1907: A Tax Strategy That Puts Humans First

Summary

So Money Podcast with Farnoosh Torabi

Episode 1907: A Tax Strategy That Puts Humans First
Guest: Hannah Cole, Founder of Sunlight Tax
Date: November 19, 2025

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Episode Overview

This episode centers on making tax strategy accessible and empowering for freelancers, creatives, and self-employed individuals. Farnoosh Torabi welcomes Hannah Cole, tax educator and founder of Sunlight Tax, to discuss her new book, Taxes for Humans: Simplify your Taxes and Change the World When You’re Self Employed. The conversation dives into demystifying taxes, practical systems for organization, breaking common tax myths, and linking personal finance to social justice.

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Key Discussion Points and Insights

1. The Motivation Behind Taxes for Humans

Timestamps: [05:05]-[08:33]

• Hannah’s Background: Cole is a professional artist who experienced firsthand the alienation and lack of support creative professionals often face around taxes.
• Empowerment Through Education: The book is designed for self-employed people—especially "anyone who feels like a weirdo" or outside traditional boxes.
• Rejection of Shame: Hannah recounts an experience with an accountant who questioned her legitimacy as an artist. She channels this to create a book that validates and empowers readers:

  “I got you and we are not going to do that. Your work is important.” (Hannah Cole, [08:33])

2. Breaking Down Tax Myths and Limiting Beliefs

Timestamps: [09:04]-[10:54]

• The prevalent “tax burden” narrative is a product of corporate and billionaire interests, not reality for most Americans.
• Taxes are positioned as investments that provide education, disaster relief, public services, and safety nets:

  “For most of us, if we are working class, middle class, we're getting back more from taxes than we pay in... Taxes give back to you in the form of disaster relief... It gives back to you if you're being domestically abused.” (Hannah Cole, [09:18])

3. The Three-System Approach to Tax Organization

Timestamps: [11:27]-[16:45]

a) Receipts

• Keep all receipts (digital or paper) in chronological, annual order. Digital receipts in inbox folders are acceptable.
• Credit card or bank statements alone are not sufficient—IRS may disallow them during audits.

b) Tax Documents

• Designate one spot for incoming tax documents (both physical and digital) to avoid missing any in tax season.

c) Bookkeeping

• Essential for self-employed/1099 earners but not W2 employees.
• Use a separate bank account and spreadsheet or simple tools for tracking income/expenses—no need for complex software unless necessary.

“If you just realize there's three things and that they serve three different purposes, it helps you not cross wires on them.” (Hannah Cole, [11:27])

4. Choosing Tax Software with Caution

Timestamps: [18:34]-[20:21]

• Commercial tax software (TurboTax, TaxSlayer) is user-friendly but can upsell or mislead about free filing offers.
• The IRS requires that most filers have free options—but these are often hidden by tax software companies.

5. Facing Tax Fears and IRS Audits

Timestamps: [20:35]-[22:44]

• The fear of audits is overblown; many IRS contacts are simply paperwork requests.
• “Audit” is often routine, not a “horror show.”
• The IRS is a human-run agency, often reasonable and open to dialogue.
• File your taxes even if you can’t pay the bill—filing and paying are separate actions.

“The very worst thing to do is to freeze and do nothing.” (Hannah Cole, [31:03])

6. What To Do If You Can’t Pay Your Taxes

Timestamps: [30:35]-[32:44]

• Always file your return, even if you can’t pay; partial payment reduces interest.
• States are generally less forgiving than the IRS—when in doubt, pay state figures in full and make a payment plan with the IRS.
• It’s possible to negotiate payment terms or request more time with both agencies.

“There's... like DIY payment plan... File your taxes, don't pay or pay as much as you possibly can because whatever you don't pay, you're going to have interest on.” (Hannah Cole, [31:03])

7. The Human and Social Justice Side of Taxes

Timestamps: [27:08]-[29:49]

• Taxes are an extension of community and a means to effect positive societal change.
• Tax advocacy and education are stepping stones to fairer laws; understanding taxes means citizens can better push for policy that benefits their communities.

“Money is not always a bad guy and that it is a real tool to create social change and have a bigger impact.” (Hannah Cole, [27:28])

8. Lesser Known Tax Benefits & 2025-2029 Tax Law Changes

Timestamps: [33:18]-[41:42]

• HSAs (Health Savings Accounts): Significantly expanded in the new tax bill for more people; offer full tax shelter on contributions and withdrawals for qualified expenses.
• Certain start-up credits for new businesses, especially for listeners starting with 1099 or partnership income, are highlighted.
• The new tax bill (“The Big Beautiful Bill”): Some short-term benefits (e.g., car loan interest deduction, expanded standard deduction for seniors), but many social and environmental programs reduced or eliminated.

“HSAs: it's an awesome, super amazing account that you get access to because you have really yucky healthcare... It gives you something really nice on top of something gross.” (Hannah Cole, [39:19])

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Notable Quotes & Memorable Moments

• On Tax Shame:

  “I didn’t realize I was going to be like questioned on the existential level walking into this appointment.” (Hannah Cole, [08:01])

• On Tax Software:

  “Buyer beware, because they do have these little surprises and hook you into paying when you shouldn’t have to.” (Hannah Cole, [20:21])

• On Audits and IRS Communication:

  “The tax code is built for humans. It's not built for economic robots who do everything perfectly.” (Hannah Cole, [22:44])

• On Social Purpose:

  “If you had a little more knowledge... you could boost the money you already have, make it more, have a little rocket fuel behind it. And then you could spend more time and have a bigger impact with that amazing work you're already doing.” (Hannah Cole, [29:49])

• On Humanizing the Tax Experience:

  “If you can just be like, hey, I bet your day was a little hard. I hope you're doing okay. They're generally really nice and they'll work with you.” (Hannah Cole, [33:30])

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Timestamps for Key Segments

• Hannah's story and origins of the book: [05:05] - [08:33]
• Debunking "tax burden" myth & taxes as investment: [09:18] - [10:54]
• The three-system approach to staying organized: [11:27] - [16:45]
• Bookkeeping logistics for new businesses: [17:04] - [18:34]
• Commentary on tax software traps: [18:34] - [20:21]
• Fear and reality of IRS audits: [21:23] - [22:44]
• Social justice, taxes, and financial empowerment: [27:08] - [29:49]
• Practical steps if you can't pay your taxes: [30:35] - [32:44]
• HSA expansions and new tax bill pros/cons: [36:17] - [41:42]

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Lightning Round: Personal Touches (“Taxes for Humans” Rapid Fire)

Timestamps: [41:49] - [44:19]

• Last thing made with her hands:

  “Screen prints of T shirts and tote bags... they say human on them.” (Hannah Cole, [41:56])

• Tax season comfort drink:

  “When it's that bad, I think I usually go for a beer.” (Hannah Cole, [43:02])

• Favorite unapologetic business expense:

  “Business travel... it really helped my business.” (Hannah Cole, [43:18])

• A good tax preparer is: “empathetic.”
• What would she audit in our culture?

  “Our attitude about helping our communities, about being a part of a fabric and not just individuals.” (Hannah Cole, [43:58])

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Final Thoughts

Farnoosh and Hannah underscore that understanding and organizing around taxes isn’t just about compliance—it’s about gaining power, peace of mind, and the ability to better use money as a force for good. Listeners are reminded that taxes impact every aspect of community life, and that developing a healthy view and habit set around taxes is both an act of empowerment and civic engagement.

Resource Links:

• Taxes for Humans Book Tour: sunlighttax.com/montclair

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For freelancers, creatives, and anyone who has felt like an "outsider" in financial conversations, this episode is both a practical toolkit and a rallying cry: taxes are for humans, and you can master them—while shaping the world you value.

Transcript

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[Hannah Cole]

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[Farnoosh Tarab]

So money episode 1907 a tax strategy that puts Humans first.

You're listening to so MONEY with award winning money guru Farnoosh Tarab. Today, get a 30 minute dose of financial inspiration from the world's top business minds, authors, influencers and from Farnoosh herself. Looking for ways to save on gas or double your double coupons. Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life. Welcome to SO money.

[Hannah Cole]

First of all, the very worst thing to do is to freeze and do nothing. So let me just help if there are ways around it. If this is you and you are not the first person to struggle with their tax bill, especially when you're self employed because if you didn't know how much profit you had all year, which is very easy when you get behind on bookkeeping because you get busy, that's very easy to have happen. The first thing to know is that you can, you should file your tax return even if you can't pay the bill. Those are actually two separate acts. Don't also not file your taxes if you know you can't pay the bill. So that's rule number one. The second thing is there's a sort of like DIY payment plan which is just exactly like file your taxes, don't pay or pay as much as you possibly can because whatever you don't pay, you're going to have interest on and so you can reduce that amount. You should reduce it and then wait for the bill that's going to come from the irs. And believe me, it will come and then pay it. Then that will buy you a little bit of time.

[Farnoosh Tarab]

Welcome back to Sew Money everybody.

[Podcast Host]

My guest today is somebody that I.

[Farnoosh Tarab]

Personally adore, someone whose work has empowered thousands of freelancers, creatives and self employed.

[Podcast Host]

Humans to finally feel in control of their taxes and have a little fun along the way. Hannah Cole is the founder of Sunlight Tax and she's back on so Money. She's here with some big news as well. Her new book, Taxes for Humans, Simplif your Taxes and change the World when you're self Employed is coming out in the world this month.

[Farnoosh Tarab]

It's funny, joyful, deeply practical, and unlike any tax book you'll ever read.

[Podcast Host]

I'm holding it in my hands right now and for my Montclair and New.

[Farnoosh Tarab]

York City listeners, Hannah's coming to Montclair.

[Podcast Host]

On January 15th at 7pm for a special stop on her book tour. I'll be on stage with her at.

[Farnoosh Tarab]

The rec room at Lackawanna Plaza.

[Podcast Host]

Tickets are [e-mail] Montclair in today's conversation, Hannah and I dig into some much ground, including the big goal behind taxes.

[Farnoosh Tarab]

For humans, why she thinks tax education is actually empowerment.

[Podcast Host]

The limiting beliefs that so many freelancers still carry around taxes and how to break them. Her beautifully simple three system approach to staying organized all year around your taxes.

[Farnoosh Tarab]

And what if you do if you.

[Podcast Host]

Can'T pay your tax bill?

[Farnoosh Tarab]

This episode is packed.

[Podcast Host]

Let's get into it. Hannah Cole, welcome back to Sew Money.

[Farnoosh Tarab]

Wow. Taxes for humans is out in the world. I'm actually holding it in my hands We've been talking about this book, I feel like for two years because that's what it takes us, the gestation period for a book. If you're lucky, it takes two years.

[Hannah Cole]

Yeah.

[Farnoosh Tarab]

Congratulations, my friend. Taxes for humans. Simplify your taxes and change the world when you're self employed.

[Hannah Cole]

Oh, thank you, Farnoosh. And you know what? Like, huge credit to you because you were who I reached out to when I wanted to write this book because I was like, she knows how to do this. And I have so, so many little touch points along the way. I felt, oh my gosh, thank God for that community that you provided. So that was big. I feel like you're a part of this book.

[Farnoosh Tarab]

I'm honored to have had any part of this. And I love that you called it Taxes for Humans. And I'm sure you thought about the book titled Taxes for Dummies. We're not dummies. Okay. That's the point, right? Taxes, we. That's myth number one, that we think that they're necessarily complicated and we have to dumb it down in order to learn and get it. And your approach, what I love has always been to say, no, you're not. You don't have to dumb it down for people. We're not stupid. That. Look, yes, there are some complexities, but we can all rise to the occasion. And this is important stuff and it's important to care, but you've packaged it in a way that, that is very approachable. And as I said in my quote for your book, it's funny and it's joyful and even the book cover, it's got a. Is that a sun?

[Hannah Cole]

Is it like a bright little.

[Farnoosh Tarab]

It's like a little sunset or a sunrise maybe. So I want you to start by telling us a little bit about. And once again, you've been on the show before and we've talked a little bit about, we've teased this book. But for those who need a refresher or are new, tell us a little bit about the goal that you had with this book. I know that there's a personal story hidden behind this, that as a, as a creator, as an artist, and this book is really primarily for those, those freelancers and those self employed people that taxes were a bit of a pain point for you, but you thrived, you came on the other side.

[Hannah Cole]

Yeah, I tell this story, I tell this story in the book that when I was. I'm a professional artist by training and so a lot of people who follow my work are creative alth. So this book really is for self employed people, not just people who are creative, but it's also for anybody who feels like a weirdo. And I think that's not just artists though. We do feel like weirdos. I just remember sitting when I first started my life as a professional artist and I understand most people don't know what artists do. It's very, it's not a prescribed path. It's really difficult, notoriously difficult. But I remember sitting down with my dad's accountant and him saying to me like, so when are you going to get a real job? And I was just like, whoa.

[Farnoosh Tarab]

What?

[Hannah Cole]

I didn't realize I was going to be like questioned on the existential level walking into this appointment. I thought maybe you were going to help me with bookkeeping. So that feeling of being shamed, just the sort of small numbers we were dealing with making me feel really small and unimportant to this guy. I think that is the feeling that people can relate to and I think why they will like this book. This book is like coming from someone who's experienced that and I'm like, I got you and we are not going to do that. Your work is important.

[Farnoosh Tarab]

How small minded of that person. They probably just couldn't find the box. There's no box for artists anywhere. Like we don't fit into a box.

[Hannah Cole]

Yeah, yeah, I agree. And also I think to be fair, I think if you choose to go into accounting, you are a pretty opposite personality type from someone who chooses to be an artist. One is like risk aggressive and the other is risk averse. One is wants to stand out and have purple hair and the other one wants to blend in and wants no one to notice them. Yeah.

[Farnoosh Tarab]

What do you think is a really big limiting belief that even maybe sometimes you catch yourself still believing around taxes and how do you recommend we break through it or how are you working through it?

[Hannah Cole]

Yeah, honestly think a limiting belief and it's not an accident. I think our corporate overlords are training us to think this. But is that taxes are a burden? I absolutely reject that phrase tax burden. That is like workshop to language to help us frame taxes as always negative and something that should always be cut. And I don't think that's true. The book is dedicated to the taxpayers of Massachusetts because I am so grateful for a very good public education that I received. Like this book wouldn't exist without it. And for most of us, if we are working class, middle class, we're getting back more from taxes than we pay in. And of course billionaires don't like that they want to program us against that because they don't really want to be paying for our public schools and our health care and our environmental protection. So that's I think a really important thing to know. Like taxes give back to you in the form of disaster relief when something horrible happens to you, which I have personal experience with. It gives back to you when you're in the startup phase of your new business by subsidizing all your deductions and allowing you to take losses. It gives back to you if you are being domestically abused. You can withdraw money from your 401k without penalty because of that. So there's a lot that's really protective and wonderful in taxes and just a knee jerk attitude that all taxes are always bad I think is it makes us all feel like fearful and we should make it go away and maybe also that we should hold our electeds accountable for them.

[Farnoosh Tarab]

Wow. I'm from Massachusetts. I got a great education there. Although I moved when I was 14. But while I was there I was a great public school education too.

[Hannah Cole]

Yeah.

[Farnoosh Tarab]

So let's get into some of the systems you really, your whole approach is, and you say it in your subtitle. Simplification, Simplification. So let's dig into the systems and you have a three system approach. So let's break it down. Let's talk about organization, the three systems that you need just to get started.

[Hannah Cole]

Yeah. So I think a lot of people's confusion comes from not realizing that there's three separate systems. If you just realize there's three things and that they serve three different purposes, it helps you not cross wires on them. So the three systems are keeping your receipts, keeping your tax documents and then doing your bookkeeping. So those are separate things and they all serve different purposes. Receipts is really simple. That one is just keep them, put them in cold storage and if you can keep them in chronological order and by year, that's even a little better, which is not hard to do.

[Farnoosh Tarab]

Do you need paper receipts? Can you just. If you get a credit card statement and everything is tracked there, is that okay?

[Hannah Cole]

That's a great question. So a receipt doesn't have to be on paper. If you buy stuff for your, for your self employment on Amazon and you get that email confirmation, that's fine. That is your receipt. And so keeping receipts in an inbox folder is fine but a credit card statement and a bank statement are not a receipt. So it's really important to actually know that detail. The IRS can actually look at a credit card statement and disallow it because you still don't have what the law requires, which is the receipt. I say to people, like an IRS person in a good mood might accept that, but I wouldn't count on them being in a good mood.

[Farnoosh Tarab]

Yeah, I say that because sometimes when I submit expense reports for a client, I'll attach like, a credit. Credit card statement that shows the total that I spend. If I'm doing it's like a business expense that I spent on behalf of the client or whatever. And they'll accept that.

[Hannah Cole]

Yeah.

[Farnoosh Tarab]

And so I'm like, okay, so that maybe the IRS will accept that too. But good point.

[Hannah Cole]

I think this is part of what is confusing because actually, that credit card statement and that bank statement, where they belong, they have a role, a very important one, which is in your bookkeeping. So keeping a separate business bank account and a business credit card, what it gives you, the beauty is it gives you a statement that is all business. And then from there, you can do your bookkeeping. So that's for you to be organized and have it all in one place. Which, of course, if you think about what receipts look like, it's a relief to look at your credit card statement is so much more pleasant. So you only have to do your bookkeeping from that. You don't. Going through receipts and trying to do bookkeeping off receipts, that's where people go to hell. Feel like they're in hell. And so we don't want. We don't want that.

[Farnoosh Tarab]

Yeah, so receipts and then tax documents.

[Hannah Cole]

Yeah, so tax documents are more seasonal. You typically are going to get those because taxes are retroactive. We do the taxes for 2025 when it's 2026, because they're the tally. It's the time where we take all the estimates we made throughout the year and we reconcile with what actually happened. So in 2026, you'll get tax documents for what happened in 2025. So those will be your 1099s and your W2s, your bank statements, brokerage statements, things like that. So basically, it's pretty simple system there. You just want to have one dedicated spot in the house that absolutely, without fail, those documents will always go to. So I just, like, designate basically a spot on my desk, which is where I put them. Like I have a drawer in my desk, and they all go in there. Then when I'm ready to deal with them, when I get my last one in the mail, then I pull them out, and then I start doing my taxes. It is Also important to understand that as the world goes more digital, you'll get a hybrid. You'll get some still in the snail mail, but you'll get a lot of them more and more in your inbox. So you also want to have like a inbox folder where you keep them all because again, you don't want to miss one that got emailed to you.

[Farnoosh Tarab]

So now bookkeeping, you said, is number three.

[Hannah Cole]

Yeah. So bookkeeping is when you're self employed. Now of course, if your income is only coming from a day job because you're an employee and your getting a W2, you don't need bookkeeping because employees don't get tax deductions. So you're not 401k.

[Farnoosh Tarab]

And certain there are, there's a trade.

[Hannah Cole]

Let me clarify. So employees don't get business deductions. That's what I'm talking about. When you're self employed, any of the here's IRS language, ordinary and necessary. But basically the expenses that you incur to do that work, those are deductible when you're self employed. So if you're getting 1099s, you're eligible to take business expenses. So for people who are self employed, if you get 1099 income, if you invoice clients, if you do gig work, you are entitled to track business deductions. And I say you're entitled to because you don't have to. It's like a privilege. If you lose all your receipts, you don't have to actually take those deductions. You can go ahead and overpay your taxes. Nobody's mad at that, but maybe you are. But if you want to get them, you want to get that awesome benefit, then your job is to keep the receipts in cold storage, but then do the bookkeeping. So that's where the separate account comes in. And this doesn't need to be fancy, it doesn't need to be with software. It's totally fine to just have a spreadsheet where you track your expenses. If you just have a couple of 1099 jobs, you really might not have need for monthly software fees for bookkeeping. A spreadsheet might capture the 10 things you spend money on to make that income.

[Farnoosh Tarab]

Now when you go to do your taxes. So I'm going to use myself as an example. This is the first year that I'm going to be filing taxes for the Montclair Pod, which is a new business that I co founded this year. And we have our own business checking account business, Amex.

[Hannah Cole]

It's a.

[Farnoosh Tarab]

We have an ein. All of the things we aren't paying ourselves, like it's just basically money coming in, money coming out. When we go to do our taxes, what kind of paperwork will we need? We'll need receipts. Right. We'll need our ein. We'll need like what else? What else should I organize?

[Hannah Cole]

Yeah. One of the most important things is just the origin of who's getting the money and what the structure is. So you do it with. You have a partner in that. Correct. So you and your partner, if it's an official partnership or if it's a two person llc, then that means that there's going to be a separate tax return. And so there will be some stuff to deal with there. But basically you'll just categorize all the income and expenses, gather that up and then if it's a partnership, if you have a partnership, then you'll have to fill out a partnership tax return. And part of the job there is essentially still the same. Tracking your income, tracking your expenses, but it also has a little detail about what income each of you contributed to the business, what you are owed, what you've taken in and put out as things are moving along, and then also what percentage of the profits you each are entitled to and pay taxes on. So a partnership doesn't have to be split 50, 50. I know partners that split things 90, 10. Whatever your partnership agreement says is going to determine that.

[Farnoosh Tarab]

There's so much software out there. Do you have any rules of thumb as far as good software versus bad software?

[Hannah Cole]

Yeah, the tax industry is not my favorite. I have a lot of critique of it in this book because I don't think we should have to pay money to do our basic civic duty. I think you should just be able to file your taxes for free. Technically that is the law. If you are in the 70% of taxpayers below the top 30% of income, you are entitled to a free tax return. But this is information that's generally as hidden as possible by the tax software companies. And they have a lot of carve outs in the law that makes it so that they don't have to actually honor it to the full extent they should. So I'm not a huge fan. But with that said, I also live in reality and understand that using TurboTax or tax layer is generally pretty user friendly. They do tend to ask questions in a way that feels human, like feels understandable, that is the benefit of them. I think that part is great. What I do not like is I do think they Use tricks to. A lot of software companies use tricks to catch you into a paid return when they've advertised. They've hooked you by saying it's going to be free, and then they surprise you with, oh, but if you want to file your state return, which is of course mandatory, and you've done all this work already and we're going to delete it if you say no, you're going to have to pay us this money. So that kind of stuff. ProPublica has done some really great reporting on those tricks, which I have shared with permission on my Sunlight Tax podcast. But those commercial softwares, I think they're good and user friendly, but buyer beware, because they do have these little surprises and hook you into paying when you shouldn't have to.

[Farnoosh Tarab]

Yeah, that's interesting. I didn't know that. Can I just mention how, again, another awesome thing about your book. And back to the theme of simplicity. Some of your chapters are like two pages.

[Hannah Cole]

Who doesn't love that?

[Farnoosh Tarab]

That's amazing. Like chapter six, tax documentation, page 109. And it ends at 1:11. I love that. Talk to me about what you do when you're in a bind. A lot of people are worried about, what if I get audited? What if I can't pay my taxes Again, this conjures up a lot of fear. And then the industry loves to prey on that and loves to get us to pay for that. But tell us the reality of the chances of you even getting audited. And sometimes an audit can be very not serious. Right. It could just be like you forgot to submit a piece of paper and oh my gosh, it's in your filing cabinet. That's happened. Or sometimes the IRS is wrong. They ask ask, they follow up, oh, you forgot to submit this thing. It's happened to me.

[Hannah Cole]

It's.

[Farnoosh Tarab]

No, it's there. It's a pain in the butt. But yeah, it's not a horror film every time.

[Hannah Cole]

No, it's absolutely not. Although that word, audit, just think of how we've been trained. We think of an audit as a horror show. And sometimes an FBI raid at your house. Oh, my gosh. Yeah. A full body cavity search. Actually, usually it's, oh, hey, we got this 1099 that we don't see reported on your schedule C. That's it. And if you had reported it, somebody sent you a late 1099. Happens all the time. You just send them your. You send them your bookkeeping, right? And you just show them the line. No, see here, included in the total income. I Reported is that amount that got a late 1099, problem solved. And then the IRS says, oh, okay, thanks for showing us. We're done now. Right. So it's not always terrifying, it's not always awful. And if the IRS is wrong and if you've done everything correctly, which is absolutely possible, they don't bother you. They give you back your money with interest if they've held onto your refund, for example. So it's not always terrible. I think the other thing to know is like the tax code is built for humans. It's not built for economic robots who do everything perfectly. It's built for the citizens of the or the taxpayers of the United States who are, I don't know. Can you name a perfect one among us? I'm not sure I can.

[Podcast Host]

No. Yeah. And that's.

[Farnoosh Tarab]

That was echoed by another guest on my show recently who said, let's remember everyone who works at the irs, they're people and they're not out to get us as much as again, maybe Hollywood is responsible for that. Or I don't know. But I will say, though, I'm still waiting for my state refund because I filed, I extended my return delayed. What is the term I extended my.

[Hannah Cole]

Yeah, you did an extension for an extension.

[Farnoosh Tarab]

Extension. And then the government shut down.

[Hannah Cole]

Oh no.

[Farnoosh Tarab]

But my federal came right before the government shut down. And then. But my state takes longer and so hopefully we're recording this now. What like a day after the government reopened. Fingers crossed.

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[Farnoosh Tarab]

So, you know, you talk also in the subtitle about changing the world and you can simplify your taxes and changing the world. Talk a little bit about this intersection of taxes and social justice and why you wanted to put that in the subtitle. Why is this book going to also help us change the world?

[Hannah Cole]

Yeah, I think a lot of people, especially if you are historically underpaid, whether it's because you do like care work or nonprofit work or creative work, a lot of us are in it really for the love, like we're trying to do something with our work. And so I think not only are people like us often underpaid, but we're actually also really advocating socially and advocating for change. And so I just want to connect that money is not always a bad guy and that it is a real tool to create social change and have a bigger impact. And when it comes to taxes, like when I had the opportunity to write this book, I was like, we don't get a tax education in this country. Everybody feels like they're behind, but nobody knows this stuff. And so if I'm going to do the work of helping somebody get all the way from A to Z to understanding, like here's how the tax system works and here's how they fit inside it. There's just one more little step we can take to and here's what a fair tax law looks like and here's your representatives. It's hard to advocate for anything fair in the tax code when people are under educated about what a fair tax law looks like. So I took that step in this book book to be like, hey, here's one thing that would really change things I'm not trying to overwhelm. Speaking of a six page chapter, that's what these civic chapters are at the end. But just here's, here's language that you've been programmed to use that's against your interest when it comes to taxes. Here's how to talk about taxes with your friends in a way that's a little more real and that or to your benefit. And then also here's like how to advocate for a better, fairer law.

[Farnoosh Tarab]

And two, as artists you may not feel like you can be financially successful, that as an artist we have this kind of narrative, the starving artist, all of that. And I think you're also, with your work, your empowerment work, you're also changing that narrative. It's like you, if you can figure this out, you can go back to being an artist and like, like just not have to worry about this stuff anymore. And you can also go back to your artistry with more confidence in your financial life and bring that to your artistry too, which is not a small thing.

[Hannah Cole]

Absolutely. And I think that's true for artists, I think it's true for nurses. I think it's true for people doing teachers. Teachers, exactly. Like tax. I'm not saying let's all be tax weenies and get up in the internal Revenue code and spend our time in spreadsheets. I'm saying I think your work that you're already doing is super important. And if you had a little more knowledge of how some of these tax advantaged retirement accounts or HSAs work, you could boost the money you already have, make it more, have a little rocket fuel behind it. And then you could spend more time and have a bigger impact with that amazing work you're already doing. I just want people doing great work in this world to have more money and more power and even a little bit of rest.

[Farnoosh Tarab]

Yeah. What do you say to the person who's not sure if they can pay their taxes?

[Hannah Cole]

Yes.

[Farnoosh Tarab]

Especially, especially the self employed because especially when you're new to self employment, you aren't experienced maybe. And it's not that even it's always hard like managing cash flow.

[Hannah Cole]

Yeah.

[Farnoosh Tarab]

And then suddenly you have a big tax bill and you're like oh my God, no, it's gonna be this big. And then I don't know what to do. What do you do? Yeah.

[Hannah Cole]

First of all, the very worst thing to do is to freeze and do nothing. So let me just help. If there are ways around it. If this is you and you are not the first person to struggle with their tax bill, especially when you're self employed. Because if you didn't know how much profit you had all year, which is very easy when you get behind on bookkeeping because you get busy, that's very easy to have happen. The first thing to know is that you can, you should file your tax return even if you can't pay the bill. Those are actually two separate acts. Don't also not file your taxes if you know you can't pay the bill. So that's rule number one. The second thing is there's a sort of like DIY payment plan which is just exactly like file your taxes, don't pay or pay as much as you possibly can because whatever you don't pay, you're going to have interest on. And so you can reduce that amount. You should reduce it and Then wait for the bill that's going to come from the irs. And believe me, it will come and then pay it. Then that will buy you a little bit of time. You are going to have penalties and interest. This is a last resort. This is not a thing you should just do every year. But that is the sort of no application payment plan right there. Yeah. There's also a little bit of strategy to employ, too. If you owe to the state and to the irs, I would pick one. If you can pay off one bill, pay it off totally. Because it's much better to deal just with one entity than two. And generally the states are meaner. So I would pay off the state and make my payment plans with the irs.

[Farnoosh Tarab]

Oh, that's a great tip. Yeah.

[Hannah Cole]

If you think about, and this is what I do a lot in the book, is just connect it to what's happening in the background. Like states, a lot of them have balanced budget amendments, so they are not allowed to have a deficit. They go hard after taxpayers who can't pay the irs. The federal government can run on a deficit, so they don't have that hard stop the way states do. And the U.S. treasury, they can print money. I think there's something about printing money that makes you feel a little more generous. So I would rather deal with the IRS than the state of New York work.

[Farnoosh Tarab]

What are some other lesser known tax. I don't, I wouldn't call this a benefit, but I don't know secrets whether it's related to credits or deductions or permissions.

[Hannah Cole]

Yeah, I think really along those lines. Like, the IRS is really often very nice. They are humans. They are actual people who work there. And I found if you have the tiniest little shred of empathy for them, and they deserve it because their budget is always cute, they're not hiring new people when someone retires. Like, they are. The people who work there are really civil servants and they really get. They take a lot of flack. But if you can just be like, hey, I bet your day was a little hard. I hope you're doing okay. They're generally really nice and they'll work with you. So I think that the fact that you can call the irs, you can talk to them, there are people on the other end. That's good to know. Another thing that's really good is if you get a bill or if you even are audited by the irs, you can ask for more time. This is something I have a little strategy for inside the book. But basically you can call them and you can write down the name of the person you talk to and their badge number and you can say, I'm working on it. I got your letter. I see that. I have an examination happening. I'm getting my stuff together, but I need more time. Could I have more time? And then they'll generally grant that to you. Almost 100% of the cases they will say yes.

[Farnoosh Tarab]

What's the best way to communicate with the irs?

[Hannah Cole]

Oh, furnish. I wish we had a properly funded irs because that is a functional IRS that picks up the phone and can be really helpful with you. When we starve them of funds, it tends to make the experience with them really terrible. And it means you're on hold longer. It means it's hard to get them to return your call or keep track of your case. But in a functional, in a functional world, you generally, there's a taxpayer helpline that you can use. There's even a Taxpayer Advocate Service if you get a case that gets lost in the system. Sometimes that happens. There's a whole separate branch called the Taxpayer Advocate Service and they are there to help you out of those situations. But yeah, generally, if you're under audit, there's generally somebody's name on there and you. That will become your point person and you can start having a direct line of communication with that person. And that's helpful because they track your case.

[Farnoosh Tarab]

What's a deduction or a tax lever that you wish more, more people would adopt? Whether that's your audience.

[Hannah Cole]

Right. Yeah.

[Farnoosh Tarab]

Entrepreneurs, small business owners. Like last time you were on. I guess because it's been a minute. I haven't started a new business in a while. I didn't realize there were small business tax credits that were reserved for startups.

[Hannah Cole]

Yeah.

[Farnoosh Tarab]

And so I'll be looking into those pretty soon. But what else?

[Hannah Cole]

I think.

[Farnoosh Tarab]

Give me, give me some more. I got my notepad right here.

[Hannah Cole]

I love it. I think there's some little, like, sugar highs in the new tax bill. There are some things to pay attention to.

[Farnoosh Tarab]

Do you call them sugar highs?

[Hannah Cole]

I do, because I said that on purpose. Because I think in general we're all going to have a big crash in 10 years when the, the deficit explodes and we can no longer fund anything except servicing our debt. But I think they tend to build tax bills so that there's a little like, good stuff up front and people like it and the bad consequences, people losing health coverage, things like deficit explosions, those things are scheduled to come down the pike later. That's why I said it that way. So yes, there are some sugar highs from it. $10,000 of car loan interest if you buy a new car. Trump accounts, which we don't have full guidance on yet. They're not. That's not expected to come out till mid-2026. It is. It's an idea that I actually think is a pretty nice one. Do I have full faith it will be implemented? Well, we'll see. But those are good things. But I think something that has been around for a while and got a little expanded this year and I think of all years in your life, this is the year I wish everyone in your audience would take full advantage of their hsa. That's a health savings account. HSA is often confused with an fsa. An FSA is a flexible spending arrangement that's through a workplace and those expire each year. That's a use it or lose it thing. An HSA is totally different and HSA is awesome. And it rolls over. You keep the money, it doesn't expire. It's basically a super powered tax advantaged account where if you put money in, you get a discount. It takes income, taxable income off your current year tax return. And then if you use it as the account is intended to spend money on health expenses, then that money is also tax free when you take it out. So it's a full complete tax shelter. Now this is more important than ever this year because of the rising costs of health care. And an hsa, because it lowers your taxable income, it can actually lower your income potentially enough to qualify you for certain plans, I would say qualify you for certain ACA marketplace subsidies. Although those are as. At the time of speaking, we reopened the government without getting concession on refunding those subsidies. So we're a little in a limbo state. I don't think those subsidies will continue to exist. But the HSA can lower your income and help you qualify for stuff that you would get with a lower income. And they've also, this year in the new tax bill, expanded the use of HSAs. I used to call, I still do call HSAs like a poop sandwich because.

[Farnoosh Tarab]

We went from sugar high to poop sandwich.

[Hannah Cole]

It's that because it's an awesome, super amazing account that you get access to because you have really yucky healthcare. It gives you something really nice on top of something gross. So that is what an HSA is, an amazing account that you can use when you don't have great health care. So it used to be only for high deductible health plans, but this year in the new tax law, they've actually expanded HSA eligibility to also include bronze plans and catastrophic plans. So more people qualify now for HSAs than did last year.

[Marc Maron]

Year.

[Hannah Cole]

So, yeah, very good to know. Worth looking into.

[Farnoosh Tarab]

As we look ahead and the bbb. Big beautiful bill. What are some of your high level thoughts on tax planning with. With that and some of the Trump plans around tax code going forward?

[Hannah Cole]

Yeah, I don't love this bill, if I'm being completely blunt and honest with you. It does fulfill some campaign promises. Although all of those promises then expire in 2029. They're temporary, so no tax on tips, an expanded standard deduction for seniors, car loan interest. But there's a lot of sort of high level community stuff that I think I don't love. It ended all of the environmental credits of the Biden era Inflation Reduction act, which was a massive investment in the green economy here. Asheville, where I live, like one of the huge solar companies just completely folded because of those credits being canceled. So it has impact. I would say for tax planning, there are some little things that you can scoop up this year and between now and 2029, and I'd be paying attention to those. But I would say on a larger and more community level, I really don't like the world we're developing where we gave the huge majority of the tax cuts in that bill to families making over $500,000 a year at the expense of poor people's food and health care. And we literally are kicking people off healthcare to pay for the wealthy to have more caviar on their private jets. I don't love that.

[Farnoosh Tarab]

Yeah, essentially. Yeah. Before we go, a few lightning round questions. It'll be fun.

[Hannah Cole]

Great.

[Farnoosh Tarab]

Taxes for humans. The human part. What's the last thing you made with your hands?

[Hannah Cole]

Well, the last thing I made with my hands, I'm doing a print project because of the book. So I've been doing these screen prints of T shirts and tote bags that are like merch for the book, but they're handmade so they're hardly commercially viable. And they say human on them. So that's what I really love. Yeah, I've been enjoying.

[Farnoosh Tarab]

For my Montclair listeners and my Essex county listeners and even my New York City listeners, Hannah and I will be doing a talk walk in January in Montclair at the rec room in Lackawanna Plaza. January 15th.

[Hannah Cole]

Right. 7pm January 15th, 7pm we'll put that link.

[Farnoosh Tarab]

I don't know if we have a link yet, but stay tuned for that?

[Ulta Beauty Advertiser]

We do.

[Hannah Cole]

Sunlighttax.com Montclair oh, perfect.

[Farnoosh Tarab]

Okay, so we'll put that link in our show notes if you want to grab tickets. And I'll be talking about it more and more until we get to that event. It's gonna be so much fun. All right, next. Next question. Coffee shop confession. What's your go to? Tax season, Comfort drink or snack when you've hit like hour five of receipts?

[Hannah Cole]

Oh, my gosh. When it's that bad, I think I usually go for a beer.

[Farnoosh Tarab]

Okay, fair. Yeah.

[Hannah Cole]

I love a strong coffee in the morning, which I will drink until about 3pm and then I'm cut off.

[Farnoosh Tarab]

Gotcha. Favorite business expense you'll never apologize for.

[Hannah Cole]

Oh, my gosh. Business travel. In fact, Farnoosh, I talked about you in my newsletter recently because, like, I took it, I did a your pitch please conference in New York. And it's how. It's where I met you. And that was like I met with a friend. We, like had great food all over New York City. I met you. We learned how to pitch. It was wonderful. And it was a business expense and it's really helped my business.

[Farnoosh Tarab]

Yeah, it did. And that's when we met. Oh, my gosh.

[Hannah Cole]

Yeah.

[Farnoosh Tarab]

All right, complete the sentence. A good tax preparer is empathetic, wonderful. And if you could audit one thing in our culture, what would you audit and why? Last question.

[Hannah Cole]

I love it. Our attitude about helping our communities, about being a part of a fabric and not just individuals. Yeah.

[Farnoosh Tarab]

Bravo. Taxes for humans, everybody. Hannah Cole, founder of Sunlight Tax, Congrats on your book. Thank you for writing your book. And I'll see you in Montclair.

[Hannah Cole]

I'll see you in Montclair. Thanks for having me. Far news.

[Farnoosh Tarab]

Thanks so much to Hannah Cole for joining us. Her book again is called Taxes for Humans. And to join us in Montclair in January for her special bookstop, go to sunlighttax.com Montclair I'll see you back here on Friday for AskFarnouche. And I hope your day is so money.

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