Monday, February 16, 2015

Time to Adjust... Withholding, and Attitude!

Tax time is usually a happy time of year for me. The last few years, I've tended to get refunds. I know it's all a psychological game, because a big refund really means you were overpaying all year, and gave the government a free loan. If you owe money, it's like the government gave you a free loan... though interest rates are so low these days, it's pretty much a wash anyway. What is ultimately important is the net amount of tax you pay... so I try to remember that the refund isn't really like winning the lottery. But this year, although I wasn't expecting to get a big refund, I got none at all. Instead, I owed several thousand dollars!
It's my own fault-- my accountant told me to adjust my withholding last year and I just never got around to doing it. And now that I'm not a homeowner anymore, I don't have the big mortgage interest deduction that I used to have, and some of my other itemized deductions were lower. I also had more income and the net result is that I owed more tax. A lot more than I thought I would. My total taxes paid will be a lot more than last year.
The good news is that I am not paying it a minute before it's due on April 15. And hopefully in the meantime I'll have gotten a decent bonus that will more than replace that outflow. And I already adjusted the allowances on my W-4 in hopes that I won't have this problem again next year!

Next on the to-do list is some serious thinking and planning about what makes sense for Sweetie and me and our tax situation as individuals and as a couple. Sweetie owns real estate but doesn't have a job right now. I have a job, but don't own any real estate, so one option is for me to buy a share of Sweetie's apartment. Another option is getting married! Neither of these is anything to take lightly... We shall see...


4 comments:

Anonymous said...

Can you talk about how you choose an accountant and how much their services typically cost?

Anonymous said...

I have been reading your blog since the early 2000's. And to this date I still enjoy it. I have financial evolved, through your experiences I was able to make smart choices. I created a budget, finished college, bought a condo and in 2010, I left NYC and moved in with my partner in CA. Now, 2015 loving my life I made for myself and g/f, just debating whether or not to sell my beautiful condo in NYC. Decisions...

AJ Winters said...

Congratulations! Even if you don't get married, you're in an enviable romantic relationship :)

I can't actually remember how long I've been reading your blog for - probably from before I got married, which means at least 7 years. It's always lovely to hear updates from you; I hope your mom and sister are doing well/better.

Nate M. said...

I worry as an independent contractor that I will end up owing more than I expected. I guess I just need to figure out with my accountant just as reassurance.