I’ve worked for Molen & Associates for more than 20 years. Over the course of my career I’ve learned that the greatest enemies to understanding the federal income tax are unverified sources such as family members, friends, neighbors and co-workers.

Their intentions are good. They mean well. They really do just want to help.

The primary issue with listening to outside influencers is that most are not qualified to advice you on whether or not what they’re telling you actually applies to your specific situation. In the income tax world, we refer to it as “facts and circumstances”. Your specific facts and circumstances determine much of how and when the laws and precedent apply to you.

Legal Precedent

Federal Tax Court cases go a long way in further expounding the law and making determinations on what certain portions of the law actually mean. In some cases, the law just isn’t sufficient and precedent must needs be set so the tax professional can make appropriate decisions on what direction to take based on an individual’s facts and circumstances. What are the chances that your brother-in-law is actually familiar with the specific court case his tax professional cited to help him qualify for that tax deduction he just told you about? Just because it was deductible for him, doesn’t mean it’s deductible for you.

The Internet, The Friend and Other Hearsay

A few years back there was a popular website that posted an article regarding the deductibility of breast pumps for nursing mothers. The post talked all about how they could be used as a deduction on your tax return but failed to give any real information on how, why and when it would actually help. I had a new mother come in the next filing season and she was adamant about writing off her breast pump. I had to explain that while the device is absolutely tax deductible, it was only deductible as a medical expense, and medical expenses must exceed 7.5% of your income in order to be applicable. The breast pump was surely deductible, but as my client’s total medical expenses did not exceed 7.5% of her income, the deduction was not applicable in her case.

It can be difficult to explain to my clients that you can’t trust a single source that addresses a large audience. It’s exactly why at the end of every blog post I write I tell my readers to call me and get specific answers to their questions.

Diamonds in the Rough

All of this being said, family members, friends, neighbors and co-workers can still be a great source of information. I’ve had clients who have called me because a friend told them about a deduction, and I was able to help my client qualify for it. In this situation I absolutely adore outside influencers, they help to spread information that causes my client to be curious. Curiosity in the tax world is a fantastic thing and causes us to explore additional opportunities to pay less tax.

I can’t possibly keep up with the daily decisions my clients make so I constantly advise them to call me with questions or when making important financial decisions. The key piece to all of this is to actually seek professional advice when learning about something that may help you to pay less tax.

As always, our phones are open and our tax professionals are ready to give you a free 10-minute phone consultation to talk about any tax questions you have. They will ask many questions to try and better understand your specific facts and circumstances and provide the right tax advice to you so you can pay less tax. Call us at (281) 440-6279 today!

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Kevin Molen
Tax Manager