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...
Monday, February 16, 2015
Time to Adjust... Withholding, and Attitude!
Posted at 9:00 AM
Labels: income, real estate, taxes, unmarried couple finances
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4 comments:
Can you talk about how you choose an accountant and how much their services typically cost?
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...
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.
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.
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