March 12. 2015
It’s that time of year when we perform the annual tax ritual of gathering the prior year’s tax information and attempt to determine our tax liability. For some, it’s a fun time because they know a refund is coming, but for most, the question isn’t if we will pay, but how much we will have to send to the IRS.
The good part of this annual torture is that we are forced to compile all of our data. It gives you, and us, a snapshot of the prior year so we can gain perspective on your actual tax situation instead of just using an estimate. Each spring we use this information to make a long term projection specific to you and your future. I have to admit, as a recovering engineer, the tax code is very intriguing and quite fun to attempt to understand and use in your planning. There can be two very similar situations, and with only a small difference the tax liability can change dramatically.
As you work through this spring, I encourage you to review your financial recordkeeping at the same time. For tax purposes, we suggest keeping the actual tax return indefinitely, but keep only the supporting documents for the prior 6 years. For general financial records (bank, brokerage, credit card, etc.) you should check with your institution because many already store electronic copies for you. At Waterway, we store electronic copies of your quarterly reports and Fidelity statements. You can also access your Fidelity statements through their website at Fidelity.com. Hopefully this gives you some confidence that you can shred some of those paper files to clear some space in the file cabinet.
Spring cleaning can also be refreshing on a personal level. As Bob Goff, author of “Love Does”, says “Thursday’s are for quitting something.” He encourages people to say “no” or quit something every week. The idea is, if you say no to something you’re doing right now, it will open up the door for something new in the future. We all can get in the habit of saying yes to everything in order to avoid hurting someone’s feelings. It can be difficult at first but it gets easier. I like to think of it as a spring cleaning exercise for your time. Find those areas you are passionate about, where you are making a difference, and go all in. For the other areas not working and only adding stress to your life, give yourself permission to stop and say no. It will be ok. By saying no you are actually giving someone else the opportunity to step up, and they will.
Enjoy your spring cleaning and I hope you quit something this week!