May 7

Coffee With Mike- Federal Employee Tax Planning

Tax

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April 15th is fast approaching, and everyone is thinking about January-April 15th as being tax season. And it is true. It's when you gather all your materials, you find out how much money you actually made, what you have to count, or what the IRS is going to count as taxable money. Then you prepare your forms and you get him into your CPA, or maybe you do it yourself you get them into the IRS. As a result of that, you either write a check or you get a check back, and a lot of that has to do with your tax plan. 

So I want to I want to remind you that as a federal employee, your tax planning actually is in October. Your tax planning is when we have open season for health insurance, when we have it there for your Flexible Spending Account. That is really a lot of your tax planning, the best tax planning that you can do. Remember that your health insurance premium is actually pre-tax when you're employed. That's a really important thing to remember. 

Also think about the fact that if you use a flexible spending account appropriately, and assuming you don't have a lot of prescriptions, a lot of added pocket costs already, you can still go through the Flexible Spending Account eligible expense area and find things that you could actually save money on from a tax perspective as you use them. Things you're probably already doing. 

These are things that I think we miss when we talk about, "Well how can I actually get a break on my taxes?" If we're concerned about those taxes but we're unaware of what kind of benefits we have and how they actually help us during tax time, then by the time we get to January, February, March, and April it's too late because we don't have that set up for us for 2021, and we already missed it for 2020. 

"Remember that your health insurance premium is actually pre-tax when you're employed. That's a really important thing to remember."

So this coming this fall, in October and deep into November, I want to make sure that I say to you when open season starts, the 2nd Monday of November, you should have already thought out what it is you can do to take advantage of your benefits that they are offering so that you can lower your tax bill. You might say, "You know that's only $300, that's only $500." Whatever it is, every little bit helps. You know if you were saying that about saving money, someone would convince you that every little bit helps. Remember that that's true about saving on taxes as well. Every little bit helps. 

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