Tax Time Tactics: Extensions, Payments, & Contributions

Announcer:
Hello, everyone. Welcome to the Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.

Jarrod Bridgeman:
Hello and welcome to the Millionaire Dentist. I'm your host, Jarrod Bridgeman. Casey is out of town working some events and meeting some dentists and spouses, and specialists as well. In store today I have for you folks out there, I brought in Steve "Pipes" Levy. He is a CPA. He is a JD and he's in charge of all taxes. I'm pretty sure he's the boss of the IRS. Is that how that works?

Steve Levy:
No, you know it.

Jarrod Bridgeman:
That's right. That's right. I've got a brand new guest for you folks. You may have seen him on the website. You scroll down and you see a really handsome lad. I've got Brodie Hough here. He is a CPA as well, and also deals a lot with accounting, obviously, and working with our clients and trying to help our people save on their taxes, earn more money, and all that kind of stuff. Today, we are going to talk about obviously taxes, which are due, were going to be due next week on the 15th, which I believe is a Tuesday.

Steve Levy:
That's right.

Jarrod Bridgeman:
Steve, my first question for you is, should I start working on mine?

Steve Levy:
Please. I mean, it just depends on your timing, really.

Jarrod Bridgeman:
Right, right, right.

Steve Levy:
You don't want to cram something in and get all panicky on it.

Jarrod Bridgeman:
Right. That's a good idea. I don't do well with panic, so maybe I should start tonight pulling all my receipts and looking at my mileage, and all those kinds of things.

Steve Levy:
Sure, yeah.

Jarrod Bridgeman:
All right.

Steve Levy:
Absolutely.

Brodie Hough:
Absolutely.

Jarrod Bridgeman:
Brodie, for those of you who don't know you yet, give me a little spiel, a quick little elevator pitch on why you're so great.

Brodie Hough:
Why I'm so great? Hold on. A quick one, that's a little tough there but-

Jarrod Bridgeman:
20 seconds or less.

Brodie Hough:
I graduated in 2019 from Anderson University, local Indiana. Got my CPA pretty quickly after that. I've been in the tax world ever since I graduated and I actually did a couple internships on the front end before I graduated with taxes, too. I've been in the realm ever since I've really been in accounting aspect.

Jarrod Bridgeman:
It seems like you quite enjoy it.

Brodie Hough:
I do. That's not common, but I definitely do, and that's why Four Quadrants is such a great fit on the back end, too. I started in a normal public firm, was working those 60 to 70 hour weeks.

Jarrod Bridgeman:
Ugh, right.

Brodie Hough:
Yeah, not great. But now with the work-life balance that Four Quads provides, and then also being able to stay in the taxes and be able to help people out that way, save money through all the nooks and crannies you can find through tax code and everything, it's really enjoyable.

Jarrod Bridgeman:
Yeah, and what I think it's great for the both of you as well, our listeners know that we have clients that come in annually for their yearly planning meeting and both of you guys get to actually work hands-on and meet our clients and their spouses. Can you just do a quick little cover of how that's, especially for you, Brodie coming from a churn and burn kind of a situation previously, how does that alter your work? How does that make you feel, they're not just a number on the screen?

Brodie Hough:
No, absolutely. I think that sums it up perfectly, not being just a number on the screen or it's one of the hundred plus clients that you can have on the 1040 side with a typical CPA firm that are under your belt. They're just okay, tug and turn, that's all that matters. You don't get to know the person behind what's on their 1040. That's how you know the person and you might be lucky enough to meet them once a year for a 15-minute meeting, and they don't want to be there. They're just ready to sign it, get their money back, or just write the check that they need to write. I think that's a very unique experience that we have here is getting that one-on-one relationship with all the accounting side, the planning side, the marketing side, and everything that we're able to get our hands on, not on, but with-

Jarrod Bridgeman:
You just straight up grab the client.

Brodie Hough:
Yeah, just straight up.

Jarrod Bridgeman:
Yeah. I mean for real, some of them do hugs.

Brodie Hough:
In your face, yeah.

Jarrod Bridgeman:
I mean, I've got pictures of Steve getting hugged by various people.

Steve Levy:
Excellent.

Jarrod Bridgeman:
Steve, getting to the topic that you sent me and you said that everybody in the world definitely needs to hear this, they're going to be super excited about this. Let's talk about our taxes. Can we start with the audit risk in terms of the IRS may choose to audit you if you're riskier in their eyes or not? Let's start with that in terms of maybe extending or extensions in terms of that.

Steve Levy:
Yeah, it's a debate in this area where you hear sometimes you should extend and that lowers your audit risk or you shouldn't extend and that lowers your audit risk. There's been really nothing proven either way, and the IRS certainly wouldn't tell you that, "Okay, extend. I'm good," that kind of mentality. But really, in our experience, we haven't seen anything either way. It's okay to extend, it's not the end of the world.

Jarrod Bridgeman:
But if you can get it done on time, get it done on time.

Steve Levy:
Sure, yeah. If it makes sense too, then sure, you can certainly do that.

Jarrod Bridgeman:
I'm not a big fan. I used to be this way in terms of procrastinating, but pushing problems out for my future self, my future self is like, "Damn it."

Steve Levy:
That's not good.

Jarrod Bridgeman:
Yeah, that's not good? Brodie, in terms of what Steve just said, are you pretty much in line with that as well, that extending and not extending does not really increase or decrease your audit risks?

Brodie Hough:
No. Yeah, 100%. There's no backing anywhere, any data that would back that kind of conclusion for anyone. If you are hearing that from an accountant or from a CPA, that it's probably just an excuse, that they might have too much on their plate at the moment to get it done before the normal deadline which, again, like Steve said, it's not bad to extend. It's not like a penalty or anything in that aspect.

Jarrod Bridgeman:
No, and if it's something you actually need to do and is warranted, it's different.

Brodie Hough:
Right. If you don't have some aspect of your individual taxes that isn't done yet, like a business or something you own that you need to wait for some tax documents for, it's completely understandable. But if you do have everything I usually lean towards or lean towards going, let's get it done when we can.

Jarrod Bridgeman:
Less headaches.

Brodie Hough:
Less stressful. Yep, exactly.

Jarrod Bridgeman:
Steve, when extending the tax return, extending that out, how does that change or not change? How does that change when your due date for the payments of your taxes?

Steve Levy:
Yeah. One key aspect of that is that extending the due date for the tax return does not extend your due date for actually paying in because if you do have a balance due, then once you extend and get past that initial due date, then the meter starts running for the IRS.

Jarrod Bridgeman:
You can already start getting, I don't know if fines is the right word- but start getting something tacked on even though you've not really finished your taxes.

Steve Levy:
Right. It's really a form of interest mainly, but there is a failure to pay. Now, if you didn't extend and you owe money, then failure to file gets tacked on, too. So make sure you're filing that extension, or else there's another penalty add-on.

Jarrod Bridgeman:
Gotcha. Brodie, in terms of, let's say there's someone listening out there and their CPA or their regular accountant, whoever they've got has been trying to extend this stuff, and let's say they got it done on time and they realize they have a big bill due. Is there a way for someone to help ease that pain of that in terms of not just having to pay everything on the 15th?

Brodie Hough:
Yeah, absolutely. I think that's part of the extension process, if you can still extend when there is a balance due and just pay part of it, if that's the only way or there's even on top of that, you can go through the IRS. They have different ways to do payment options that will not have any of that interest accrued on it.

Jarrod Bridgeman:
Because you're promising to make payments on it.

Brodie Hough:
Correct. That's definitely a route you can take if you do end up having that huge balance and you just don't have the cash fund right there in the moment to pay it. That's definitely an option, for sure.

Jarrod Bridgeman:
I mean, we've got people out there, and we have clients came here because they had such large tax bills because their accountant wasn't doing the right thing. I know it's a very, very sore subject, even if on my personal taxes, if I own anything, even if it's 20 bucks, I'm like, "This sucks." But 20 bucks is a lot better than either way.

Brodie Hough:
Oh, yeah. I mean, there's been cases where we've seen where it's thousands and thousands that they owe because there was no tax planning on the front end for clients that we've had come in. So yeah, $20 isn't that bad compared to that.

Jarrod Bridgeman:
Right, right, right.

Brodie Hough:
But obviously, we avoid that at all costs, on our side, too, with the tax planning aspect.

Jarrod Bridgeman:
Steve, how easy is it for me to make up children to add as dependents?

Steve Levy:
Make up children?

Jarrod Bridgeman:
Yeah.

Steve Levy:
Yeah.

Jarrod Bridgeman:
Fellows, in terms of HSA contributions for the previous year 2024 for your taxes, does that need to be taken care of prior to the new year, or is this something that's still viable in terms of the deduction?

Brodie Hough:
No, that is absolutely not the case that you don't have to make your HSA contributions before the year-end of that year. For example 2024, you didn't have to make it before the end of 2024. You have till April 15th to make that contribution to get the max out.

Jarrod Bridgeman:
Is that date not affected by any extensions that get approved?

Brodie Hough:
If you do end up extending, you actually still that April 15th is a hard deadline for the HSA. That is something that is worth noting. If you end up extending, you still need to make sure you have the HSA contribution figured out so you can get the max deduction you can on your personal account.

Jarrod Bridgeman:
You need to have it time-stamped by the 15th, but it still comes into play when doing the taxes if it's extended.

Brodie Hough:
A hundred percent.

Jarrod Bridgeman:
Okay. Got it, got it, got it.

Steve Levy:
If you haven't maxed it out, it's a great way to get that additional tax benefit before you're actually filing. You're going to use the health funds for something, certainly. It's really one of the easiest benefits to get tax-wise.

Jarrod Bridgeman:
This might throw you for a little loop here, and it maybe it's just state-based, but I know in Indiana there is that fund where you can deposit money for your children. Is that something else that's also you have till the 15th to do?

Steve Levy:
Yeah, in general, that's the case, yeah.

Jarrod Bridgeman:
Okay, okay. That's something I think is state-based you may want to find out what your local state laws are on that.

Brodie Hough:
Correct. I would say correct on that.

Jarrod Bridgeman:
Okay.

Brodie Hough:
I think most states are the April 15th is the deadline for-

Jarrod Bridgeman:
It's relatively standard.

Brodie Hough:
... 529 accounts if that's what you're referring to.

Jarrod Bridgeman:
Thank you. Yeah, yeah. I just throw money at it.

Brodie Hough:
But that is something that is smart to confirm with your state just to make sure. But in most cases, it is April 15th.

Jarrod Bridgeman:
Going off this whole not maxing your contributions out, how does IRAs play into this? We're not talking about the Ireland Republican Army.

Steve Levy:
Right. Absolutely. Definitely not.

Jarrod Bridgeman:
Okay. My understanding of that's way different than that.

Steve Levy:
Individual or retirement accounts.

Jarrod Bridgeman:
With these IRAs, these individual retirement accounts, can you talk me through why someone would want to consider that and how that happens?

Steve Levy:
That's another kind of deadline situation where you can have it apply to the prior year but still get it in and max it out by April 15th. Now, there might be a situation where you may not be able to deduct it because you've too much income, or in a rough IRA situation, you may actually not be able to contribute it because you're making too much money. But it just depends on your individual situation. But if you are eligible and you have really an IRA plan going already, it's not a terrible idea to go ahead and get another tax benefit before the deadline to get that in.

Jarrod Bridgeman:
Okay, to really get that down. If you have questions about whether you make too much or not too much, speak with your accountant or CPA. If they don't have a good answer for you, it's time to start looking for a new one. Brodie, I know we're talking about last year's taxes a lot because that's the big thing that's due. But looking forward, I know there are quarterly estimates are due obviously four times a year for 2025. When is the deadline for quarter one of 2025?

Brodie Hough:
That's a great question because it's actually coming up pretty quick as well because it is also April 15th. April 15th is just a great deadline for many different things within the tax realm. That is something that if you do have an accountant or CPA that does your tax planning, that would be definitely something you want to reach out to them about because that is obviously next week. So definitely worth looking into because I believe you guys have hit that actually on a previous podcast here that how important those estimates are for tax planning and getting down to the line to you're filing your tax return and having a nice number to look at and not owing tons of money or being way overfunded, too.

Jarrod Bridgeman:
What's something we should tell our listeners who are not currently doing quarterly estimates? What's a piece of advice for them on that? Is that just reaching out to your team?

Brodie Hough:
I think so. I think whoever-

Jarrod Bridgeman:
Or asking why you're not doing it?

Brodie Hough:
Right. There is times when you probably aren't within the right income threshold to be, it's not worth making those payments because you don't owe a lot. It's really mainly for those business owners that have this outside income other than your normal paycheck and all that, that you're not withholding anything on any income-wise. That's definitely where, if you have that type of income and you're not making estimates, you probably could make your life a lot easier when it comes to the filing deadline to make that payment a lot easier to handle.

Jarrod Bridgeman:
And it's less likely to have a large tax bill come the next April.

Brodie Hough:
Correct, correct. Because you're pretty much just going ahead and paying or withholding some of the taxes from your passive income.

Jarrod Bridgeman:
Got it. It's like a non-fund layaway.

Brodie Hough:
Yeah.

Jarrod Bridgeman:
Yeah.

Brodie Hough:
I like that. I like that.

Jarrod Bridgeman:
Steve, not getting political here, but we've got a lot of layoffs and firings and things. Has this affected the IRS, and has that affected people's abilities to file on time?

Steve Levy:
I would say so. I mean, it's one of the priorities for April 15th, but there's a lot of other things going on, certainly.

Jarrod Bridgeman:
But the idea is still to try and get time stamped on time.

Steve Levy:
I would say so. You can file online. You can easily get it in, get proof you've filed and things. Another fun thing about April 15th though, is there's a lot of freebies out there on that day.

Jarrod Bridgeman:
There are?

Steve Levy:
Yeah, like restaurants and fast food. You can go around. There's all sorts of deals.

Jarrod Bridgeman:
I was going to say, this year, it falls on Taco Tuesday, so I was going to [inaudible 00:15:10].

Steve Levy:
Oh, boy. I can see that happening. Taco Bell coming out with something.

Jarrod Bridgeman:
Are there any last wrap-up moments that you guys want to really tell our audience?

Steve Levy:
Just don't stress over the deadline. If you can't make it, don't try to throw a bunch of information in there and see if it sticks. File the extension; don't panic over filing an extension. If you can reasonably get it in in time, go for it. But don't panic.

Jarrod Bridgeman:
Isn't that a line from Hitchhiker's Guide at the Galaxy, you know, their whole thing, "Don't panic."

Steve Levy:
Yeah.

Jarrod Bridgeman:
Grab your towel. Folks, if you're out there listening, obviously, you are because you're here right now. We are heading out to a bunch of new cities coming up soon. Our team of speakers are going out there to educate and provide CE that's pay certified. We usually tie that with food. We tie it up with the bourbon tasting. If you're interested in learning more, register on fourquadrantsadvisory.com/events. We're going to be in Louisville, Kentucky, Lexington, Kentucky. We're going to be in Columbia and Charleston, South Carolina. We're going to be out in Salt Lake City. We're going to Boise, Idaho. We're going to be in all kinds of places and we don't take a break. We never stop. We work hard for our clients and we work hard for our students, people that are out there, practice owners that come and listen to us. Steve, thank you so much for coming on. Brodie, you were better than I expected.

Brodie Hough:
Oh, good. Yeah.

Jarrod Bridgeman:
I might invite you back again.

Brodie Hough:
Oh, awesome.

Jarrod Bridgeman:
Really appreciate it and hope you guys have a great day. Thanks.

Brodie Hough:
Thank you.

Announcer:
Hello, everyone. Welcome to the Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.