Football & Tax Planning

I recently went to the UT/Ole Miss football game. The atmosphere in the stadium was electric, and the UT fans had hoped for a win until the unfortunate final 54 seconds of the game. If Josh Heupel can help the team improve from what we saw in this game, it just might give us a reason to stay optimistic for the Vols this season.

There is not much that UT Football and tax planning have in common. Unfortunately, looking back at past tax years and talking about what went wrong does about as much good as Josh Heupel telling his team what went wrong at the Ole Miss game as they are running onto the field for their next game. It is good information to have, but it serves no purpose unless it facilitates change. That goes for both football and tax planning.

This year we hear more questions than ever concerning tax law changes as potential tax reforms are making their way through Congress. Take the child tax credit, for example. In July of 2021, the IRS began sending advanced payments on the enhanced 2021 Child Tax Credit. These payments are based on your most recent tax return but will be reconciled based on your 2021 return. This is problematic if your situation has changed from 2020 to 2021 because if you end up with a child tax credit overpayment, you may have to pay it back when you file your 2021 return.

With tax planning, it’s so easy for CPAs to serve as historians, only looking backward at the actions that resulted in the tax bill you currently owe rather than proactively planning for the future. Our clients who have had positive tax planning experiences aren’t simply looking backward each year. They’re planning and taking action to improve their situation for future tax years. We partner with clients and their CPAs to help them keep more of what they earn. If you’re thinking through a planning concept that goes beyond investments, call or email us. We’re here to help.

Hannah Whatley, CFA® AIF® is an Advisor at Rather & Kittrell. Hannah can be reached at [email protected].