Tax Time Cometh!
My tax documents are slowly trickling in, and based on some preliminary numbers, it looks as if I'll be getting back a nice refund. I got a tiny refund ($31 from the Feds; $803 from the state) last year, but it was the first time in many years. Prior to buying the place I live in now, I didn't have enough deductions to itemize, so I always ended up paying extra to the government. I don't mind paying taxes, but I sure do wish the $87 billion (and probably much, much more) that's apparently being wasted in Iraq could go to establishing something that everyone could benefit from: a national health care plan. Besides: When did conservatives become so fiscally irresponsible?
What's different for me this year, now that I'm a tightwad gazelle? I made some financial moves that will reduce the amount I owe! I picked up these tips from reading the end-of-year finance columns, which I found to be helpful. I can't believe I'm actually saying this, but I'm looking forward to seeing how the numbers pan out. Any refund money goes directly to investments. (Last year, I used to money to pay down credit card debt.) Careful spending during the past year allowed me to have the excess cash to pony up on a few tax-deductible items.
For starters, I paid my Jan. mortgage payment in December, which netted an addtional $875 towards the yearly interest. I also prepaid my March property taxes--$1500, which I can also claim. (The good thing is that they're not due again until November!) For the last 1.5 years, I've had a steady freelance gig, so I claim whatever deductions I can on that. Having freelance income is a double-edged sword, because you have to do lots of special things, including paying special taxes. And while you have extra income, you have extra liabilities. It's too complicated for me to grasp, so I just I leave it to my tax accountant to figure out. I keep good records, spreadsheets and receipts, and I usually compile all this for her. But the $300 I pay her (also tax-deductible) is money well-spent as far as I'm concerned.
Still, I haven't decided how to handle voluntary contributions to retirement accounts. I put $1K in a traditional IRA at the beginning of the year, but I'll wait and see what putting the maximum there does to my taxes, since I have some time leeway. If it doesn't do anything, then I'll move the money to my Roth IRA account--at least it'll grow tax-free, so it seems to be the better option when I consider the long term. I set up the Roth IRA at the beginning of the year, the goal being to contribute the maximum through automatic deductions. Or course, I could always add the money to my slowly growing emergency fund.
Other news: I looked at my 401K statement, and during the last year and a half, my company added $4,102 in matching funds. Wow!--You can't beat free money!
My tax documents are slowly trickling in, and based on some preliminary numbers, it looks as if I'll be getting back a nice refund. I got a tiny refund ($31 from the Feds; $803 from the state) last year, but it was the first time in many years. Prior to buying the place I live in now, I didn't have enough deductions to itemize, so I always ended up paying extra to the government. I don't mind paying taxes, but I sure do wish the $87 billion (and probably much, much more) that's apparently being wasted in Iraq could go to establishing something that everyone could benefit from: a national health care plan. Besides: When did conservatives become so fiscally irresponsible?
What's different for me this year, now that I'm a tightwad gazelle? I made some financial moves that will reduce the amount I owe! I picked up these tips from reading the end-of-year finance columns, which I found to be helpful. I can't believe I'm actually saying this, but I'm looking forward to seeing how the numbers pan out. Any refund money goes directly to investments. (Last year, I used to money to pay down credit card debt.) Careful spending during the past year allowed me to have the excess cash to pony up on a few tax-deductible items.
For starters, I paid my Jan. mortgage payment in December, which netted an addtional $875 towards the yearly interest. I also prepaid my March property taxes--$1500, which I can also claim. (The good thing is that they're not due again until November!) For the last 1.5 years, I've had a steady freelance gig, so I claim whatever deductions I can on that. Having freelance income is a double-edged sword, because you have to do lots of special things, including paying special taxes. And while you have extra income, you have extra liabilities. It's too complicated for me to grasp, so I just I leave it to my tax accountant to figure out. I keep good records, spreadsheets and receipts, and I usually compile all this for her. But the $300 I pay her (also tax-deductible) is money well-spent as far as I'm concerned.
Still, I haven't decided how to handle voluntary contributions to retirement accounts. I put $1K in a traditional IRA at the beginning of the year, but I'll wait and see what putting the maximum there does to my taxes, since I have some time leeway. If it doesn't do anything, then I'll move the money to my Roth IRA account--at least it'll grow tax-free, so it seems to be the better option when I consider the long term. I set up the Roth IRA at the beginning of the year, the goal being to contribute the maximum through automatic deductions. Or course, I could always add the money to my slowly growing emergency fund.
Other news: I looked at my 401K statement, and during the last year and a half, my company added $4,102 in matching funds. Wow!--You can't beat free money!
posted by Tightwad Tim at 4:18 AM
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