The Fourth Quarter

The Fourth Quarter? Of what? In a football game, there are four quarters each lasting 15 minutes and a break in the middle typically referred to as half-time. At the end of each quarter, football teams switch sides to ensure fairness and equal playing conditions. At the end of the second and fourth quarters, officials stop the game clock and announce a two-minute warning indicating two minutes left to play. Most of the time, the fourth quarter seems to matter the most and is usually the most exciting. Coaches may alter their strategies to a conservative approach if their team is winning to protect the lead. If the team is losing, the approach may be more aggressive and risky to try and pull out a win.

4th-quarterLife can be compared to a football game with four distinct quarters and break in the middle too. Each life quarter has unique characteristics, with the fourth sometimes more challenging due to health or wealth issues. A career-long game plan for retirement can break down if the approach is overly aggressive due to risky investments.

If the nest-egg is intact, the approach may require moving to more conservative investment options to “protect the lead”. Like football, the goal of the game of life is to maximize the fourth quarter and end up victorious with as much potential, joy, and purpose as the previous three quarters. One thing is certain, a good strategy can result in the most satisfying and rewarding “game” ever played.

The fiscal year also has four quarters, each with three consecutive months, and is the period generally used by businesses and governments to report accounting and budgets. The end of the fiscal year is “officiated” by taxation rules and laws requiring accounting records to be maintained and taxes to be calculated annually. Although some companies use a calendar year as their fiscal reporting year, it tends to be more financially lucrative to align fiscal years with the general flow of the business or seasonally, as in the beginning or end of summer.

choosing-a-fiscal-year-calendarSince the fiscal quarter acts as a basis for reporting accounting and financial statements, all public companies in the US must file quarterly reports with the SEC (The Securities and Exchange Commission.) Each quarterly statement contains the company’s un-audited financial statements and accounting records for the previous three months. Analysts and investors tend to utilize these smaller financial windows to track the company’s performance to determine if performance is consistent.

For the individual taxpayer, the fourth quarter is made up of October, November, and December. For taxpayers that pay quarterly estimated tax payments, the last due date is January 15, but many taxpayers chose to pay these in December in hopes of avoiding Alternative Minimum Tax penalties and include the deduction on their tax return. The Internal Revenue Service does not have a roster of what a quarterly tax payer looks like, but this population is generally the self-employed, the retired community mainly living on pension, and people that live primarily off of investments. The IRS requires anyone who ends the calendar year owing $500 dollars or more to estimate total liability and pay taxes quarterly. For employees, this is usually handled without issue through withholding. However, the self-employed or a small business owner will likely be paying estimated quarterly taxes designed to cover income that is not subject to withholding.

Hut, hut, hike! The best way to avoid the end of fiscal or calendar year Hail Mary is to pay attention to the Fourth and GOAL!

– Susan Amsler
– October 10, 2017

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