Are You Surprised With Your Tax Return?

While it is common for people to be surprised with their tax return results, ideally, you should not be surprised with your tax return results. There are several things you can do to help minimize surprises and ensure that you have a good understanding of your tax liability:

Tax Planning

  1. Keep Track of Your Income and Expenses: Throughout the year, keep track of your income and expenses, including any deductions or credits that you may be eligible for. This will help you estimate your tax liability and ensure that you are taking advantage of all available tax breaks.
    2. Review Your Withholdings: Review your W4 form and make sure that you are withholding the appropriate amount of taxes from your paycheck. If you have had any significant changes in your income or family status, it may be wise to adjust your withholding allowances accordingly.

    3. Know where you land in the tax brackets. How much income do you make? Use that number and subtract the standard deduction for your filing status to get an estimate of your taxable income. Then google tax brackets for that year. Observe where you land and see if it makes sense.

    4. Do you have other income, such as investment income, retirement account distributions, selfemployment income, rental income? Do you know how that income is taxed?

    5. Stay Informed of Tax Law Changes: Keep up to date with any changes to tax laws or regulations that may impact your tax liability. This will help you make informed decisions when it comes to tax planning.

    6. Work with a Tax Professional: If you have a complex tax situation, it may be beneficial to work with a tax professional who can help you understand your tax liability and ensure that you are taking advantage of all available tax breaks.

By taking these steps, you can help minimize surprises and have a better understanding of your tax liability when it comes time to file your tax return.

Personal Income Tax Course

We are developing a selfstudy course that teaches you the basics of a personal income tax return so there are no surprises. If you want to be notified when it is available, please enter your email address here.


Financial Journey LLC is a registered investment advisor offering advisory services in the states of Alabama, Florida, Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

Tax Planning at Different Stages

It’s February and now you are receiving all of your tax forms because it’s tax time again. Completing your tax return each year is essentially a trueup to make sure you paid your share of income taxes. Because you are accounting for the previous calendar year, there are not too many things you can do to change your tax situation when it’s time to prepare your taxes. That is why it is important to understand your tax return once it is complete so that if there are any slight changes that you can make, you can do so during the tax year when it counts.

Ultimately, you have to know a little bit about taxes in order to notice where these changes may occur (or know enough to ask for help!)

What are we working with? Age, stage of life, current income, current assets, location of assets, tax thresholds in many different areas and tax law updates, just to name a few.

Working/Accumulation Phase of Life

While you are earning money and building your wealth, you want to be mindful of several things. Understanding the mechanics of the different things going on in your tax return can give you planning ideas for what you invest in, the different account registrations that you may or may not be able to utilize and look at the big picture to decide what could be more beneficial in the future. For example, you could be paying huge capital gains taxes in your individual accounts with mutual funds that are out of your control. A couple of things to look at would be reviewing what the estimated capital gains are and potentially moving out of that position (also reviewing that tax consequence) and into an ETF where taxes can be more controlled. Another planning item is making sure you are investing in different account types with different taxation. For example, if you only invest in your traditional IRA and traditional 401k, when you take the money out later on, it will all be 100% taxable versus maybe investing some in a ROTH IRA or ROTH 401k. Again, depending on your situation, this could be beneficial or not.

Retirement/Decumulation Phase of Life

Even if you are in the retirement/decumulation stage of life there are many things that are going on with your income. For example, your Medicare premiums are based on your AGI from 2 years ago. This means that you can jump Medicare premium surcharges every year even if you are $1 over the limit. If you are budding up close to one of these brackets, then you may be able to sacrifice a slightly lower distribution from an IRA in order to save yourself hundreds of dollars in Medicare premiums.

The Bottom Line

Every situation is different and should be looked at from different angles. If you do not understand your taxes, ask someone who does. Also, make sure you look at your tax return once it’s done and see if there is anything to do DURING the year that can help your situation.

How Much Money it Takes to Purchase a Home

Buying a home is the American Dream and it is also the largest purchase we will make during our lives.  Buying a home isn’t quite as simple as having a down payment and getting a loan.  There are several pieces to the puzzle, especially when you are obtaining a mortgage.  The goal in this post is to touch on the most common costs so that you are well prepared and know about how much it’s going to cost to get into a home.

The first thing I want to mention is that buyers do not pay their real estate agents a commission.  The seller of the home is the one who pays the selling commission that is split between the buying and the selling agents for a transaction.  That being said, there are a lot of different fees for buyers that come together for your closing costs.  


Let’s take a closer look.  I like to break the costs up into 4 categories based on when you actually have to have the money:


  • Down Payment
    • Earnest Money Deposit–this is the money you put down when you are making an offer.  Typically 1%  or so of the offering price, but if you are in a competitive market, you may put more money down to show the seller that you are serious.  When writing the contract, you can put certain contingencies in the contract such as home inspection and financing contingencies–basically you can get out of the contract and get your earnest money deposit back within these contingency deadlines.  Otherwise, if you don’t follow through with the contract, then the seller gets to keep your earnest money deposit.
    • Down Payment–this is the down payment on the entire purchase.  This isn’t due until closing time and your earnest money deposit counts towards this.  It is worth mentioning, that if you put 20%, you shouldn’t have to pay any mortgage insurance premiums.  You can put less than 20% down, but you will usually have mortgage insurance costs on a monthly basis.  Talk with your lender because there are so many different lending options available. 
  • Up Front Costs–you pay these after you have a contract, but before closing.  These costs are the ones that you cannot get back if you do not make it to closing. 
    • Appraisal–if you are getting financing, you will be required to have an appraisal because the lender is not going to lend you money on a house that costs more than what it is worth.  If the appraisal comes back for less than the contract price, then you will have to make some adjustments in either price or more money down to meet the lender’s requirements.  If you have a contingency built in, then this is where you can walk away as well.
    • Home Inspections–even if the lender isn’t requiring a home inspection, most people want a thorough inspection to know what they are actually buying. Some insurance companies require certain reports from the home inspection in order to obtain insurance as well.
    • Surveys of the land–this depends on the type of property
  • Closing Costs–these are the most shocking costs that buyers face.  There are so many different things that need to happen in order to transfer ownership.  These differ from state to state and typically range from 3-4% of the sales price of the home.  Some of these costs may include the following:
    • The remainder of your down payment
    • Title search fees 
    • Initial escrow amounts like a year’s worth of homeowners insurance and/or half a year’s worth of property taxes
    • Transfer taxes–city, county, state, any special assessments 
    • Lender costs–all fees associated with getting the loan which includes the commission for the lending agent, credit checks, document processing fees, etc.
    • Settlement agent representation fees–these are the people preparing the settlement documents between the buyer and the seller.
  • Monthly Costs–this is what your monthly payment will consist of which is PITI (Principal, Interest, Taxes, Insurance)
    • Loan–PI–this is the monthly payment for the term of your loan.  If you have a fixed rate and term, such as a 30 year fixed loan, then your P&I stays the same for the life of the loan.  You don’t have to worry about inflation, because this is fixed.
    • Escrow–TI–this is your annual taxes and insurance.  These items do change on an annual basis and your mortgage company typically ‘escrows’ this and pays it on your behalf.  This way you are paying a little every month, then when your annual insurance or semi-annual property taxes are due, then money is in the escrow account and the lender pays this directly.  Each year, you will get a notice of how much the taxes and insurance are estimated to increase and the TI portion of your monthly payment goes up a little.  
    • Association Fees–these are HOA (Homeowners Associations) or Condo Fees.  Your lender does not escrow these payments, you will pay these directly to the association
    • Maintenance & Repairs–you’re a homeowner now, so this means you will have to maintain the property yourself and fix anything that breaks

Hopefully this information gives you a better idea of what home ownership costs.  There’s a lot of other information that comes into play with these costs and planning to prepare for these.  


If you need help navigating one of the biggest purchases in your life, please schedule a call and see how we can help.  


Financial Journey LLC is a registered investment advisor offering advisory services in the state of Alabama, Virginia and in other jurisdictions where exempted.  Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice. 

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Tax Time!

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Give Smarter and Make a Greater Impact with Philanthropy

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