“How do I pay less in taxes?”

Video Transcript

I loved playing basketball in high school growing up. My freshman year of high school I had a coach and his name was coach Sir. Coach Sir was all about 7 feet tall, 70ish years old, and went on to be in the Illinois high school basketball hall of fame as a coach. And we always used to laugh at coach Sir because he used to have what we called “Sir-isms.”

And when he wanted to make a point, he would pull us aside and he’d say something kind of off the wall, but he truly knew how to ram a point home. And early in the season, I was having issues with fouling people during the game. And I used to think that it was always the referee’s fault. I wasn’t really causing those fouls.

And in high school basketball you’re allowed 5 fouls. After 5 fouls, you’re thrown out of the game, which isn’t good for you or your teammates. And we were 11 games into the season and I had 48 different fouls. And after practice coach pulls me aside and he goes “Bretl, we’re 11 games into the season. That’s 22 different referees. They have called 48 foules on you. Not all 22 referees are wrong. You need to work on your footwork and play better defense.”

Well that kind of hit home and really made a point to me that I should stop complainig about the referees and start looking at the real issue, which was my footwork.

Now, this is also true with tax returns. We prepare a lot of tax returns in our office. I talked to a ton of people about tax returns and the number of people that come in and they say, “Can you help us out? I owed so much money in taxes last year.” And what they’re usually talking about is they’re talking about when they do their tax return, they owe money at the end. Now this is kind of a crazy thing because if I went next door here to our office to Culver’s and I wanted to buy a burger and that burger costs $6. If I gave them a $10 bill what’s going to happen is they’re going to give me $4 in return.

Now I don’t get all excited and say, “Ooh, I get $4 back!” No. I say “Ooh, I got a burger. I’m happy. I paid $6 for it. I think it’s a fair thing.” No questions asked. Now if I gave them $3, they’d say, “Excuse me sir, you owe us three more bucks.” Now am I mad? You know, do I go to find a different Culver’s that isn’t going to charge me an extra three bucks.

No! The burger is $6. That’s what I owe. If I want to find a cheaper burger, I got to go find somewhere  that’s not gonna charge me 6 bucks for a burger. Well that’s what’s happening in your tax return. When you get a refund, you’ve overpaid. You’ve overpaid your tax bill, and they’re just giving you change. If you owe money at the end, you didn’t pay enough.

So the question you’re asking, “How can I get a bigger refund?” is the wrong question.

The question you should be asking is “How do I pay less in tax? How do I buy a cheaper burger?” Now in your working years, you have very little control over this. The cost of the burger is usually determined by how much you earn.

And that’s going to determine your tax. So having a refund could be a good thing then, but in your retirement years, you do have control. You have control over how much tax you’re going to pay. And now is when we should focus on how should we get those taxes down. Taxes are the single greatest variable that’s gonna impact your retirement.

Now is the time that you should be thinking about how do I lower those taxes? Not “How do I get a bigger refund?” Wrong thought! The right thought is “How do I lower those overall taxes?”

If you’d like to learn more about how our thought process works in regard to those taxes, I highly encourage you to attend our taxes and retirement webinar.

This is a great webinar for anyone that has been retired for a few years or thinking about retiring in a few years. Because that tax concept is really important, and let’s change our mindset so we’re not thinking about “how do we get a bigger refund,” to “how do we pay the least amount possible in taxes?”

I hope you got some value out of the video we just shared with you. And if you know somebody else that could find value in this, please feel free to share it with them. If you yourself would like to talk further about this, please use the link below to book a 15 minute phone call with our office. Thanks.