Podcast Summary: Grown-Up Stuff: How to Adult Episode: You Might Also Like: Grown-Up Stuff: How to Adult
Release Date: March 8, 2025
Host: Adam Graham

Introduction

In the "Grown-Up Stuff: How to Adult" episode of The Great Detectives Present Dragnet (Old Time Radio), hosts Matt Stillo and Leah Palmieri delve into the often daunting world of taxes. As tax season approaches, they are joined by expert Russ Garofalo, founder of Brass Taxes, to demystify the complexities of tax filing, ensuring that listeners feel more confident and informed when handling their finances.

Meet the Hosts and Guest

• Matt Stillo: Veteran host bringing experience and enthusiasm.
• Leah Palmieri: Newest addition to season three, bringing fresh perspective and humor.
• Russ Garofalo: CPA and founder of Brass Taxes, shares his extensive knowledge on tax preparation and strategies.

Understanding Taxes: A Historical Perspective

Russ begins by providing a brief history of taxes in the United States, explaining that income taxes were introduced post-Civil War to manage national debts. Initially imposed only on the wealthy, taxes have gradually expanded to include a broader population. He emphasizes the evolution of the tax system as one of "cheating and then changing the laws so that cheating is not allowed," highlighting the dynamic nature of tax regulations [05:01].

The Tax System Simplified

Russ breaks down the concept of tax brackets, clarifying a common misconception:

“You should always take more money because the next money you make only ever goes into the next tax bracket when you've filled the previous bucket.” [09:25]

He explains that tax brackets are progressive, meaning only the income within a higher bracket is taxed at that higher rate, not the entirety of one’s income.

Tax Filing Essentials

The conversation transitions to the practical aspects of tax filing:

• W-2 vs. 1099 Forms: Russ distinguishes between employees (W-2) and contractors/freelancers (1099), underscoring the importance of understanding one's employment status for accurate tax filing [14:33].
• Starting Tax Preparation: He advises beginning the process early to avoid last-minute stress and to ensure all necessary documents, such as W-2s and 1099s, are accounted for [12:04].

Deductions vs. Credits

Russ elucidates the difference between deductions and credits:

• Deductions: Reduce taxable income (e.g., student loan interest, IRA contributions).
• Credits: Provide a dollar-for-dollar reduction in tax liability (e.g., Earned Income Credit, Child Tax Credit).

“Deductions are like a discount... Credits are like, we'll give you a refund of the money you spent.” [27:44]

Choosing a Tax Professional

Selecting the right tax preparer is crucial. Russ offers valuable advice:

“Work with someone who understands your industry and you feel comfortable talking to.” [19:35]

He warns against assuming that certifications like CPA guarantee competence and emphasizes the importance of communication and industry-specific knowledge.

Tax Planning and Withholding

Effective tax planning can prevent unexpected liabilities:

• Withholding: The amount deducted from each paycheck for taxes is determined by the W-4 form.
• Estimated Taxes: For freelancers and self-employed individuals, setting aside a percentage of income (typically around 25-30%) can mitigate year-end surprises.

“Withholding is money that they take from you before you get your money... If you get that wrong by $50 and then you get paid 26 times, now you owe $1,300.” [25:03]

Navigating Tax Refunds and Liabilities

Russ clarifies that filing taxes early can expedite refunds without altering the amount owed:

“You would get it sooner... not the amount.” [13:09]

He advises treating refunds as a form of passive saving, suggesting that overpaying taxes may not be financially optimal.

The Reality of Audits

Addressing fears around audits, Russ demystifies the process:

“An audit is just a scary word for show us how you got these numbers.” [38:45]

He reassures listeners that while audits can be intimidating, they are relatively rare and often involve straightforward verification of submitted information.

Self-Employment Tax Explained

For freelancers and gig economy workers, self-employment tax is a significant consideration:

“Self employment tax is a flat tax... You're going to pay 15%.” [42:30]

Russ explains that self-employed individuals are responsible for both the employer and employee portions of Social Security and Medicare taxes, totaling 15%.

Key Takeaways

• Start Early: Begin tax preparation well before the deadline to avoid stress and ensure all documents are in order.
• Understand Your Forms: Distinguish between W-2s and 1099s to accurately report income.
• Track Expenses: Regularly record business expenses to reduce taxable income.
• Choose Wisely: Select a tax professional who is knowledgeable and communicative.
• Plan Ahead: Adjust withholding and set aside funds for estimated taxes to prevent year-end surprises.
• Stay Informed: Continuously educate yourself on tax matters to make informed financial decisions.

Notable Quotes

• Russ Garofalo: “You should always take more money because the next money you make only ever goes into the next tax bracket when you've filled the previous bucket.” [09:25]
• Russ Garofalo: “Deductions are like a discount... Credits are like, we'll give you a refund of the money you spent.” [27:44]
• Russ Garofalo: “Withholding is money that they take from you before you get your money... If you get that wrong by $50 and then you get paid 26 times, now you owe $1,300.” [25:03]
• Russ Garofalo: “An audit is just a scary word for show us how you got these numbers.” [38:45]
• Russ Garofalo: “Self employment tax is a flat tax... You're going to pay 15%.” [42:30]

Conclusion

The episode successfully transforms a typically intimidating subject into accessible and actionable information. By breaking down complex tax concepts and providing practical advice, Matt, Leah, and Russ equip listeners with the tools needed to tackle their taxes confidently. Whether you're an employee or a freelancer, understanding the basics of tax filing, deductions, credits, and planning can lead to better financial outcomes and reduced anxiety during tax season.

For more detailed advice and resources, listeners are encouraged to visit brasstaxes.com.

Note: Advertisements and promotional segments have been excluded from this summary to focus solely on the informative content of the episode.