Episode 62

It’s April! What should I be doing about taxes?

April 1, 2024

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Welcome to The Retirement Tax Podcast, where hosts Steven Jarvis, CPA, and Benjamin Brandt, CFP, work together to bridge the gap between tax professionals, financial advisors, and their mutual clients to help reduce most people’s largest expense in retirement: taxes. Each week, they will dive into conversations around taxes, focusing on what you can truly control (instead of what you cannot) and how to set yourself up financially for your future.

Benjamin Brandt is back on the join this week and rejoins Steven Jarvis to talk tax topics that are relevant in April. Whether you’ve already filed your return or still need to get it across the finish line the guys have some great information for you. They also dive into what it means to file an extension and when it makes sense to do just that (spoiler, Steven regularly files an extension for his own taxes). And they cover some of the things you should be on the lookout for before you get your heart too set on amending a return.


What You’ll Learn In Today’s Episode:

  • Why an extension to file and an extension to pay are NOT the same thing
  • Factors to consider before you rush off and amend a tax return
  • How to start thinking about planning for the rest of 2024.
Ideas Worth Sharing:

“Filing an extension is not an automatic red flag for getting selected for audit. Lots of people file extensions. It’s a common thing to do. The bigger issue is are you making the payment when it’s due?” – Steven Jarvis

Anything that you would encounter in the world that makes other people nervous or it’s high stakes or there’s a lot of unknown information or barriers to entry, informational barriers to entry is potentially a lucrative career.” – Benjamin Brandt

“I would strongly encourage you that you don’t just immediately rush out and amend your return.” – Steven Jarvis

Resources In Today’s Episode:
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Read The Transcript Below:

Ben (00:08):

Welcome back to the Retirement Tax Podcast, AKA the Least Boring tax podcast. I’m your humble host, Benjamin Brand joined as always by an international man of mystery, Steven Jarvis. Steven, how are you doing today?

Steven (00:20):

I’m doing really good. Ben, welcome back to the show. I know our listeners have been anxiously waiting for you to come back and balance out the nerdy CPA talk as we went through tax returns last couple of weeks.

Ben (00:31):

Oh yeah. Well, I wish I was doing something like international man of mystery style intrigue so people could think that I’m like an undercover CI agent, but I was doing financial advisor stuff. We are, every once in a while we bring on new clients into the firm, and that’s kind of all hands on deck intensive. This actually kind of brings me to what I want to talk about this week’s episode is we’re bringing on, by the time this airs, they’ll already be on about 10 new clients in the first quarter of 2024. And you being our go-to answer man for all things taxes, you’re going to be doing a lot of their income taxes. So what happens when we bring on new clients to a new tax advisor, sort of close to tax time? What are some options that I myself or other people might have? 

Steven (01:13):

So it’s a great question. I’m glad you’re asking it proactively because a lot of people don’t ask the question and then they make up expectations in their head, and that’s a good way for all of us to be disappointed. So I just like to lead with really a lot of transparency on this. So as we’re recording this, we’re already into February and typically for our team, once we get into February, we start setting the expectation that for brand new clients it’s, Hey, we’re more than happy to work with you to get this year’s tax filing done, but most likely we’re going to extend your return to make sure we have time to really understand your situation and get all of your tax documents and then go ahead and file your tax return after the April 15th deadline. That way we create a situation where we can still serve our existing clients in a really quality way, and we don’t leave new clients in a situation where they’re questioning whether they’re going to get help, and we know when that timing’s going to happen.

Ben (02:03):

Okay. So is it pretty common to file an extension? Do I have to pay some taxes or some interest? What are the pros and cons of that?

Steven (02:12):

So extensions are an interesting topic because for people who have never done one before, usually the impression I get is that people find them scary and painful and this terrible thing that they should always avoid, which I get. I mean, anything we can do to stay in the good graces of the IRS I would recommend doing, but extensions are not inherently a negative thing. This is just part of the administrative process. This is one of the options the IRS has given us. So personally, I have to wait for K1s every year, so I extend my return every year. That’s just my normal process. That’s true for a lot of business owners or people with investments that are going to produce K1s because K1s are notoriously late when they come in. So extensions are not inherently bad, but the one big trade-off to an extension is even though filing an extension doesn’t put a black mark on your IRS record, the IRS says, sure, we’ll give you extra time, but we still want our money. And so your tax payment for the year is still due by April 15th. It has to get paid along with your extension, which can be challenging because if you’re extending your return, you probably don’t know exactly what your tax bill is going to be. So at that point, you’re making your best guess of how much you should pay with your extension to give yourself time to finalize the tax return, but it doesn’t give us extra time to make the payment.

Ben (03:34):

So if we’re meeting with clients at the end of the year and we’re forecasting where we think their tax liability is going to be and we’re catching them up, that probably sets us good for April 15th for the traditional deadline. If we need to extend, are we then written in stone to fill out our taxes or file our taxes in October? Or what kind of leeway do we have? Could if we’re just going to be a day, do we do an extension? What are the parameters for that?

Steven (03:56):

So again, some of this is a preference for me. By the time we get to the beginning of April, I start leaning much more heavily to let’s extend as opposed to let’s force them through at the last minute. Now, I’m still filing returns up until about a day or two before the deadline. I almost never push returns through on the deadline because again, I don’t want this fire drill right at the last minute. Bad things happen when you do that. So for individuals, which is what we talk about on this podcast all the time for individuals, the initial filing deadline is April 15th every year if we file for an extension, it extends it out to October 15th. But just like the initial deadline, that’s the very last chance we have to file and still be a timely filer. Again, for me personally, I still want to get returns done as early as practical, and so we might get to that April timeframe and say, you know what? Just to give ourselves some cushion just to make sure we don’t create a fire drill. We’re rushing and miss something, let’s go ahead and extend. But I mean, I filed returns the week after the deadline. I file a lot of returns in May. Personally, I don’t want to wait until October to file the return. Even if we extend it, because we talk about it on this podcast all the time, I want to be able to move on and focus on planning for the future as opposed to getting stuck on what happened last year.

Ben (05:08):

Okay, now let’s say I have to file an extension. Do I have to do what I did when I was a kid and I wanted to call in sick to school, I had to fake a cough or something like that? What do I need a good excuse or I can just file an extension for any reason I didn’t have time to work on it. Or a lot of our clients are traveling, they’re in Europe. Do they need to hurry up and get it done before they leave or would an extension be fine?

Steven (05:28):

Yeah, so again, this is just part of the IRS’s normal process. We don’t need excuses. There aren’t a list of pre-approved reasons. We can just say, yep, I would like an extension to file. And so I think that was kind of the trade-off when Congress made this rule was great. Rather than have you jump through a bunch of hoops to file the extension, we’re just going to ask you to pay the money now, and if you don’t pay the money now we’re going to charge you interest on it. And oh, by the way, just in case you had forgotten that the IRS is always out for themselves, they won’t give you your refund early. So if you are filing an extension and you’re expecting a $50,000 refund, they’re not going to go ahead and give that to you on April 15th. They’re not going to give you any portion of it until you actually file your return.

Ben (06:09):

Interesting. Okay. So if I owe them money, they want it now, if they owe me money, they’ll get it to me eventually. 

Steven (06:15):

That is exactly how that works. 

Ben (06:16):

That actually does kind of make sense. So if I could maybe try to, this is very different than other parts of maybe our financial life. So if I owe money on my credit card and I’m late, my FICO score goes down because it’s letting other credit reporting agencies and people that would be looking at that. Maybe I’m not a great borrowing risk, but if I’m a habitual, well habitual almost makes it sound negative, but if I consistently file extensions, does that make it more likely that I’m going to be audited or something like that?

Steven (06:42):

The exact parameters of how people get picked for audits is a little bit of a kind of closely guarded secret by the IRS, but thankfully there are some people out there who track the data and we can see who gets picked. And from everything that we can see, filing an extension is not an automatic red flag for getting selected for audit. Lots of people file extensions. It’s a common thing to do. The bigger issue is are you making the payment when it’s due? In fact, Ben, we probably should do a whole episode about things that are audit red flags, but an extension is not one of them. Like I said, I file an extension every year. It’s a very common thing to do for business owners. And so I get why it’s a little bit scary if you’re an individual who’s never filed one before. But for me, that’s in no way a risk factor.

Ben (07:28):

Is a risk factor for getting an audit, being a retirement podcaster.

Steven (07:32):

I sure hope not. I don’t personally know any retirement podcasters who have been audited. So if one gets audited, if any of our retirement podcast friends get audited, I would love to be involved in the process.

Ben (07:40):

Anecdotal evidence aside, it’s a hundred percent chance we won’t get audited. I like it. I can run with that. So tell me about, we’ve been hearing a lot more and more about filing extensions. Is there something happening in the tax prep industry that might be influencing the reason we’re hearing more about extensions? 

Steven (07:58):

Ben, there’s a couple of things that come to mind. One is that it is very, very challenging to find good tax prep talent, and that’s not just anecdotal. I was recently sent a report that’s never seemed to be current, so this is from 2022, but the trend hasn’t gotten better in 2022, the report showed that over the past two years, 17% of the accounting workforce had left the industry. And there’s all sorts of speculation as to why that is, but it is not a growing area of the workforce. And so that means there are bigger constraints on the people who stay in the industry. The tax code keeps getting more and more complicated, which we’ll talk about that in just a second, why that causes extensions as well. But the tax code keeps getting more complicated. There are fewer people to prepare tax returns. And so it creates this supply and demand issue where there are a lot of firms out there, and personally I’m not a fan of this approach, but I see it often of they just automatically extend all of their clients. They just tell clients out of the gate that by default, we’re going to extend everybody. And if we get you done before April 15th, great, but by default we’re just going to go on extension.

Ben (09:04):

Interesting is the CPA world kind of like the CFP world where I’ve been an advisor for more than 15, but less than 20 years, and every year you hear, oh, the average age of the CFP is 104, or the average age of the CFP is 68, and maybe it comes down a little bit as I get closer to that age, but in the CFP world, CPA world is maybe similar or?

Steven (09:27):

Yes, the challenge appears to be that there are fewer and fewer people that are wanting to get into the industry, which if there happens to be someone listening to this podcast who’s thinking about doing it, please reach out to me. I’ll tell you what the good sides of it are. There are definitely challenges to it, but I wouldn’t discourage someone just out of hand from pursuing it, but it is not as attractive to younger career-driven employees.

Ben (09:50):

Okay. Well, sell me on being a CPA. I’m curious about it because the interactions that I’ve had in the past before I work with you, A CPA works in a windowless office, chained to the desk from January 15th until April 16th, and he does 17,000 tax returns and doesn’t see the light of day. Is that the case or has it gotten better?

Steven (10:10):

Well, I dunno, about 17,000 stereotypes exist for a reason. Stereotypes about CPAs exist for a reason and for a long time, the CPA world very much was what you’re describing is sit at a desk, grind out as much as you possibly can, talk to as few people as you can, and hope to someday make a bunch of money. I will tell you that most of the CPAs, the accountants, I know they didn’t grow up wanting to be CPAs. That was certainly true for me. I didn’t dream as a kid of someday I’m going to be a CPA, but then I got a little bit older and realized, wait, I want a stable career where I have a valuable skillset and I get have an impact on people. And so being a CPA, being an accountant can check a lot of those boxes. That’s why I’m still doing this.


That’s why I really enjoy it. And I’ve adjusted my career a couple of times, including starting Retirement Tax Services to better align what I’m doing with those impacts that I want to have. But it’s a very needed skillset. It’s a very valuable skillset, teaches you a lot of great skills as you go along, but yes, it’s demanding. But Ben, as you know, any career field you choose has its demands and challenges. Thankfully in the CPA world, there is an upside to those challenges if you can successfully navigate them. It can be a lucrative career and you can certainly have a lot of impact along the way and learn some pretty great skills.

Ben (11:28):

I liked a kid, but I definitely would not discourage any of my kids from becoming an accountant, an EA, or a CPA. Anything that you would encounter in the world that makes other people nervous or it’s high stakes or there’s a lot of unknown information or barriers to entry, informational barriers to entry is potentially a lucrative career. And when you consider work from home or work from anywhere or everything is sort of in this kind of glowing box in front of me, I think maybe there’s a new possible age upon us where people could do this from home and actually go outside every once in a while. And I don’t think I’ve discouraged my kids at all from being a CPA.

Steven (12:04):

Yeah, I’ve had some incredible experiences specifically because of my career, some of the places I’ve been able to travel, some of the adventures I’ve been able to do, the flexibility that comes with that. To your question of are things changing? I think things are changing more slowly than I’d like them to be. I mean, I’m a CPA running multiple podcasts. I’ve written a book. I speak all over the industry. There are beginning to be more exciting elements of potentially being in this career field. It doesn’t have to just be sitting at a desk.

Ben (12:30):

That’s interesting. I like it.

Steven (12:31):

So Ben, let’s circle back to the other reason that extensions might be a little bit more common of a topic this year in particular. So we’re going to have to be a little bit careful with how we talk about this because there’s a little bit of a gap between recording and this releasing. So it’s possible that the pending tax legislation that I’m going to talk about, we’ll have passed by the time this comes out. So before you take any action on this, let’s double check what the final result was. But one of the reasons that I’m frequently hearing people say, wait, wait, as long as you can to file your taxes, maybe even extend, is that right now as we record this podcast, there’s pending legislation that’s going to potentially make a couple of tax rule changes that will be applicable to 2023, which we’re recording this in 2024.


The fact that Congress is going to make retroactive tax law changes in the middle of tax filing season just tells me there are no CPAs in Congress and they don’t care about me as a human being, but rather than get too much on my soapbox or having a pity party, let’s talk about what that means for actual taxpayers. The biggest proposed changes are related to expansions in the child tax credit, at least the refundable portion of it and bonus depreciation. So if neither of those are relevant to you, if you’re not buying capital assets in a business and you don’t have dependence on your tax return, then that pending tax law change shouldn’t affect your approach to this tax filing season at all. If those could be relevant to you, I would say that this should only in a very minor way impact your approach because we don’t want to wait on everything administratively.


These will be very small changes if they go through on your personal tax return. So still go ahead and get everything else done, be right at the finish line, ready to go, and then wait and see how those come out. You won’t have to start over or reprepare your entire return if you do it yourself. Your CPA isn’t going to have to re-ask for all of your documents, you’ve already provided ’em, keep moving forward assuming that we can have a normal timeline and then we can adjust right at the end. Again, I would not just automatically extend everyone just because there’s a pending tax law change.

Ben (14:32):

And so capital assets are, you bought a truck for your business, you bought a giant copy machine, and what Congress is debating is should we allow them to depreciate it all at once or spread out over multiple years? So if you don’t own a business, I guess that’s kind of out, you don’t have to worry about that so much anymore. And then the other one was refundable tax credits for kids. So if your kids are grown and gone and they’re not dependents anymore, probably also not something that’s going to limit or increase the likelihood you have to change something once you’ve started the process.

Steven (15:00):

Yes, that is correct. And even if you have kids at home, there are very specific parameters around this change that are mostly going to apply to low-income tax earners. And so again, most of the people that we interact with through this podcast who are doing a great job saving for retirement are in their earning years or even into retirement and drawing on those great investments they’ve made throughout their earning years are unlikely to be impacted.

Ben (15:25):

That’s fantastic news. Yeah, not an additional reason to wait. We can get started. Yeah. Excellent.

Steven (15:31):

So Ben, the other thing we’ll throw in here real quick before we run out of time, let everyone get back to their wonderful days. The question that usually comes along with a tax law change, especially one right at this time of year, is what if I’ve already filed my taxes and then I’ll include with that because this is an issue every year. What if after I filed my taxes, I get new tax information or my custodian sends me an amended 1099, what does it mean if I think I get information that tells me I would have to amend my return? And so that’s the question that usually comes up along with this. And we’ve talked a little bit about amending returns on other episodes, but in general, I would strongly encourage you that you don’t just immediately rush out and amend your return. That’s something we want to have a thoughtful approach to because there’s several things that come into consideration if it’s related to a tax law change.


We need to wait until it actually finalizes and see how the rules are going to be applied to see if that’s actually necessary or if it actually impacts our situation. So if by the time you’re listening to this episode, you’ve filed your tax return and this legislation has passed, don’t immediately assume that you’re going to have to amend your return. What’s much more common is, and Ben, we saw a lot of these last year for the 2022 tax filing that custodians can send amended 1099s, which nobody asks for my opinion on these kinds of things, but to me it feels like they’re just passing the buck to tax prepares because the custodians have a deadline to get their 1099s out in February, but then they don’t really have a deadline for when they need to amend these 1099s. And so we saw a whole ton of ’em last year where in March and early April we were getting these amended 1099s that would change dividends by a hundred dollars.


They’d change a capital gain by $20. There are these small changes, and so what I told my clients, and I guess I probably should throw out this reminder of this is not specific tax advice to your situation, please double check with someone else. But in general, for those, especially for small changes that are on 1099 that also got reported to the IRS, we don’t need to rush out and go through the cost and expense and time of amending our return. A lot of those things will sort out through the IRS’s normal process, not through an audit. They have basically a matching system that says, does the 1099 match the tax return? And for small adjustments like that, the IRS is actually just going to tell you, Hey, you own extra $3 in taxes or an extra $30 in taxes, and you don’t have to refile your return. So if you think that you might have to amend a return, that’s probably a really good sign. It’s time to talk to a professional because it’s not worth the hassle to just immediately assume I have to go amend everything.

Ben (18:01):

So can I run the corrected 1099 back to you again? So at some point, the 1099 that I get from my custodian and Fidelity already has that 1099, they’re going to compare the two correctly through my return, and it says, I’m $80 off, I paid taxes based on this 1099. The admitted return says, and the difference that the IRS would get would be $80 at some point in the future, I’m going to get a letter from the IRS that says, Hey, you owe us $80. So I don’t actually have to go back and okay, so if it’s a smaller, again, this isn’t tax advice. So if it’s a smaller thing and it’s not worth amending and refiling, it’s going to square itself up at some point probably before the next time I go back and file my taxes.

Steven (18:42):

Most likely. And so like I said, if you’re to the point where you think an amended return is necessary, that’s really where you need, even if you’re a staunch DIYer, maybe just talk to a professional for that one year because there’s definitely a cost and a hurdle and amended returns definitely get more scrutiny than just your normal filing. You do have to provide reasons to the IRS for why you’re amending. And so that’s really when it’s time to make sure that you’re talking to another professional.

Ben (19:09):

That’s fantastic. Words of wisdom, Steven. Thank you. And we can all just say a quick prayer for not a whole lot of amended 1099s. That’s great.

Steven (19:17):

Amen. That’s excellent. 

Ben (19:19):

Well, any parting word, Steven?

Steven (19:21):

As this comes out, we’ll be wrapping up yet another successful tax filing season, and I’m sure I’ll have plenty of stories to share on the podcast coming out of that so that we all can learn from this together.

Ben (19:31):

Well, excellent. Well, until next time, Steven, don’t let the tax man hit you where the good Lord split you.

Steven (Disclaimer) (19:35):

Hi everyone. Quick reminder before you go. While Ben and I feel very strongly about the information we’re sharing on this podcast, it is for educational purposes only and should not be taken as specific tax, investment or legal advice. You need to make sure that you are working with a professional to evaluate how these concepts apply to your specific situation before you take action.

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