Is Cheap Advice Really Worth the Price?

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Imagine you're struggling to make sense of your taxes in accounting.

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You find some free advice online.

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Sounds too good to be true, right?

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Well, it probably is.

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So today we're going to get into the world of cheap tax and accounting

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advice, and we're going to explore why investing in sound guidance might just

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be the best decision you can ever make.

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So stick around to find out how to escape the cycle of tax and

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accounting confusion with confidence.

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Welcome to the ask Ralph show.

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I am your financial evangelist and I am thrilled you're here.

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Our goal today is pretty simple I want to help you break free from the cycle

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of tax and accounting confusion and gain confidence in your financial decisions

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And here's my promise by the end of this episode You're gonna understand why

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cheap tax and accounting advice can be a trap and how investing in quality advice

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Can transform your financial future.

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So today we're talking about something super important for

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anyone seeking financial freedom.

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We're going to explore the hidden cost of cheap advice and why investing in

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professional guidance might be the key to achieving your financial goals.

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I'm going to talk about the.

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Pain points of navigating free, cheap tax and accounting advice and the

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complexities of just about doing that.

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And I'm going to provide you with practical steps to move beyond them.

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So stay engaged because this episode is going to empower you to

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make informed financial decisions.

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Now, yesterday we talked about the taxpayer's advocate was a real practical

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discussion and how they can help you.

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We discussed how this value be resource can assist you with tax issues and

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provide a lifeline for those in need.

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So if you missed it, you can catch up by visiting ask Ralph.

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com where you'll find all of our episodes.

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Well, let's get started with today's question.

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Today's question comes from Ann and this is what Ann writes.

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She says, Ralph, I'm overwhelmed with my taxes and accounting.

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I've been using free advice, but keep making mistakes.

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The IRS is sending me notices and I'm worried about penalties and audits.

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I spent hours online reading blogs, watching YouTube videos and using

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free tax software, but I'm still confused and I am overwhelmed.

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Every time I think I've got it figured out, I realize I've made a

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mistake or missed something important.

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The IRS is sending me notices, and I'm worried about penalties and audits.

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I feel like I'm drowning in a sea of numbers and regulations,

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and I don't know where to turn.

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Is it really worth investing in a professional advisor, or

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should I keep trying to make do with what I can find for free?

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I'm emotional and exhausted, and I need some clear guidance.

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And thank you so much for sharing your story.

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And I can feel the weight of your struggle, that, that, that

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annoyance and that, that guarded, uh, uh, issues that you're having.

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And I want you to know that you're not alone in this.

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Many people find themselves in similar situations, trying to

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navigate the complexities of tax and accounting with limited resources.

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The temptation to opt for the chief's advice is understandable, I get it,

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but it's important to realize that cheap advice Often comes with some

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hidden costs and that's exactly what I'm going to explore today.

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I'm going to talk about the pros and kinds of cheap tax and accounting advice,

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and I'm going to provide you with some concrete steps to help you make the best

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decision for your financial wellbeing.

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And don't forget.

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You can submit your question just like Ann did by going to justaskralph.

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com, because here's the truth.

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I love answering your questions and it's my goal to help you

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find the answers you need.

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Well, let's get started with a Bible verse.

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We always need to ground ourselves in scripture.

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And today's Bible verse comes to us from the book of Proverbs chapter 15, verse 22.

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And it says this.

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Plans fail for lack of counsel, but with many advisors, they succeed.

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And I talk about this on the show all the time because this first highlights

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the importance of seeking wise counsel.

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And this is especially important when we're looking at tax and accounting

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matters, having the right advice can make.

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All the difference.

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Having the wrong advice can make a huge problem for you.

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So let's consider this first as we discuss the value of tax and accounting advice.

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And I just want to start by saying this.

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Thank you so much for joining me.

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I am grateful for the opportunity to share my experience and my knowledge with you.

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The Lord has given me the privilege of helping many people just like you

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and overcome their tax and accounting challenges through my faith based

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principles and my faith based approach.

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So I am thankful for the wisdom found in the scripture.

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I like when it talks about seeking wise counsel and those

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scripture verses can guide us in making sound financial decisions.

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So let's get right to it.

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Let's talk about the hidden cost of cheap or free advice and see, here's the truth.

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When it comes to tax and accounting, You get what you pay for often rings true.

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Now there is an allure of free or cheap advice, and that's understandable,

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but you have to understand that that free or cheap advice often comes

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with significant hidden costs that can outweigh any initial savings.

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Yeah.

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You might be not paying for something, but what is it costing you?

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And that's exactly what I want to start by talking about.

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The first thing is the cost of mistakes.

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One of the most significant hidden costs of cheap.

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Or free advice is the cost of making mistakes.

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See tax and accounting is a complex field with intricate rules and

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regulations, and a single mistake can lead to substantial penalties.

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I've seen these day in and day out.

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It can lead to interest and even legal issues.

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Imagine you rely on free online tax software to file your taxes,

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you input your data and the software spits out a result.

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And trust me, I have seen this so many times.

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You file your return thinking, Hey, everything is great.

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Then about six months or a year later, you get that dreaded IRS notice stating

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that you owe thousands of dollars in.

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back taxes and penalties due to an error on your return.

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And you think about it, this mistake could have been avoided

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had you used professional guidance.

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that's the first thing, the cost of mistake.

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The second thing, opportunity costs.

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Now opportunity cost is something we talk about in financial and

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accounting lingo, but it refers to the potential benefits you miss.

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Out on by choosing one alternative over another.

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So in the context of tax and accounting advice, the opportunity cost of

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relying on cheap or free advice is the missed opportunities of tax

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optimization and strategic planning.

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Let me say that word three times, tax optimization.

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and strategic planning.

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So suppose this, suppose you use free online resources to plan your taxes.

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You follow the basic advice provided, but you miss out on advanced tax strategies

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that could save you thousands of dollars.

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And that's where somebody like myself comes in a tax pro,

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a professional tax advisor.

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Could have identified these strategies and helped you maximize your tax savings.

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So the potential opportunity cost here is the potential

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tax savings you missed out on.

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Just yesterday I was doing a tax return for a client when we got done

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the, the tax return preparation.

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I said, Hey, let's take a look at what's going to happen next year.

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In this particular case, this client lost his wife two years

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ago, a very sad situation.

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So he was afforded the ability to file as what's called a qualifying widower.

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For two years, but now moving into the next year, he's not going to do that.

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And that's going to have a significant impact on his tax return.

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Now he could have gone online and found, you know, what's the,

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the filing status going to be, what's that going to look like.

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But we were able, because I'm a tax professional, this is what I do every day.

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We were able to build a model and he was able to move into a better understanding.

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Now, in his case, one of the things that I found that he could do

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was maximize his 401k, and that would potentially save him money.

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It was a. 2, 000 potential tax savings because it wasn't just

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some online free resource.

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Another thing you've got to be worried about is time and effort.

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And this is one that cannot be undersold.

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The truth is cheap or free advice often requires a significant investment

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of time and effort on your part.

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You know, I've heard it said time and times again, you

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either pay with your money.

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Or you pay with your time.

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And in this case, you've got to sift through mountains of information.

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You got to verify it's accurate and then apply it to your unique situation.

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And as you said, so eloquently in your letter today, this can be a

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time consuming and stressful process.

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Think about it.

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If you will imagine spending.

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hours, research and tax deductions, only to find out later that you missed

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a crucial deduction that it could have significantly lowered your tax bill.

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You got to really weigh this time and effort you spent could have

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been better used elsewhere, maybe focusing on your business or

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spending time with your family.

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So that's one of the real big things to consider.

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Another thing you've got to consider is the emotional toll.

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The emotional toll of dealing with tax and accounting issues can be substantial.

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Hey, I just wrapped up somebody's taxes this weekend.

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They sent me a very nice email yesterday said, Ralph, we thank you so much for

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the peace of mind you give us when we come and sit down with you and we go

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over your tax, we go over the taxes and you explain to us what's going on now.

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The stress and anxiety of navigating complex financial matters can take a toll

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on your mental and your physical health.

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And those cheap or free advice, they often lack the personal touch and the emotional

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support provided by professional advisors.

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You know that that online software is not going to give you a pat on

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the back and say, Hey, great job.

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They're not going to counsel you when something's going on

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and think about the stress.

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And anxiety that you're experiencing and you're feeling overwhelmed, you're

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feeling exhausted, you're worried about penalties and audits, and that emotional

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toll can affect your overall wellbeing.

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It can affect your quality of life.

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And here is a beautiful truth.

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A professional advisor could provide the reassurance.

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And support you need to navigate these challenges with confidence.

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So now let's examine the potential downsides of cheap tax and accounting

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advice with some specific examples.

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I just want to drill down to some specific examples.

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One of the big areas I think that we need to think about is conflict of interest.

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Imagine you're in.

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Uh, you're advised to use a particular tax strategy by a commission based advisor.

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You know, there's a lot of these people out there that earn a commission

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based on these tax strategies.

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And unbeknownst to you, the advisor receives a heavy commission for

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recommending a particular strategy.

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In my view, this creates a huge conflict of interest where the

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advisor's financial gain might not align with your best financial interest.

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For example, I had a client one time that was advised to use a high, a high

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fee tax strategy that underperformed leading to significant losses.

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Now I'm going to use a more simple example.

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I see this routinely.

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I see when car dealers offer to do your taxes for free.

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Well, guess what?

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My friends, the reason they're offering to do that is they want you to buy a car.

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It's really that simple.

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So are they the most well trained tax advisors?

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Probably not.

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So that's the first thing.

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Second thing is a complete lack of personalization.

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Consider someone who relies solely on free online resources for tax planning.

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And trust me, I see this.

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All the time, a person might follow a generic tax calculator

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that doesn't account for their unique financial situation, such as

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upcoming medical expenses, or maybe they got a desire to retire early.

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And this generic advice could lead to some really bad, inadequate tax

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savings and a lower standard of living.

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I had a client one time who relied on an online tax preparation service and ended

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up with a significant tax bill because the service didn't provide guidance

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on better tax efficient strategies.

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Like I talked about yesterday with that client that I work with where we were able

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to get under the hood and we found a way for him to save a couple thousand dollars.

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Another big problem with free or cheap tax advice or financial advice for that

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matter is a limited scope of advice.

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Suppose you're using a basic online tax preparation service that

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only helps you file your taxes.

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And a lot of them do that.

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If that's the only thing you do.

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And I say this on the show all the time, I say this to my clients

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routinely, tax preparation is great, but the real value is in tax planning.

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So if you're using this free online tax software, you might miss out on

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some crucial, some crucial advice on tax optimization, or maybe.

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IRS representation.

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Maybe you've got an issue or some accounting services

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you might be entitled to.

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I had a client once who relied on an online tax preparation service, ended

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up with a significant tax bill because the service didn't provide guidance

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on some more tax efficient strategies.

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Another thing you've got to question is what I'll call questionable expertise.

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This is the big takeaway, free tax and accounting advice from

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unqualified sources can be risky.

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I don't know how many times I've had a client come in.

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They say, Ralph, I was online.

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I read this and it said I could do this.

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And I say, well, I don't know where you got that from, but

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that is completely in error.

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A friend of mine, one time he followed advice from a blogger.

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He found this blog.

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He said, this guy is great.

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He's given all kinds of tax advice and this particular blogger, uh,

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claimed to be a tax expert, but he lacked any form of training.

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I think he was an expert on recording blog posts, but in this particular case,

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this advice turned out to be inaccurate and it led to costly financial mistakes.

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to my, my friend getting hit with.

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Penalties and interest and see, here's the thing.

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It's essential that you vet the qualifications and track record of anyone.

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And I'm talking about anyone providing tax and accounting advice.

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So let me share some experiences from my last 30 years of doing what I do

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and I had to help clients who had.

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Taking cheap tax and accounting advice.

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I call this one, the retirement account debacle.

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I had one client, we'll call him James.

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He, he decided to take all the money out of his retirement

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account to pay cash for his house.

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Now at the time, James thought, Hey, this is going to be great.

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I'm not going to have a mortgage.

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I'm not going to have that worry of making that mortgage payment every month.

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He thought this was a smart move because he wouldn't have to deal

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with those mortgage payments.

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However, and here is the crisis of this thing.

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When I did his tax return, I remember him and his wife,

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they sat down in front of me.

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They were all excited.

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They were telling me all about how they had bought their house with cash and

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they were really excited about, they didn't have a mortgage of payment.

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So I'm sitting here and looking at this and he had taken all the

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money out of his retirement plan.

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I'm thinking to myself, Oh, this is not going to be good.

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So I do the tax return and they owed a ton of money.

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I mean, Oh, a ton of money and I told them, I shared my screen with them.

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I said, look, here's what's going on.

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And the two of them were just absolutely devastated.

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I remember the wife just broke down crying.

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So not only did they have to pay taxes on the withdrawal they made, but

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they also had penalties and interest.

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And to make matters even worse, that goal of having a home with no mortgage

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completely stopped because they had to go get a home equity loan to pay the taxes.

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And what they thought was a smart financial move turned into a nightmare.

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I talked a few minutes ago about the perils of online tax preparation and

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listen, I've seen numerous clients try to use online and low cost tax

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preparation services only to find out later that they made costly mistakes.

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Now one client, I'll tell you, uh, this isn't her name, but

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we'll say her name is Mary.

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She tried to prepare her own taxes using one of those online services

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and she ended up making several errors and that resulted in a significant.

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Tax bill and penalties.

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And when she came into me for help, it took a lot of time and effort to

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correct those mistakes and negotiate with the IRS to reduce the penalties.

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Now this one just happened the other day and I'll call this the

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recent tax preparation mishap.

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And this is true.

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Just the other day I had a client who had tried to prepare their own taxes.

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Now they had come in to see me the year before and they

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ended up making several errors.

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They claimed deductions they weren't entitled to and they missed out on credits

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they would have been able to claim.

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So when they came in to me, I had to spend, it was an hour and a half just

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talking through what they had done.

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We're still trying to correct the errors, making sure they're in compliance with the

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tax laws and the money they hope to save.

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Man, now they're paying penalty.

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Now they're paying interest.

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They're paying me to go do the return correctly from the, from the beginning.

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And this may very well lead to audits and it may lead to

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more penalties down the road.

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And my big takeaway here, these experiences highlight the importance

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of seeking that professional tax and accounting advice.

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Now.

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Of course, there is a cost associated with hiring a tax advisor.

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I don't work for free, but the potential benefits can often outweigh these

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expenses, particularly in the long run.

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And here's something when I was preparing for the show, I found research

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suggests that professional guidance.

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And hear me on this can potentially lead to significant longterm returns.

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Studies indicate that working with an advisor can add several percentage

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points to tax savings over time.

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Now you might be saying, Ralph, why is this?

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Well, the factors such as strategic tax planning, like I've talked

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about discipline, accounting, and avoiding costly errors.

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And there's biblical principles for this too.

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Any tax and accounting advice you receive should resonate with

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biblical principles of stewardship, contentment, and generosity.

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You also have to think about the complexity of your financial situation.

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I talk about this on the show all the time.

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Those people who have straightforward needs might find those free resources

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or online tax preparation services.

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They might be fine.

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But if you've got more intricate financial lives, you may benefit from a personalized

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sit down with a professional and accounting advisor, because your situation

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is ultimately a little more common.

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Now, one of the things that, and you didn't say, but one of the things I

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hear you saying between the lines, It's something I'm going to say, trusting your

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gut, see ultimately trusting your gut.

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Feeling about an advisor is also important.

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Tax and accounting planning involves a high degree of

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trust and open communications.

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So feeling comfortable and confident in the advisor is crucial.

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Now I've done shows before about how to find somebody and I've said this

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on the show time and time again, find somebody that you trust, have

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open communication with them and make sure you're comfortable with them.

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So let's take a little bit deeper dive into the true cost of cheap

Ralph:00:18:35

advice, focusing not just on the immediate financial impact, but also

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the longterm consequences, because there's those immediate things.

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You might have a penalty, you may have some stress and all that, but

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here's some longterm consequences.

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The first thing is financial penalties and interest making mistakes in tax filing

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can result in significant penalties.

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It can result in interest and even legal issues.

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I mentioned that a few minutes ago, the Iris imposes.

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Penalties for late filing, late payment, under payment of estimated

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taxes, substantial underpayment of income or overstating expenses.

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And these penalties can quickly add up and they can turn just

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a minor oversight into a major.

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Okay.

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Burden.

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Imagine you miss a crucial deduction because you relied on a

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free online tax preparation tool.

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The IRS audits your return and finds a mistake.

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Now you owe not just the additional tax, but also penalties and interest, which

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can amount to thousands of dollars.

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We talked about this as well.

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There's lost opportunities for tax savings.

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Cheap or free advice often lacks the depth and personalization needed to

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identify all potential tax savings.

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A professional tax advisor can help you navigate complex tax laws and regulations

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to maximize your deductions and credits.

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Here's a great example.

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Suppose you have a small business and you're using free tax software.

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I do not for the life of me understand why small business people

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want to go do something for free.

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You want somebody to come pay for your products or services, but yet

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you're not going to do that for this.

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Well think about this.

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You might miss out on deductions for business expenses.

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You might overlook depreciation or get it completely wrong and you might

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miss other tax saving strategies.

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A professional advisor can help you identify and claim

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these deductions, potentially saving you thousands of dollars.

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Now, this one cannot be undersold.

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I truly believe this at the core of my being.

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By doing this, you increase the risk of audit.

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See errors and inconsistencies in tax filings, they just increase

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the risk of an IRS audit.

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And here's the thing.

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If you've never been through one of these audits are time consuming, they're

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strew, they're extremely stressful and they can lead to additional financial

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penalties of mistakes are found.

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Imagine.

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You have a complex tax situation involving multiple income streams.

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Many retired people, many of my more sophisticated, uh, clients have these.

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If you're relying on cheap or free advice, you can end up making

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several errors in your tax return.

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All of a sudden the IRS flags these errors and they say, Hey.

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Here's the return.

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We better go look at.

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So you've now got an audit.

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That audit process is lengthy.

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It's stressful and you can end up owing thousands of dollars in

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taxes, penalties, and interest.

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There's also a long term financial impact.

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The mistakes and the missed opportunities that result from cheap or free advice can

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have long term financial implications.

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These might include things like reduced savings, delayed retirement, and

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even limited financial flexibility.

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Suppose you're saving for retirement and you're relying on free tax advice.

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You miss out on tax saving strategies that could have significantly increased

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your retirement savings over time.

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And this is the whole point of retirement savings.

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The compounded effect of these missed opportunities can mean the

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difference between a comfortable retirement and financial struggles.

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So now you've heard the bad.

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Let's explore some of the value that professional tax and accounting advice

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can bring to your financial planning.

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And, and this is really what you're asking for.

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And these are my key things that I want to discuss here as the part of the show.

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Number one thing.

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Expert knowledge and experience.

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Professional advisors have specialized training and extensive experience in

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tax and accounting, accounting matters.

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They stay up to date with the latest tax laws and regulations that ensures that

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their advice is accurate and relevant.

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For example, a professional tax advisor can help you navigate complex tax

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laws and regulations, ensuring that you comply with all the requirements

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and to maximize your tax savings.

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Now here's one that you don't get if you go online for free advice,

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and that's personalized strategies.

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It's all, I say this on the show all the time.

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Everybody's situation is different.

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Professional advisors take the time to understand your unique

Ralph:00:22:52

financial situations and goals.

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Online free software can't do that.

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We develop personalized strategies that address your specific needs and help

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you achieve your financial objectives.

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A professional advisor can help you create a comprehensive

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tax plan, a financial plan.

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It can incorporate your short term, your longterm goals.

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Maybe it's things like saving for retirement, paying for a child's

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education or starting a business.

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You're never going to get that from that online or free or cheap advice.

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Another thing we offer is proactive planning.

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Professional advisors don't just react.

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We're not just reactionary.

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I talk about this all the time.

Ralph:00:23:28

We're not just reactionary to your current financial situation.

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We can help you plan for the future.

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We can provide proactive advice that can help you anticipate and anticipation.

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It's a big part of it.

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Like, like I did with that client yesterday, we're anticipating his

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filing status is going to change.

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That's going to have a trickle down effect on his tax return.

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So we're looking for ways to mitigate that.

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We can help you anticipate and prepare for financial challenges and opportunities.

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A professional advisor like myself can help you plan for life events, such

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as marriage or divorce or retirement.

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Maybe you're going to get an inheritance.

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These are all the things I talk about on the show every day,

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ensuring that you're financially prepared for whatever comes your way.

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And one of the big ones, and I mentioned this a couple of times in the show now,

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emotional support and accountability.

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See.

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As you so eloquently put it in, navigating tax and accounting

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matters can be stressful.

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It can be overwhelming.

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Professional advisors provide that emotional support just like

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that email I got from that client.

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She says, Ralph, you gave me peace of mind.

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They also provide accountability.

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We help you stay disciplined and we focus on your financial goals.

Ralph:00:24:35

A professional advisor can offer reassurance.

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We can offer guidance during periods of financial uncertainty.

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Maybe you lose a job or there's a market downturn.

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We can help you make informed decisions and stay on track

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with your financial plans.

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So you might be saying, Ralph, what's the bottom line?

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Well, here you're ready.

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Here's the bottom line.

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The bottom line is that cheap or free tax and accounting advice

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can be costly in the long run.

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The mistakes, the missed opportunities that can result from

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relying on such advice can lead to significant financial penalties.

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Hear me on this.

Ralph:00:25:07

Lost tax savings, increased risk of audits, and long term financial impact.

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Investing in professional tax and accounting advice can

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provide substantial benefits.

Ralph:00:25:17

We've talked about these, including expert knowledge, personalized strategies,

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proactive planning, emotional support, and more importantly, accountability.

Ralph:00:25:27

Professional advisors can help you navigate the complexities

Ralph:00:25:29

of tax and accounting maxers.

Ralph:00:25:31

Matters, maximize your tax savings and help you achieve financial goals.

Ralph:00:25:36

Well, I know we covered a lot today.

Ralph:00:25:38

Now, if you found today's episode valuable, I want to encourage you

Ralph:00:25:41

to subscribe to our newsletter.

Ralph:00:25:42

You can do that by going to ask Ralph podcast.

Ralph:00:25:45

com slash newsletter.

Ralph:00:25:47

Now our newsletter is packed with insights.

Ralph:00:25:49

It's packed with tips and resources to help you master your taxes and

Ralph:00:25:52

accounting from a Christian perspective.

Ralph:00:25:55

So don't miss out on this opportunity to stay informed and empowered.

Ralph:00:26:00

Go now and talk about our reflection questions, and I just like to handle

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some of these here at the end.

Ralph:00:26:05

Number one thing, what are the potential downsides of relying solely on cheap

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or tax advice and accounting advice?

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Say, what did you learn today?

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Think about that.

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What are the potential downsides of relying on that

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second reflection question?

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How can investing in professional tax and accounting guidance benefit

Ralph:00:26:22

your longterm financial goals?

Ralph:00:26:24

What can you gain from building that relationship?

Ralph:00:26:28

And number three, what steps can you take to ensure that tax and accounting

Ralph:00:26:32

advice you receive aligns with your Christian values and principles?

Ralph:00:26:35

I always want to bring it back to that because I think that is so important.

Ralph:00:26:40

Well, now let's talk about our key takeaways.

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Cheap tax and accounting advice can come with significant

Ralph:00:26:45

drawbacks, including bias, lack of personalization, and limited expertise.

Ralph:00:26:50

Investing in professional tax and accounting guidance can provide you

Ralph:00:26:53

with some really great long term benefits, including comprehensive tax

Ralph:00:26:57

planning, tax optimization, and like we talked about, emotional support.

Ralph:00:27:02

Aligning financial decisions with Christian values and seeking counsel from

Ralph:00:27:07

knowledgeable advisors can lead to greater financial wellbeing and stewardship.

Ralph:00:27:11

Well, tomorrow we're going to discuss how to budget when

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paychecks are unpredictable.

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So join me again for another insightful episode that will help

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you navigate the challenges of budgeting with fluctuating income.

Ralph:00:27:23

Well thank you for your time and for supporting the show.

Ralph:00:27:25

Remember my passion is to help you achieve financial success.

Ralph:00:27:28

I want to see you live out your dreams and grow in your faith and I know

Ralph:00:27:31

together we can master your taxes and accounting from a Christian perspective.

Ralph:00:27:36

So as I always end the show, stay financially savvy out

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there and God bless you.