Professional Development

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Homework

0:00:02.2 Professor Walden: Alright, we are going live. Fantastic. I am here. We are just gonna wait for people to join and pop in. So no worries there. So right now, I’m just talking to myself because there’s no one here. It’s all good. It’s all good. We’ve done this before. So we’re waiting. We’re waiting. Let’s see. Alright. We’re popping in. We’re going. Let me see here, make sure… Let’s also make sure that folks are supposed to be here. Let’s see…

0:00:58.5 Professor Walden: Alright. So it may… We may just kinda go for it and that’ll be cool, and everybody can watch the recording, which is very cool. So today I am super, super excited because we have Caitlyn back with us. Yay. So if you are unaware and you have not been able to watch the videos in the past… If you are unaware, Caitlyn is the resident CPA expert for us. I’ve designated her with this title and she has so graciously accepted that title for us. But today is exciting because today we… Well, let me take a step back. When Caitlyn was here the last time, we were talking a lot about taxes and how we manage ourselves and manage ourselves via these taxes. And she gave a lot of good information that is timeless. So if you have not been able to watch her live, that is something that you wanna take a look at.

0:02:03.7 PW: But one of the things she mentioned in her last video was she talked about this tax calculator. And so when she said it, I said, “Hold on. Wait a minute. I don’t even know how to work the tax calculator.” And we kind of laughed offline, because what people do is they say, “We’ll figure out how you can adjust your pay and all that good stuff so that bonuses don’t affect you in a weird kind of way at the end of the year.”

0:02:35.4 PW: Everybody just sends you to the tax calculator and you’re supposed to be able to kind of figure it out and know what you’re doing, and quite frankly, no one really knows what they’re doing. So that’s what I discovered, is that no one can truly tell you how to use a tax calculator. So I thought, “Oh my gosh, we have to ask her to come back to see if she would basically, run through a couple of scenarios and kind of teach us how to use this tax calculator.” So that’s what she’s gonna do, so I’m really excited. You likely will not experience this anywhere else and this is just for us. And I am, again, so grateful and you guys should be so grateful for this information.

0:03:21.0 PW: So she’s gonna run through a couple of scenarios. If there are questions, we’ll take the questions. If there are questions afterwards and you’re watching this on demand and you have questions about your stuff or, for example, your hypothetical stuff, you could send it to us and we will try to answer it to you through Caitlyn. So all of that. Or you can… Yeah. That’s probably the best bet, is just send the questions to us and then we can try to get you an answer.

0:03:51.5 PW: But again, really excited about this. So without further ado, I’m gonna read you a little bit of her bio again, and then we’ll bring her to the screen. So Caitlyn has been developing her love of numbers and spreadsheets over the last decade as a CPA specializing in business taxes. After working for public firms and corporate tax offices, she decided a year ago it was time to connect with clients on a personal level and have her own corner office.

0:04:19.3 PW: After leaving the corporate office, Caitlyn has been helping women, small business owners mainly, across the country, take ownership over their numbers. Through education and breaking through the fear of money her clients, not only have someone preparing their taxes, but someone who empowers them to make decisions about their numbers. She recently launched a membership site that takes dreamers and young businesses from confused to thriving with regard to their bookkeeping, taxes and all the numbers in between. When not running her business and educating business owners she’s a mom to three adorable little girls, four and under, wife to an Air Force pilot and dreaming of the day she has time to hit the golf course again.

0:05:00.1 PW: Me too. So without further ado, we are going to bring Caitlyn to the screen. So here she is. Hey, Caitlyn.

0:05:10.6 Caitlyn: Hey. It’s so good to be here. Some day. Some day we will golf again.

0:05:13.7 PW: Someday we will have that extra five minutes. I don’t know when, though.

0:05:17.2 Caitlyn: Or hours. The extra four hours.

0:05:18.5 PW: I know. I know. I am just really, really excited to sit back with the students and watch the scenarios and watch you talk through things as well. Because like I said, I have no shame in saying… I can figure it out if I had to and surely… And I’ve been there, but I really don’t know what I’m doing when I’m there. So this is… I would love to have a deeper understanding of how to work this out, and if I need to adjust my monies throughout the year so that I’m not paying large sums at the end of the year, that would be amazing.

0:05:58.5 PW: So again, this is just for… Let’s say guys, you get a bonus in April or you get a bonus in June, or whenever you get it, and you’re like, “I don’t want that to put me over into the next tax bracket,” this is one of those ways or one of those tools that you can use to kind of go back and so you can adjust yourself so that you’re not paying big taxes at the end of the year.

0:06:25.1 Caitlyn: Yeah.

0:06:25.2 PW: Did I explain…

0:06:27.2 Caitlyn: Yeah. Yeah. Yeah. So a little history, I suppose, if we wanna dive right in, is that back in 2019, we used to have this W-4 where we said, “Oh, I want this many allowances taken out.” And you always knew that the more allowances kind of meant you got a bigger refund. So you just had more being withheld throughout the year and it just left you in a really good place at the end of the year. And then in 2018 we wanted to make everyone feel like they got a bigger paycheck, and so we said, “Oh, we’re gonna stop this over-withholding nonsense and this big refunds, and we’re gonna change how we withhold taxes on people.” We’re gonna change the W-4 and everyone now is gonna get more money every month, which worked out to be like $10 more every month.

0:07:10.8 Caitlyn: And then they all freaked out when the refund disappeared. And so after the tax professionals and Congress and everyone getting very upset about this and the people, the IRS said fine. “We’ll come up with a little withholding calculator, so you can figure out how to use this new W-4.” So when you’re starting a new job, that’s a popular time that people are like, “I don’t know how to fill up this W-4. It doesn’t have my allowances on it anymore. I’m married. We’re self-employed. We have all this other income going on. What do I do with it?”

0:07:37.5 Caitlyn: And you have options. You can pop on to the IRS website. You can ask your tax preparer to basically prepare a pseudo tax return for you and that’s gonna cost money. And so the first step I would encourage anyone is just to pop on to the IRS site. It is not perfect, but it’s good. And it’s got enough of the data. I was playing with it some more this week and realized that they haven’t updated for the child tax credits that have increased. So it’s okay because that just means that you’re gonna be conservative in these calculations, so you’ll wind up on the side of a refund. But it’s little things like that, that you’re like, “Okay, we’re still working out the tweaks.” But something is better than nothing.

0:08:18.3 Caitlyn: So let me share ’cause what I did is we have put together, on our end, some pay stubs and… Do you see my screen? 

0:08:32.6 PW: This is exciting. Yes, so I’m going to add your screen and I’ll back off so that you can have full…

0:08:40.2 Caitlyn: Perfect. So yeah, we have some pay stub, some Excels and the IRS calculator itself, so we can actually walk through some real life examples and we’re gonna go from pay stub to taxes. And I think that’s just a great place to start. So in this case, we have a military individual, so the pay stub might look a little funny to you guys, but I’ll walk you through where those numbers are coming from. And then here’s a more normal pay stub that you might be seeing and used to seeing.

0:09:05.8 Caitlyn: So what we’re doing is whatever month you are running this estimator… You could do it monthly if you were that gung-ho about this. I tend to just check it, at least quarterly, is when I like to suggest people run their numbers, see how everything’s coming. Or if there’s been a change in job income or childhood, like child’s family status. You’ve had kids, something like that. All of that is gonna affect your taxes.

0:09:32.6 Caitlyn: So in this case… And this is just kind of a little funny for the military. We’re gonna actually use right down here, this wage period. So what this number tells me is what was the federal taxable income for this wage period, so this pay stub, which is for a month. So for one month there was $8384 of taxable income. And we can find our wage year-to-dates. And you can find this all here too. We can see what the gross pay of this period was, the year to date, the federal taxes withheld. So those are the main lines we’re looking for here. We wanna know what were you paid in each pay period, what we’ve been paid year-to-date, what our taxes withheld year-to-date are and what our taxes withheld each period are.

0:10:17.6 Caitlyn: If you contribute to 401ks, you’re gonna see that data on your pay stub. If you have an HSA or an FSA, that data is on your pay stub, all of that. And why we like the pay stub is ’cause it breaks it down into this point in time, so this last pay and what we’ve gotten so far. So I usually will do this with a pen and paper and a calculator when I am running it for our family or a quick calculator for a client. However, I wanted to make sure we organized our data, so I did put it all into an Excel for you guys today.

0:10:51.7 Caitlyn: And what I did is in this first column, it’s gonna show you the year-to-date numbers, and then the pay periods remaining. So each of these pay stubs are monthly, which makes it a little easier. If you’re bi-weekly, then you’re just gonna have eight pay periods left. If you’re weekly, then you’re gonna have a lot more. So it’s really up to you. You can kind of sum them all up and get a rough number by going monthly, not worse. The more detailed you are though, the more detailed your answer is gonna be.

0:11:22.1 Caitlyn: So I’ve laid it all out so that I can get what the total income for the year is, the total federal taxes. I’ve also, down here, added in some assumptions to try to make this a more dynamic example for you all. So we’re gonna assume that one of these people is self-employed and that they made $25,000 a year. But they got some interest in dividends through the year, that’s a lot of interest, so clearly, they found some magical interest account that we don’t know about because no one’s paying that. And then this self-employed individual has no access to other retirement accounts, so they used a SEP, which is a pre-tax way of saving for retirement that you can do when you’re self-employed.

0:12:03.1 Caitlyn: The max is 25% of your net income on a Schedule C, which is what this is or… I think the number is up to about 55,000, I’d have to verify that. So it’s a large amount, which is why a SEP is super popular to do, but we’re limited right now to 25% of the net income. And we’re gonna say that they haven’t made any estimated tax payments this year, they want a refund and we’ll run an example with two kids. And so what we’re gonna do is come and pull up our estimator.

0:12:37.4 Caitlyn: You can Google, if you go into Google and type IRS withholding estimator, IRS withholding calculator, any of that will populate this information for you. And then you’re gonna scroll on down and you’re just gonna start using it. And the first question… And what it’s gonna do is walk you through a tax return. So if you’ve ever used TurboTax, if you’ve ever self-prepared, then these are gonna be familiar questions. If you haven’t, grab your last tax return and you can pull a lot of the data off of that too.

0:13:10.2 Caitlyn: And so that way you just know that you’re answering it correctly. But again, if a life situation has happened, let’s say you got married and you weren’t at the beginning of the year, you got divorced, and you were married at the beginning of the year, this is what is gonna help you really determine that end of year. So in this case, they’re married filing joint, may another tax payer claim you as a dependent? 

0:13:31.7 Caitlyn: This would typically only happen if you are a full-time college student or someone who is 18 and younger. Those are really the cases that we’re talking about a dependent. There are some other circumstances for if someone is providing over half of your care, things like that. More often than not, though, at this point in your life, no one else can claim you as a dependent on their return. Do you plan to claim dependents? So we said that they had two kids. So we’re gonna say yes.

0:14:01.1 Caitlyn: They’re both under 17 and make our life easy. Do you or will you hold a job where paychecks are being withheld? Or paychecks have tax withheld? And the answer is, yes. We’ve seen both of those pay stubs. For this situation, we have one. Now if you’re working for three employers, you would put three here. And then we would walk through each pay stub for each employer to get the best data. And the spouse is holding one job also. No one’s receiving a pension. But if again, you have one, we’re gonna say yes. And then check all that apply to you and your spouse, because we said we were married filing jointly.

0:14:41.7 Caitlyn: Did you get Social Security benefits, a scholarship or grant that must be counted as income? That’s when it’s above and beyond the actual expenses of college, is when your scholarship would become taxable. You’ll collect unemployment compensation or you did collect? So if you got laid off, come run the calculator again, make sure that everything’s running the right way. We know that we have net income from self-employment. We received investment income, dividends interest. If you are an S Corporation, I’d probably mark this, I would suggest marking this and putting in your net earnings from your S corporation, because you don’t wanna put your S corporation income as self-employment income, ’cause this calculator will apply FICO to it and that’s not how that tax works.

0:15:30.6 Caitlyn: So you’d be better off putting it in this category. Again, this is one of those situations where it’s not perfect, but we’re just trying to get close to good. Did you have taxes withheld or make estimated payments? No. Other taxable income? No. And so we’ve kind of walked through that demographics. Again, this is on your return and you should also know it. Are you gonna be older than 65? And then are you blind? ‘Cause we have extra deductions for those.

0:16:00.4 Caitlyn: The next question is, do you expect to hold the job for the whole year? In this situation, we’re saying yes, that we’re paid monthly. And this is where it’s important again to know how often you’re being paid. I expect everyone usually knows that. Most people are checking those bank accounts to make sure that paycheck came through. So weekly, every two weeks, twice, monthly and then once a month are your options here. And then this is where we’re getting a little detailed. When was the most recent pay period? So technically, it’s through the 31st for now, we’re close enough. We’re gonna pick the 25th.

0:16:31.4 Caitlyn: So this is where that handy Excel we put together is coming into play. So there’s the wages were expecting to receive, which we got again by taking our year-to-date pay and then adding in the remaining pay periods and that gets us to what we expect. This is assuming no bonus or anything like that. Or if there was a bonus, it was paid out earlier in the year. However, the IRS will specifically ask about bonuses. Have you already received one this year? Do you expect to receive one later this year? And then this is the key box… Will your employer withhold the appropriate taxes? 

0:17:09.5 Caitlyn: An employer should withhold a higher income tax on a bonus, because typically, they bump you into the next bracket. I don’t know of any employers that don’t. If you’re working for a small employer who’s manually doing payroll, they might not know that, and so that might be a situation where you don’t check this box. And then using your last pay statement, they wanna know the federal taxes withheld year-to-date. 3370. And then per pay period, because what it’s gonna do is check to see if it’s enough.

0:17:43.9 Caitlyn: And then some more questions. Again, you would find these answers on your pay stub, if you don’t know off the top of your head. Do you contribute to a tax deferred retirement plan? And tax deferred meaning pre-tax. So if you have two options at work, one is a pre-tax 401k, and one is an after tax 401k. It’s that pre-tax that we’re asking about here. Or a SEP, like we had talked about.

0:18:09.4 Caitlyn: Those would be those pre-taxes. Anything with the word Roth in front of it is an after tax, and so that would not apply here. So in this case, no, we don’t contribute. We didn’t see any of that on the pay stub. An HSA, FSA, pre-tax Child Care Credit account or other cafeteria plan. Again, what you’re looking for on your pay stub is anything that is going to be a deduction. So it’s gonna usually say gross pay and then pre-tax deductions. We’re looking for anything in that pre-tax deduction category, because we wanna get to what the taxable income actually is.

0:18:47.7 Caitlyn: In this case, that doesn’t exist. So your HSAs and FSAs are for those healthcare plans, the pre-tax child credit, that’s when you’re putting money away, pre-tax. Usually, the limit’s around $5000. They’ve increased it over the last year or two because of COVID. But it goes in pre-tax, and then what usually happens is then you use that account to pay your child care provider. So you’re getting $5000 tax free, which is really nice. And then any other cafeteria plan, any other benefits you might be getting, again, designated as a pre-tax. That’s what they’re asking about there. Do you expect…

0:19:21.0 Caitlyn: And then we walk through those same questions for your spouse, and you’re just gonna enter in all the data. And so, here we know that the pay date was the 13th. The wages, which, again, we’re pulling from our Excel. No bonuses. And then, I’ll come back through, and we’ll do a kind of calculation using bonuses. I’ll show you how easy it is, if you’re like, “Oh, I forgot to enter something.” We’ll walk through that piece. But I wanted to start with something a little more streamlined. Again, no and no. Other sources of income. So, again, we had said we had investment income and self-employment income. So, we’re saying that there’s 25,000 here and that we have dividends and interest of $700. So, we’re gonna go ahead with that there. And then we paid no estimated taxes.

0:20:22.8 Caitlyn: Adjustments to income. So again, we’re looking at a return. We call these above-the-line deductions, if you ever hear of that. So the question is, “Do you have any other adjustments, self-employment insurance?” Which, because they’re both employed at a W-2 job, wouldn’t apply, because one of them provides health insurance. If neither of them provide health insurance, then that would be an option. Or contributions to a SEP.

0:20:47.2 Caitlyn: Well, we did have a SEP, so we’re gonna go to the adjustments here. Contributions to SEP. And this is… This could be what you’re planning to make. A SEP gives you until the extension deadline of the tax return to put it in. So, if you’re like, “Oh, I don’t have that $6000 now,” you actually still have more time to come up with that. Student loan interest deduction. This is a big one for a lot of nurse practitioners, of course. And for this case, we can go ahead and say that they have a, let’s say $1000 in student loan interest. Technically, for 2021, we don’t expect to see a whole lot of this as so many loans were on deferment. If you were paying, hopefully you paying principal only. Educator expense deductions, so teachers. And then, contributions to an IRA Health Savings Account, moving expenses. So, it’s just really walking through all those adjustments you would see on a tax return. So again, if you’re like, “Oh, I don’t really know if we’ve had these before,” pull up your last year tax return and compare it to what’s been going on in your life this year. Deductions from income. So, it’s gonna ask you here, “Are you gonna take the standard deduction or the itemized?”

0:21:55.6 Caitlyn: And this is personal. So, this is not your business… Like, your deductions for the business. This is personally, are you gonna be doing home interest or mortgage interest, real estate taxes, contributions, all of that? If all of those combined will get you over the hump of the $25,100, then you would itemize. The majority of people these days are taking the standard because it is so high. Okay. And then, based on your inputs, we qualify for credits for our dependents, which is what I expected, we have a child… Child tax credit and a child care tax credit. We’re both working, so there’s a good chance we’ve got kids in daycare. So, I wanna see the credits that are available. We’re gonna say that they are all under 17. This is the child and dependent care tax credit. Both of them are in daycare. Daycare these days, let’s say it’s $1000 a month for full-time daycare for two kids. Earned income tax credit. Again, we would kind of be using our tax returns, our current information. At this point, the income is too high for the earned income tax credit. Usually, you have a much lower income to qualify for this. If you adopted, there is an adoption tax credit available to you. If you’re like, “I don’t know what this is,” these question marks are pretty handy.

0:23:22.1 Caitlyn: They’ll talk to you about what it is, they’ll send you to links for… So, in this case, for the earned income tax credit, they’ll send you to another calculator to kind of help you walk through whether it’s gonna apply to you and then, they’ll also send you to the tax topics and publications that the IRS pulls together. So, if you wanna read more about it, and you’re like, “Oh, does this qualify? Do I qualify? How does this work? I wanna understand more about it. I have nothing to do tonight, and there’s nothing good on TV, so I’m gonna read a bunch of tax publications,” here you go. This is a great way. But if you are going through this, you’ve forgotten what we talked about, can’t find the video, they do explain all of these items here for you. What might be a… What might be applicable or not, which is kind of nice. And there’s lots of credits out there. And so, it’s just good to be aware of that. A homeowner… So, we’re talking about residential, energy credit, qualified mortgage certificate. Some states have that, in case you’re like, “What is this? I’ve never heard of it.”

0:24:28.3 Caitlyn: But again, if you’ve never heard of it, that question mark’s pretty handy. And then, energy efficient vehicle’s. A lot of people are getting electric cars. Unfortunately, Tesla has lost their credit, so you’re gonna have to find someone… Some other auto-maker there. But again, all of that information, super helpful. So, we’ve entered in the child’s… And then, we get to the results. So, this is the big plus that people are like, “Okay, I got to the end, I don’t know what to do with it now.” But kudos, ’cause we’ve made it through. So, that’s a big plus. So, they’re gonna give you your results right here. And again, these are projections, best estimates based on the data you put in. I mean, the IRS will add every caveat to this to basically say, like, “You can’t get mad at us if this is wrong.” But I find it to be a pretty decent calculator. So, what they’re saying is, right now, we’re probably gonna owe about $1000. Professionally, I’m happy. This is a great place to be. I didn’t overpay to the IRS, $1000 is reasonable to have to pay them. I’ve paid likely in my last year withholding, all is swell in the world.

0:25:32.8 Caitlyn: However, for some people, they’re like, “No, I really want that refund, and I wanna adjust my paychecks so that I take less pay home, but I get a refund in April.” So, because of that, the IRS put down here a little adjustment. And so, what you can do is slide it to decide how much refund you wanna get. So, if we don’t want a refund and we wanna go with…

0:26:00.6 Caitlyn: Just getting ourselves to zero. Then down here, for a refund of approximately zero, so what they’re gonna do is withhold another $1000 of taxes so that we come out completely even, we come out right here. They’re gonna tell us how we can go back to our employer and fill out our W-4. And you can print this page out and take it with you. So, it’s gonna tell you which job, so that first job we listed, that we wanna go to work, we wanna make sure we select married filing joint on our W-4, and they give you… They give you a W-4 here to look at too. Oops. So the W-4 should be pre-filled, I just don’t want to… There we go. I didn’t wanna lose it.

0:26:48.6 Caitlyn: They will pre-fill it for you, so you can print this out and take it with you. And what they do in the pre-filling is right down here. You can see the extra withholding piece. You’re still gonna have to enter this and select your household, but that’s what they tell you, step-by-step, exactly what they want you to do if you have to use paper, sign and date it. So, you can either print this out or you can print this piece out. And then, when you go to work… Most forms are electronic these days, so you can just pop in and say, “Oh, I need another $955 withheld.” And then, they’ll tell you on the other job, $26. So you both will just take this updated W-4. Now, that was like a standard, “We don’t wanna refund.” Let’s say we want a $2500 refund. And this is just nice so that mentally you can get through the math of it all of like, “In order to get that refund, what is it really costing me per paycheck?” So, if I want that refund of $2500, I’m gonna have to withhold an extra $500 above and beyond that $955. A total of $1,563 every month.

0:27:56.0 Caitlyn: And so now you can really think through, “Do I really want that refund, or do I wanna come out even?” And if you still want that refund, then just know that your check’s gonna get hit an extra $1500, which for a lot… For some people is a lot. And then $43 for the other individual. So, that’s kind of an estimation. Now you get to the end and you’re like, “Oh, I messed up. I forgot something.” You can come down here and you can edit all the information and it takes you back through. So, you don’t have to restart. So, let’s say… We’re gonna go back and we’re gonna get a bonus. We did really well this year. Everything was amazing, and our employer is giving us a December bonus and it’s gonna be $20,000. And let’s say our employer’s not gonna withhold it, ’cause we just wanna see what happens. We’re just getting crazy up in here. So, you’re gonna flick through and there you go. You’re gonna see the effect of that. So, that $20,000 bonus is gonna cost you about $4400 in taxes if your employer is not the withholding what they should. And so, let’s say you don’t get a chance…

0:29:04.0 Caitlyn: Like, they give it to you in December, I can’t change my withholding at that point. This is just a good way to know, of that $20,000 bonus, we need to set $4400 aside to pay that tax bill. If they gave us our bonus in September, though, we could totally come through and adjust this information to reflect it and withhold $1630 on our paychecks, and we should come out close to zero. I wanted to also… Let’s see here. The other sources of income. So, this would be that net, that self-employment. And so, the higher that is, of course, estimated tax payments. If you see this number fluctuating, so you expect to have a really good back half of the year, come in and plug in. What you’re really forecasting, realistically forecasting that income to be, I know we all have… Sometimes we overshoot and so we over-pay our taxes. But if, traditionally, Q4 is like a really good quarter for you, then yeah, come in and reflect that and make sure that you are planning for the taxes associated with that. Let’s see what else we’ve got here. Health insurance… Oh, I wanted to talk to you, I apologize, about…

0:30:24.6 Caitlyn: If you guys do have things like HSAs and stuff, what that kind of changes. They’re just gonna really ask, “How much do you anticipate contributing?” So, like I said, pre-tax childcare, that kind of tops out at $5000 for the year. And you usually make those designations in November before the tax year. So, you should already know for things like your HSA and your FSA, what it is for the whole year, even though it hasn’t all been withheld, because you would have made that election November of 2020 for the upcoming year, ’cause they spread it out over the 12 months. However, if you just started a job, you would have made those elections when you started, but most of the time, you can still elect that full amount. It’ll just be bigger chunks coming out. And then, if you have a 401k just be mindful that you are contributing what you’re allowed to contribute in terms of not going over your limits. I think it’s around $19,500 for most 401Ks. So. And again, the plan. So, if you, for some reason, were to change your mind part-way through the year and say, “Oh, I’m not gonna actually contribute all $10,000,” your 401k is one that you can change between paychecks. And so, that one’s subject to movement a little bit more. But what that gets you to then is the results.

0:31:48.6 Caitlyn: So, the nice part, by having those two deductions, we were able to offset about $300, $400 of tax. So, not a lot, but something. We offset some of that bonus impact on us. And so, that’s kind of where you play, “Okay, I’m getting a big bonus. What if I put all of it toward retirement?” And so, that’s where you can come back here and just continue to really play with it. I got $20,000. So, let’s say I wanna put $19,500. I’m just gonna make a big contribution at the end of the year into my 401K. What does that look like? It’s not gonna be a dollar for dollar, but, “Okay. I’m okay paying… ” ‘Cause I was already gonna owe $1000 in tax. “I’m okay with $2000 extra tax. And now, I’ve set aside $19,000 for my future retirement plan, which is awesome. I wasn’t planning on the bonus anyway.” So, these are just some really great ways to walk through…

0:32:48.8 Caitlyn: Just your personal stuff. So, if there were like really, really big events that this isn’t walking through, then yes, reach out to your professional, of course. Or if you want them to re-check it or you really want something super specific, that’s a great way. But if it’s like, “Oh, I just started a new job and I’m just not sure how to fill out the W-4,” this is where you come to really get that guidance. I think it’ll be more beneficial than asking HR, usually they would turn around and point you right back here. So, that is really a lot and all about the IRS Tax Withholding Estimator. I love that you can print this all out. And so, you can print to PDF, and then run a bunch of scenarios and compare them all. And you’re just gonna get a really decent idea of like, “Are you gonna owe? What your refund might be.” If you do this in January and decide you want a $5000 refund, then go ahead and set yourself up for that by filling out your W-4 in January of the new year to get you there. So yeah, that was a lot. I hope it was super helpful.

0:33:51.6 PW: No, it was great. It was great. And I’m like… When you said you can print this off, I literally said, “Wait, you can print this off?”

[laughter]

0:34:01.0 Caitlyn: Yes.

0:34:01.1 PW: No, I know. I’m with you, I think Clarissa, one of our students, said, “Wait, I need to study this.” And I’m like, “You’re not the only one.” I feel like I need to study this as well. I think one of the things that I learned very quickly as you were… Noticed as you were going through it was like, “I need to come prepared” when I am ready to fill this out, because I think that what happens… And other people can say the same thing or correct me if I’m wrong. But people will suggest that you go to the tax calculator, they’ll send you the link and then you go. You don’t even think about it, you just began clicking on it, not thinking, “Wait, I need to gather all these things if I don’t have them readily available.” And so, you start out clicking them, and me, I’m just like, “No, no, no, I’m too overwhelmed. Or I’m doing it wrong, or I’m guessing numbers.” And then I end up just closing it out.

0:35:03.3 Caitlyn: Yes. Or your pay stubs’ at work and you’re like, “I’ll get to this in a few weeks, because I need to go print my pay stub off.” So, if you have 10 minutes at lunch and you can grab your spouse’s pay stub on your way to work, that’s a good time to also sit down and do it. But yeah, it’s that pay stub, usually, asking for that and people are like, “Oh, I don’t have it. I have to log into my corporate system to pull that down.” And then, that’s usually where they stop.

[laughter]

0:35:27.6 PW: Yeah. Yes, you are absolutely right. ‘Cause most folks are not downloading their paycheck stubs as they should ’cause we don’t… Unless we need them, we typically just leave them in the system, which is probably not a good thing, but that is… We are people, right? 

0:35:49.2 Caitlyn: Right. And we just wait for the W-2, ’cause that’s what we need for taxes. So, we’ll just get it when we get it.

0:35:54.2 PW: No, no, no, I appreciated this. As you were going through things, there was a lot of, “Wow.” There was a lot of, “Oh, no,” or, “Oh my goodness.” So there was… A lot of it was like, “Okay, now this makes sense as someone is literally walking me through it and explaining each section as I go through it.” So, I think, like you said, it is overwhelming, but having you go through it step-by-step was super appreciative. And now, we just need to go back, like everyone’s saying, I need to go back and just kind of study it with my things so that I can make sure that I’m doing the right thing.

0:36:34.4 Caitlyn: Yeah, it just… It always clicks a little bit better when it’s your information. But gosh, I just remember that old W-4, and I remember calling my parents when I started a job. I’m like, “How many allowances do I do?” And we’ve just made it so much more complicated now, because if you look at the actual W-4, it’s like, “How many people are employed? What’s their… ” And you’re like, “I don’t wanna go through all these tables either.” So the calculator at least prevents that piece.

0:36:58.1 PW: Yes. And then they’ve changed the forms on the W-4, what have you. So, again, you move jobs and you’re like, “This is not what I filled out before.” So, now you’re confused before you even get started.

0:37:11.2 Caitlyn: Exactly, yeah. And if you’re starting a new job, ’cause I know a lot of the people here might be doing that, use your offer letter to kind of estimate what that income’s gonna be. So, when they tell you, “We’re gonna pay you whatever it is a year, you’re starting six months in,” Just kind of back into that gross income, something is better than nothing.

0:37:28.9 PW: Yeah, no. This is big, guys, because as nurse practitioners and kind of just even if you are moving into that realm where you are some level of directorship and things like that, where you could possibly get bonuses, this is a big deal. And this is because we don’t want to be tossed over into those other tax brackets if we can kind of prevent that or if we can adjust ourselves at the end of the year. And like you said, some folks like to get a tax return at the end of the year. And so, you can now properly prepare for that.

0:38:03.7 Caitlyn: Yes.

0:38:05.6 PW: So, this is exciting. I need to go back and I need to look at my own stuff and plan appropriately, just like everyone else is doing. So, I really, really appreciate this, Caitlyn.

0:38:16.6 Caitlyn: My pleasure. It was so good to speak with you all again.

0:38:19.3 PW: Fantastic. Alright, guys. So, we’ve got homework to do. I don’t even think I need to mention what the homework is. I think we all know what the homework is, but we need to get familiar with our numbers and that’s a lot of what the summer has been about for me, even with the business, personally and professionally, just getting very, very familiar with your numbers so that you are able to execute appropriately. Because, again, remember in here we are normalizing talking about money and normalizing doing things. And so… And moving the way that we want to move, but in order to do that, we have to pay attention to our numbers and where things are going and how they move and how we can personally affect them. So, this is important. Yeah, she was great. We love Caitlyn. I don’t want us to get spoiled by Caitlyn, so we’re gonna leave her alone for a little bit. But we absolutely do love her. And if you guys have questions, please let us know and let’s continue this dialogue if we can. And if you guys have questions, let’s all jump in and try to help each other.

0:39:33.5 PW: Again, normalize the numbers so that this is not a foreign concept to us, because I want us all to be prosperous and do the right thing with whatever amount of money that we have, ’cause it doesn’t really matter as long as we’re managing it correctly, right? So, that’s what we want. So, let me know if you have any questions or issues and it’s gonna be exciting, so let’s start talking about it. And, as always, it’s been 40 minutes and super respectful of your time and we’ll see you later. Let us know if you have any questions, I’ll talk to you all soon. Bye.