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A Q&A with Greg Kling on Preparing for Tax Day

A Q&A with Greg Kling on Preparing for Tax Day

Last minute advice from a tax expert.

by: Sabrina Skacan
04.08.24
A Q&A with Greg Kling on Preparing for Tax Day

Academic Director, Jennifer and James R. Parks Master of Business Taxation Program Greg Kling [USC Photo]

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  • Greg Kling

    Greg Kling
    • Associate Professor of the Practice of Accounting
    • Academic Director, Jennifer and James R. Parks Master of Business Taxation Program
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There’s still time left to get organized for Tax Day according to Greg Kling, academic director of the Jennifer and James R. Parks Master of Business Taxation Program and associate professor of the practice of accounting at the Leventhal School of Accounting.

We sat down with the tax expert for some tips, tricks, and good advice — including, stop watching the viral TikTok tax advice videos.

No matter what you see or hear on social media, you must file a tax return or file for an extension, and pay any due taxes by April 15.

Interviewer: With one week until April 15, what should people be doing right now to make sure they meet that deadline if they haven’t filed yet?

Greg Kling: My advice would be to figure out which group you’re in. If you’re organized and feel like you’re ready to file, then don’t delay, get it done as soon as possible. Let’s assume you’re using a tax preparer, those people get busy and they may not be able to get your tax return done in time.

What we always want to remind ourselves is the filing deadline. Yes, it’s a deadline where you have to file your forms, but it’s primarily a deadline to pay your tax balance due. One of the misunderstandings is if you file for an extension, that means you can pay your tax late. No, no, no. When you file for an extension, all that means is you have extra time to file the paperwork — the government still wants your money by April 15.

If you’re electronically filing and using a tax preparer or a third-party program to prepare your own taxes, you can file now, but arrange not to withdraw the funds until April 15 if you have a balance due. So even if you file early, that doesn't mean you have to pay your taxes early.

Now, if you’re in this other group where you’ve been procrastinating and you’re disorganized, maybe you’re still waiting for some information, then I would say don’t delay.

So what if you’re disorganized? Where do you start?

GK: You want to start to identify your sources of income. If you’re an employee, you received a W-2. If you are an independent contractor, you received a 1099, and we need to be careful with independent contractors because we still have the rule that a 1099 is only filed if you’ve earned more than $600 from a particular person. If a person has done smaller jobs where they’ve earned less than $600, they won’t receive a 1099 from that client. But they still have to report their income. That [situation] can be a little challenging in that case. Perhaps you just go through your 12 months of bank statements and figure out wherever you see a deposit.

If you have bank accounts that earn interest, you will have received a 1099 INT; if you have brokerage accounts that are generating dividends, you will have received a 1099 DIV. I always tell people to start with the income items.

How do you handle the deduction side of your taxes?

GK: If you’re an employee, the only deductions you’re really going to get are for things that should be easy to get your hands on. And here’s what I mean: if you put money into an IRA account, there should be a form from your broker saying you put money into an IRA.

If you made charitable contributions, you should have received receipts (or a contemporaneous written acknowledgment) from the charity saying how much you gave and the value of anything they provided back to you.

If you’re a single individual, focus on the items that we call itemized deductions, primarily property taxes, mortgage interest, and charitable contributions. If that number is less than the standard deduction, you’re done. Take the standard deduction. You definitely don’t want to review things like utility bills and phone bills unless you’re self-employed where that may then factor in as a business deduction. You’re really not spending your time in a valuable way because you’re not going to be able to deduct any of those items.

(Note: The standard deduction for individuals for 2023 is $13,850 but higher for married couples or head of households. Check IRS.gov.)

What is the best way to file? Using a professional tax preparer versus a third-party tax prep tool or the new free IRS Direct File online system?

GK: I’m laughing in my head because I’m very biased because you should always use a tax preparer.

But I think you have to be able to gauge your level of comfort with finances and taxes. If somebody says, “Look, I feel confident that my tax situation is relatively easy. I understand what my tax return needs to look like and I’m comfortable using the free IRS filing service [for federal taxes],” then I would say, please go ahead and do that if that’s what you want to do.

I am not opposed to free filing services and I believe some of the tax prep companies do that as well. But my concern is unless you really feel like your taxes are simple, which means “I received a W-2, I take a standard deduction. I’m single. Nobody claims me as a dependent and I don’t have anything else” — anything beyond that, I just feel like there are questions to be asked. Being penny wise and dollar foolish? If you go to a local tax preparation company and you spend, maybe a few hundred dollars, I think that’s money well spent. You’re getting somebody who knows what questions to ask because this is very important. And unless you know what questions to ask, you run the risk of preparing your tax return incorrectly.

[Note: Free federal filing is available IRS Direct File and some third-party tax preparation companies; visit California’s Franchise Tax Board for more information on filing your California state taxes.]

What tax myths should people watch out for?

GK: When you feel an ache in your body, do you just Google it and find out you’ve got some incurable disease? No, you go to the doctor. I think the things to watch for are the “too good to be true things” where people are basically saying flat-out wrong tax theories. Don’t listen to random websites and random TikTok videos.

It’s really these two broad groups. One is what we call the tax protester arguments, which isn't new; it’s just now on TikTok. People see more of it today, but tax protesters have been around for many, many years and the argument is that income tax is unconstitutional. They make some frivolous arguments, they don’t pay their taxes, and they always lose. The 16th Amendment of The Constitution says you have to pay federal income taxes. So, whenever you see a TikTok video that tells you to fill out your W-4 and claim exempt — beware — it’s completely false advice.

The other group are the people who say you can deduct all of your expenses, including your personal expenses. One example are the influencers who are saying that you can deduct your makeup, your clothing, and everything, and that’s just straight out false. It’s even people who say, “I went on a business trip and I took my family and I deducted the whole thing.” We need to remember that people who are employees cannot deduct their unreimbursed business expenses. There’s no ability to do that. I almost want to put that in capital letters with exclamation points.

Now, I’m not trying to say some personal type expenses can never be deducted. I’ll give you an example. Let’s say that you’re best friends with somebody who is self-employed and they run an advertising agency. They take you to lunch and you start with talking about business … maybe they ask you for business advice and then you catch up as old friends do. A case can be made that they could deduct that meal as a business expense because you spent time actually talking about business-related items. There is crossover [between personal and business expenses], but we have to be careful.

How should people get ready for next year?

GK: So, other than being organized, I want to center the conversation around financial literacy. I believe that taxes should be an afterthought. Say, I’m talking to somebody and we do their taxes and they owe $1,000. If they have the savings put away to pay for that, then they’re a little bit happier than the person who has zero savings.

We’re coming up to a new presidential election cycle and a lot of people will talk about this person’s tax proposals and that person’s tax proposals and everybody will get excited. But it’s a big ado about nothing. Typically there aren’t major law changes in the presidential election year. If you just take a step back, tax law is tax law; we may have [helpful] changes, some things may move the needle, some things don’t. But even when we have major tax law changes, I think the average U.S. person doesn’t feel a major difference. Preparing for next year, I would say, it’s not about preparing for taxes per se. It’s preparing for financial planning, which is a subset of financial literacy.

And by that, I mean, the more organized you are, the more you know where you’re spending your money. The more you know where your money is coming from, the more control you have over money in general, the better you’re able to budget all household expenses, which then includes tax.

This whole idea of financial literacy, knowing your finances, balancing your bank balances each month, having your expenses accounted for in some sort of systematic and organized way because then the tax discussion just becomes a subset of that.

Any final thoughts?

GK: The biggest issue is there’s so much misinformation and misunderstanding with income tax laws. There are different prices in the tax preparation community. I still think that finding a reputable tax advisor, whether that’s a CPA, whether that’s an enrolled agent, there’s people out there for everybody. And if somebody just says I want to do it by myself. Well, then I’d advise getting a good third-party tax processing software. And if your tax situation is more than just the basics, pay the extra cost for them to connect you to their live support people.

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