Past Year Taxes: What Would Buffett Do?

As a leading player in the current financial crisis who collaborated for the first time on a biography released last week, Warren Buffettt is getting lots of attention right now. Unlike many other characters, he's known for his careful investments -- he's buying now that prices are low, with all the money he avoided losing when they were high. But Buffett isn't just known for swooping in to do billion-dollar deals with giant companies. He's well-known for the strategies and habits that let him accumulate that money in the first place. Since Buffett's strength is his ability to systematize, it's interesting to wonder what he'd do about the kinds of financial problems the average person is more likely to encounter. For example: how would Warren Buffett deal with paying past year taxes?

First, get all the facts: Buffett is well-known for having a huge volume of data on hand. From knowing the default rates for numerous savings and loans to knowing how much money Coca-cola makes per serving served, Buffett is well-regarded for his grasp of the details. When paying your past year taxes, you don't need that level of obsession, but it can be helpful to gather all the information you can.
Second, find someone to learn from: Buffett learned a great deal from his mentor, Benjamin Graham. There aren't as many experts on past year taxes as there are on undervalued stocks, but it's still possible to pick up some information. I'd recommend googling around for a guide to past year taxes, or a similar issue, and reading until you find someone who really resonates. Then find out what else they've said, and keep on digging.

Third, time things right: Buffett knows how to buy low, sell high, and borrow cheaply. When you're paying past year taxes, remember that the interest rate you're charged on the money you owe goes way down once you agree to pay. It can be prudent to agree as early as possible to pay your past year taxes, but to arrange payment over as long a period as possible, to take advantage of the rates.

Finally, be picky about who you work with: Buffett is well-known for choosing his associates carefully. The board of Berkshire-Hathaway, his holding company, is stocked with friends from the 50's, 60's, and 70's. Although nobody can quite catch up now, it's possible to do the same thing in microcosm. Find a person or site that makes paying past year taxes easy.

I should note that I'm cheating a little by citing Warren Buffett, since he was well-known years ago for his expertise in, of all things, taxes. He found that he couldn't point to his record (it seemed speculative), and he couldn't point to his experience (just a few years), but if he showed people he knew how to help them save on their taxes, he was guaranteed to get a client. Some of Buffett's early deals may well have started out with advice on paying past year taxes.

Byrne Hobart is a New Yorker with widely, perhaps bizarrely, varied interests. He's always amazed at how small companies are helping people with their financial problems, and allowing them to file past year taxes without jumping through hoops. warren buffett-Taxes