In this episode, your host Eric Rosenberg is joined by special guest Whitney Hansen, a renowned personal finance coach and host of the Money Nerds podcast. Together, they delve into the intricacies of tax season preparation, sharing invaluable tips and strategies to help you maximize your tax refunds and streamline the filing process. From staying organized year-round to making informed decisions with tax refunds, this episode promises to equip you with the knowledge and tools necessary to navigate the complexities of tax season with confidence.
Here’s the recap of today’s 15-minute episode:
Listen below or read the transcript that follows.
Eric Rosenberg:
Hello, this is a friendly reminder that today’s episode is intended for education and entertainment purposes only and should not be considered financial or legal advice.
Hello, my friends. Welcome back to The Good Cents by Payactiv Podcast. As always, I am your host Eric Rosenberg, and I’m really excited about today’s topic. It’s something that I love because I think of myself as a money nerd and that’s taxes. We want to talk today about what you can do to get your tax refund as early as possible and make that filing experience as easy as possible, and then we’ll dive into some tips on what to do once that tax refund does show back up to help you make the most of it.
Our guest today is my very good friend, Whitney Hansen. She hosts a financial podcast of her own. We’ll chat about that a little bit at the end, and she is a wealth of knowledge when it comes to fixing up your money. So let’s dive in. All right everyone, I am here with my very good friend Whitney Hansen. Whitney is a personal finance coach, so she’s helping people with their money all the time. She also owns a couple of Airbnbs that are really fun up in Idaho in her neck of the woods, so I’m super excited to have her here on the show. Welcome Whitney.
Whitney Hansen:
I am so excited to be here and to talk about all things taxes, so this is going to be fun.
Eric Rosenberg:
Totally. I mean taxes, who doesn’t love tax season? I guess a lot of people don’t love tax season. I love tax season because it’s a time that I can look back at how much money I made through the year and I feel really good about it. I can say, yeah, this is how much I made. I get to make these clean forms that tell me my year’s financial history kind of. It’s like put one in the books and start focusing on the next one.
Whitney Hansen:
I love that we are exact opposites. I despise tax season.
Eric Rosenberg:
I think most people don’t like doing their taxes. I just think it’s kind of cool because of that roundup feel of knowing what’s going on with my money. So we’re here to talk about five tips to make tax season simple, so to make it easier on you. So maybe if you dread tax season and you can dread it a little bit less and tips to maximize your refund, if you get that refund back from the IRS or from your state, you don’t want to squander it, you don’t want to waste it. So we’re going to dive in with a first tip and that’s something that I like to do to make taxes easier when I sit down to do them and that is to stay organized all year round. What do you do to organize your tax forms? I know you get some online probably you get some in the mail. How do you keep your tax papers organized?
Whitney Hansen:
What I generally do, Eric, is I will take all of those forms and I will take either a picture of it if it’s a physical copy that I got in the mail or if it’s a virtual copy, I’ll download it and I will put all of that into one singular folder on my desktop that I will label for that tax year. Now you can actually add a password protection on there too, so if that makes you a little bit nervous and you’re like, oh my gosh, I don’t want people to get into my documents, you can still do that too, but that’s one of the ways that I just aggregate all of those documents in one place so when it comes time to file, it’s not such a hassle to go through all of the emails and records trying to find those documents.
Eric Rosenberg:
Yeah, that’s great. I actually do the same thing for my digital forms. I get ones from the bank or the investment company or someone like that. I’ll download it. I have on my desktop a file right now that says 2023 taxes and every year I make a new one and then I have a log or kind of a backlog place where I store them all after, so I can always go back and see my 2020 taxes or my whatever year taxes. For the paper forms, I actually in my file cabinet over there have two paper folders.
I’m old school, I use manila folders. One of them says taxes/receipts, and that folder is older than my kids. I’ve been using the same exact folder for a decade and any tax receipts I get throughout the year because I might make a donation or buy something that is tax-deductible. I always put those receipts in throughout the year and then I make another manila folder when tax forms start to come. So this one will say 2023 taxes. So I have the paper folder and the digital folder, and that way I know I have everything at my fingertips.
Whitney Hansen:
That’s very smart. I have to share this app that I recently came across that I started using for my different businesses. It is called SimplyWise and it’s a little bit of a pricey piece of software if you’re going to use it, but essentially it takes a picture of your receipts and it will show which card it was purchased with and which category it belongs with. So just another way to organize, but if you don’t want to spend the money for an app like that, you can simulate this with your notes app on your phone so you can still scan documents and you can kind of do the same type of thing and add your notes underneath each of the scan documents. So it’s not something that you have to pay for, but it is nice if you find a good piece of software.
Eric Rosenberg:
Yeah, yeah, definitely staying digitally organized is so important these days.
Whitney Hansen:
And so hard.
Eric Rosenberg:
I have a lot of folders on my desktop. I’ll say that.
Whitney Hansen:
Me too.
Eric Rosenberg:
So next up, something that I think is important to do ahead of tax season, but you can still do it during tax season is researching deductions and credits. If you do your taxes yourself on the computer or if you use a tax expert, they might not know everything about your financial situation. So by you being a little bit more proactive, you could go find that specific deduction or credit in the tax app and find out, do I qualify for this one? And it’ll do the hard work, but it’ll walk you through it and if you have a person that helps you with your taxes, you can say, hey, I think I might qualify for this one, can you check? And they’ll do the research and let you know what you need to know.
Whitney Hansen:
That’s the perk of having a CPA is sometimes if you aren’t sure of something, they can also ask you those questions versus online software. It might get missed, but I like your point, Eric, of taking that accountability to do a little bit of research to see what deductions and credits you might qualify for and really taking that ownership of your tax situation too. I think that’s a really good tip.
Eric Rosenberg:
And there’s a couple of programs if you want the help of a professional tax preparer that don’t have the budget to hire A CPA. There are some programs for people who have up to a certain income level for their household that you can get someone to do your taxes for you for free and they will explain everything on those tax forms that they put together for you. So it’s like a free tax preparer. It’s an awesome benefit. It’s a great program. If you Google, make sure you go to a .gov website, that’s how you know it’ll be legitimate. Help have my taxes done for free and you’ll find all those resources.
Whitney Hansen:
Yeah, irs.gov for all things tax information. That’s the resource that I personally use all the time for navigating deductions and credits and seeing what’s legitimate. That’s the site to bookmark.
Eric Rosenberg:
Yeah, it’s super wordy. Sometimes you might have to take a minute to try to turn it from IRS language into English that you understand, but it’s well worth it. I’m on that website way too often.
Whitney Hansen:
I bet you are.
Eric Rosenberg:
Our next tip is to start work on your tax return early. That doesn’t mean you have to turn it in early, but starting early gives you plenty of time so you don’t feel that rush at the end and maybe make mistakes. Have you already started your taxes for the year Whitney, or are you a last minute one who does it in April?
Whitney Hansen:
It depends on the year. This year I’m actually on top of it, so I spent an entire weekend just going through and trying to prepare everything and it wasn’t fun, but it does feel good to have it all organized in that one folder on your desktop. It just makes the process so much easier and less overwhelming. So give yourself a little bit of time, block off your calendar to go through and really get a good assessment of all of your expenses for the year to see. Do any of those qualify for these deductions and credits like we talked about earlier, the way to stay prepared and to optimize your returns is to make sure that you are spending the time to get this stuff done.
Eric Rosenberg:
Yeah, a perk if you finish your taxes early, let’s say you have a simple tax return, maybe just a little interest from a bank account and a W2 from work, you might be able to get your taxes done really quickly and if you get your taxes done earlier, you are at the front of the line to get your refund. The IRS processes tax returns as they come in and even though it’s done by a computer, their computers sometimes can be slow. Sometimes it can take weeks or even months if you have really complicated taxes for everything to come through. But if you get your taxes done early, that means you’re going to get your refund earlier if you’re expecting a refund. So don’t delay if you want to get that refund in your pocket.
Whitney Hansen:
Yeah, I agree. It’s a great way to go and if you get that refund, it just helps you get that money back in your pocket sooner and it all comes down to organization.
Eric Rosenberg:
Yeah, totally. So now we’re going to switch gears a little bit on this next tip. So let’s say your taxes are done, they’re filed, and you have that refund coming in. Whitney, what would you say is a tip for when the refund arrives?
Whitney Hansen:
I think it depends on your situation, but for most people, savings have started to diminish over the past couple of years, and so really giving yourself an honest assessment of what does your emergency fund look like at this exact moment? And I know it’s not fun, but if it’s not to a place where you feel comfortable, where if you were to lose your job, you can still pay your bills. If you’re not to that position, consider putting your refund into a high yield savings account, something that earns a little bit more than 4% generally, and that way your money is earning a little bit, but it’s there for those rainy days when they do come up. So that’s a great thing to do with your refund if you can.
Eric Rosenberg:
Use the Payactiv app, if you have a Payactiv account, you can automatically save a part of your paycheck on a regular schedule in a saving goal1. You can put different little accounts, subaccounts together in the app. So you can start an emergency fund right there with Payactiv and if you are not using the Payactiv app, you should sign up. It’s really great. But making sure you have an emergency fund is so important. Most people should usually have enough cash to survive three months roughly if something happens because maybe you get hurt and you can’t go to work or like Whitney said, sometimes people lose their job.
You might get laid off. It’s not even your fault, but it happens to people. So if you are able to save up three months of expenses, that’s ideal. And I know that’s not always easy to do, especially if you’re on a tight budget, but if you can just start by putting away $5 a paycheck, $10 a paycheck, that helps build the emergency fund. And if you get a tax refund, that’s like savings that has already been done for you, so you can just put that refund right into an emergency fund and it’s a backup plan, so don’t squander your refund. Use it to improve your finances, and if you have any high interest debt like credit cards, you can use it to pay those off too, because that will save you money for many, many years to come. If you can get out of credit card debt.
Whitney Hansen:
That is one of the best things to do in the world for yourself is that credit card debt is so hard to get out of. It feels very heavy. And so maybe if you’re in a situation where you don’t have an emergency fund and you do have credit card debt, maybe you split your refund, you do a little bit towards emergencies and put the most of it towards the credit cards to get those paid off. There’s lots of ways you can approach it, but I think really as Eric mentioned to not to squander that refund, really let this money be a blessing in your life and let it work for your financial goals.
Eric Rosenberg:
Way back when before I was self-employed, I usually got a refund like most people do, and I always use them to pay off debt. Back then I had student loans, I’d put it towards student loans and that helped me pay off my loans early or I’d put it towards my car loan so I could live without a car loan payment. Putting it towards debt is one of the best things you can do, but if you don’t have any debt, awesome, high five for you, then it’s time to turn it into savings and investments.
Whitney Hansen:
Yeah, absolutely. I think that’s a great tip.
Eric Rosenberg:
So last but certainly not least is to have regular tax planning sessions and we’ll explain what that means. So a lot of people wait until tax season arrives to start thinking about their taxes and to start gathering their paperwork and whatnot, but you could sit down throughout the year, maybe once every few months or even a couple of times a year, sit down with yourself if you file taxes single or if you’re a single filer or with your spouse or partner, if you file jointly and think through what your tax situation looked like last year, do you need to put more money away to avoid having to pay? Could you have a little bit less taken out of each paycheck so your refund might be smaller, but that’ll give you more money throughout the year so you can row your paychecks that way? What else would you think about during a tax planning session, Whitney?
Whitney Hansen:
I would start to project forward how much I think I might earn for that year. And so maybe think about your situation. Maybe you took on some extra work. Maybe you started doing some on-demand delivery or picked up some side hustles and it was a 1099 style job where taxes weren’t withheld from that income. That’s a really good indicator that you should probably sit down and at least get an honest assessment of how much your income is going to be increasing.
So then you can go to some different calculators or talk to a tax planner or a CPA and they can help you get a better idea of what that might look like from a tax liability standpoint, AKA, how much you’re going to owe on that income. So that’s a really good thing to do and just get into the habit of. Anytime a life change comes up, maybe you just had a new baby, your situation has changed a little bit. So any of those life circumstances are also good cues that it’s time to sit down and put that on paper so that you don’t forget certain things when you talk to a tax professional.
Eric Rosenberg:
Yeah, that’s awesome. Yeah, thinking through those life changes. A perk of having kids, well, it costs a lot of money to raise kids, it saves you money on your taxes. There’s a lot to think through there. If you get married or divorced during the year, that also has a dramatic change on your taxes. So yeah, think through all that and it’s a good thing to plan ahead as you’re staying organized year round, you’ll know what to expect, and tax season can be a breeze.
Whitney Hansen:
That’s the goal, right?
Eric Rosenberg:
Yeah. So if anybody wants to connect with you and learn more about what you’re doing, Whitney, where should they go?
Whitney Hansen:
The best place is the Money Nerds podcast. I hang out there at least twice a week and I talk to really cool people like Eric to learn a little bit more about their insights to financial success and what they’re doing and weird side hustles. I love talking about all elements of personal finance, and we do that on the Money Nerds podcast.
Eric Rosenberg:
Awesome. We’ll definitely go check that out in Apple Podcasts or wherever you’re listening to this, you can find Whitney’s podcast there. Go check it out and encourage you to subscribe. It’s a fun show.
Whitney Hansen:
Thank you, I appreciate it.
Eric Rosenberg:
Thank you so much, Whitney, for taking the time to hang out and chat taxes with us today. Hopefully we’ll have you back to talk money nerd topics again sometime soon.
Whitney Hansen:
I would love to. Thank you so much for having me.
Eric Rosenberg:
Well, that was a really fun conversation. I’m glad we had a chance to have Whitney on the show. She’s so knowledgeable when it comes to all things personal finance, so definitely check out her show and make sure you’re subscribed to this one as well. Also, if you’re not already, as we mentioned, the Payactiv app2 has features that can help you save an emergency fund and get prepared for your financial future. It’s a robust financial wellness platform. You should definitely check it out. And if you don’t already have it at work, tell your HR department or your CEO. We want the Payactiv benefit. It works very easily with many payroll systems and it’s quick to get up and running. Thank you so much for listening with us till the end. Also, a little quick tip. If you have the Payactiv app, you can get a discount on TurboTax, so if you’re doing taxes yourself, you can save a little money there right through the Payactiv app. Thank you all so much for listening to the end, and until next time, keep living the life you’ve earned.
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