So each state is gonna be different on like 529 college savings plan contributions.
Deb Meyer (25:17.246)
I used to live in Missouri, and Missouri has a very liberal deduction for Missouri taxpayers who make the 529 contributions, even if it's not to a Missouri plan, it could be to any state's college 529 plan. So their generous deduction was like up to 16,000 on the Missouri return for a married couple filing jointly could be deducted. And that was
an extra little Missouri tax benefit when we live there. Now we live in Florida, so there won't be any kind of Florida tax deduction because we don't have state income tax in Florida. Another thing to be thinking about with specific state credits might be like special charitable donations. So we used to support a charity, a maternity house in Missouri and they had
maternity tax credits available as an extra option for those donations. I think it was up to like $1,000 a year or something. We could get special donation credit. So we would get the benefit of making that donation for both federal tax purposes, but also get an extra benefit on the state side. So again, that would be.
tracking down any documentation you have related to that. And usually there's some extra paperwork associated with those types of special charitable donations. Not every charity is gonna have a specific tax credit in the state, okay? So I hope this has been a helpful overview of the process getting organized for taxes. Again, when you're thinking about working with a professional or not, this is not a sales pitch to have you come work with us. We actually don't do
individual tax prep anymore. We will only do it for our year round clients, just so we keep the number of clients small and make sure we have, you know, real good data to work off of throughout the year because we're already advising them on anything that touches their financial lives. So not a sales pitch for me or my firm, but if you are looking for getting some tax support, you can search for enrolled agents in your area.
Deb Meyer (27:37.582)
I also have a couple of people depending on your geographic area and your willingness to work remotely, I might have some recommendations. So feel free to shoot me an email if you're really having trouble finding someone or you can just do a search, asking around from other friends, hey, do you have a good tax preparer and see what they say. So there's lots of different avenues to pursue but.
this time of year, give the tax preparers grace, know that they're working with a lot of different deadlines. End of January, they were working towards getting 1099s issued for a lot of their small business clients. And then March 15th being a big deadline for small businesses, they likely have small business owner clients where they have either the tax filings or the extended tax filings to do.
Again, anything you can do to be kind to your tax preparer and help set them up. The ordering that I gave on the income and the deduction side, that's all kind of following the same order as what you would find on your individual income tax return. So having it in that order can be beneficial, but if you work with an outside preparer, they likely will have their own tax organizer where they're asking you to upload documents and things like that, especially if they're more of a virtual firm or they're asking you to share the documents bit by bit as you answer the question.
This guideline is more like if you're self-preparing, here are some things to be putting in order, especially if you're doing it through a program like TurboTax, they'll likely ask about it in this order, or this can be something when you're reviewing it and making sure everything's accurately captured, that you have the items in this order so you can see line by line on your tax return where they show up. OK, I hope this was helpful! Let me know if you have additional questions.