With national events continuing as they are, here at Hinckley Tax Service, we’re finding ourselves locking into “go mode” … again.
It’s unusual for us to be in this mode smack in the middle of June, but this year has not been … usual.
This is because the tax deadline (July 15th, 2020) is barrelling at us.
Many of our Cleveland tax clients have already taken care of what they needed to, and we have filed a ton of returns (and are already in “tax planning mode” with those clients).
Do you want to get on our calendar to talk 2020 taxes? Shoot me an email through the email button at the top of the page or call us [(330) 225-3928] and we’ll take a look at some proactive strategies.
But if you have NOT filed your 2019 taxes … times’ a-wastin’.
And also, allow me to remind you, again, that two estimated federal tax payments are due on July 15th. Many states have followed suit on this, but some have not. Here’s a handy list for the due dates in your state — since, although most of our clients are based here in Cleveland, we of course serve clients across the country.
I brought up the states there … and with all of the financial chaos roiling around us, it’s a good time to consider: is your state in financial trouble?
Chances are good that it is … in which case: what will your state do about it, and how might it affect you?
Is Your State Broke? Rich Rhodes Analyzes State Tax Revenue Sources
“A man should always consider how much he has more than he wants.” -Joseph Addison
The financial picture for the various states in our nation is a mish-mash of various revenue sources (and expenses).
Unlike, say, the federal government, the states cannot print money. So they are forced to go hunting for it. And they get it from a few primary sources: sales tax (based on purchases/consumption), income tax (individual and business taxes based on income), property tax and “other” taxes like the tax on fishing licenses, driver’s licenses and a lot of other smaller items.
And the most volatile — and COVID-affected — of these sources is ye olde income tax. Sales tax has obviously taken a hit as well (but people still need to buy stuff) and property taxes, well … more about that next week.
So which states will be hunting for more revenue? This will give you a good picture — it’s a breakdown for which states are the most reliant upon income tax revenue. Oregon and Maryland stand out (especially Oregon, which has no sales tax) — but MANY states will be on the hunt for that sweet, sweet green.
You are your state’s “economic stimulus plan”. Make no mistake … the next couple years will find MOST states finding ways to grab revenue from you.
This will take the form of increased property taxes (which you can fight), increased scrutiny of business operations that cross state lines (for Cleveland business owners, “NEXUS” is a word you need to know), as well as chopping their expenses.
There are already school districts that are looking at laying off anywhere from 1 in 5 to 1 in 12 teachers. Half of all cities will need to make last resort cuts to their police and fire departments (regardless of the politics and wisdom of it, “defund the police” might sound pretty nice to state treasurers). And garbage services will probably take a hit.
So what can you do about this? Well, that’s where we come in. Yes, we can help you plan out your federal tax picture and help you save there … but state taxes are still very much a category in which it quite literally pays to have a pro in your corner.
Don’t accept “software defaults” for your state taxes. Let the pros ensure that you don’t become your state’s piggy bank. Legally, ethically … and with your full financial picture in mind.
We’re in your corner.
“CRISIS Action Plan” for my Cleveland tax clients and friends:
1) Don’t marinate in other people’s panic. Be mindful of your social media consumption.
2) Continue to stay financially and logistically prepared for worsening situations.
3) Make sure you have some ready, liquid assets, if you are able. (I.e., cash in the bank, and in hand.)
4) Set aside plans for any big spending until the dust settles — but especially look out for your small business owner friends and vendors.