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Posts tagged with: tax day

Tax Time!

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It’s that time of year again…TAX TIME!!!!

This year I’ll be responsible for getting the taxes done for two households:  my own and my father’s (side-note: my dad has frontotemporal dementia, as explained here). Last year at tax time, my brother physically went with my Dad to an H&R Block to have his taxes done, at his request. It worked out, but was a whole mess because then my Dad lost all of the tax paperwork after-the-fact and it’s been a huge pain as I am the person who handles all of his finances. I really could use those year-end statements!!!

This year, given another year of progression of his cognitive impairments, my dad no longer cares about his taxes so I can handle them entirely myself without needing to include him (this is always a tricky balance because he cannot be in charge of his own finances, but he still wants to have some oversight and say in how things are handled. It’s totally understandable, but presents a challenge since he doesn’t have the mental capacity to fully think through financial decisions, etc.).

For our own household, we’ve either done our taxes ourselves (in years past) or used H&R Block, too.

This year, I want to do better. I’ve never been a huge fan of the cheap drop-in type of tax places. I want to hire a CPA that we can have an ongoing relationship with. Someone who knows our finances and is knowledgable enough that they can make recommendations (e.g., donate $X or contribute $X to whatever tax-advantaged account, in order to save $x in taxes) and know all the little ins and outs of tax laws. I want to pay what we owe, but also to limit our liability in whatever (legal) ways are possible.

Also, there’s the whole issue that I live in Arizona and my dad lives in Texas. I’m flying back for a couple of days in March to handle some of my Dad’s affairs (I will be scheduling meetings with:  an estate attorney, a CPA, and a financial advisor). I’m assuming my Dad’s CPA needs to be someone physically in Texas, given that state-level tax laws are obviously different state-to-state.

Here’s my issue – I have NO IDEA how to find a reputable CPA. None. So I come to you all, as you are way more knowledgeable about this than I am. How do I find a really good CPA? Where would I even search? Google? Yelp? Help!

And as a side note….I’m pretty nervous about this year’s taxes. Gulp! The past couple years I’d been paying estimated quarterly payments so our tax liability in April was pretty minimal (usually about another $1500ish or so). This year, I haven’t done any estimated payments at all. UGH!!! We have made some hefty tax-credit approved donations so our state tax liability should hopefully be zero (knock on wood). And I’ve had taxes removed from my full-time paycheck so hopefully that will help offset the burden of what we would otherwise owe. But, we’ve had a lot of income that hasn’t had any taxes removed (both hubs’ business income and my part-time contract based job do NOT have taxes removed from checks). Sooooo, pretty sure we’ll end up owing a pretty penny.  I’d like to get our taxes all figured out by mid-March so we have March and April to try to gather up our funds and hopefully pay the IRS in full so we don’t end up having to pay interest and penalties, etc. Worst case scenario, we could pay by the mid-April deadline on a credit card, which would buy us one extra month to pay off everything in full (since purchases made in April wouldn’t be due until May. Note: I NEVER carry a balance on my credit card!! Any purchases made on the card are paid 100% in full by the next month’s due date). That would allow us THREE months to spread the IRS tax bill over. With how high our income is, we should be able to scrape up the funds. But it also depends on how high our tax debt is. NO FUN!!!

Have you done your taxes yet for 2016? Any tips on finding a great CPA?


Ashley’s 2016 Taxes

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Happy Tax Day, friends!

 

Taxes around here have never been fun. Since hubs is self-employed (and until last summer I was working contracted jobs where taxes weren’t withdrawn from paychecks), taxes are always a bit….dicey.

To be fair, we DO make estimated quarterly tax payments. We also make strategic donations that will allow us to take advantage of Arizona’s tax credit (to cover any state income tax liability).

And immediately as soon as I began working full time (started in July 2015), I began deducting HUGE amounts of my paycheck. Like, my net pay is literally half of my gross pay.

I try to take out as much as possible pre-tax:

  • Retirement contributions to our 401(k) (<note, I feel like I call it something different every time I mention it. I looked it up and the mandatory 7% is technically invested into a 401(a). On top of that, I invest another 3% in 403(b) through work. From this point forward, I’ll just refer to this as 401(k) contributions for simplicity’s sake). The mandatory 7% + extra 3% means 10% of my pay is gone right off the top.
  • Medical and dental insurance.
  • Medical savings into a flexible spending account (pre-tax money to be used only for medical purposes, which also includes covering dental work).
  • Childcare savings into a flexible spending account (again, pre-tax money that can only be used for childcare purposes).
  • Parking permit. I have to pay for a faculty parking permit, which is auto-deducted from my paycheck. I double-checked and, yes, even this is listed as being deducted pre-tax.

But even with all this stuff to help offset the tax burden…we still usually end up owing money (ahem….technically prior to the job all we did was the estimated quarterly taxes + Arizona tax credit program. But you get the idea).

Last year we ended up owing big time. To the tune of $3,500. Remember that? Not fun.

We were pretty nervous when the time came for taxes to be calculated this year. Given the new job (and all the additional withholdings/taxes), we had no idea what to expect. We’d continued making estimated quarterly payments on hubs’ income (albeit probably a bit meager compared to where they should have been), but given our giant bill last year it was a bit of a hold-your-breath situation to finally get them sorted out this year.

And – drumroll please –

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We’re officially among the nearly 80% of Americans to receive a tax refund this year!!!! (statistic source).

According to the IRS’s website, the average refund is nearly $3,000 (source). We aren’t anywhere near that figure (we’re receiving under $1,000), but I’m just thrilled to not owe money this year!!! Hallelujah! Last year I made a big deal about not over-paying taxes because it’s essentially an interest-free “loan” to the government until you receive the tax refund. But at that time, several commenters mentioned relying on the refund as though it was a big bonus from work or something similar. I still prefer not over-paying by a large amount (but to each his own, and I can appreciate differing perspectives), so I thought our refund amount was pretty incredible. Our refund is coming mostly from charitable donations we made in order to receive the Arizona tax credit. We pay up to the maximum amount allowed by state, with full knowledge that it would probably be well over our income tax liability and would, therefore, be returned as a tax refund. I LOVE this about our state (first state we’ve lived where we’ve had to pay income tax), because it’s kind of a sneaky way of helping organizations we love and feel passionately about. We give them money, then if we over-pay (which we do), the government reimburses us (not the program, itself). Charitable program still gets their money, so no harm done to them. It’s kind of like picking where we want our tax money to go (on a state level). I’m no tax expert and many stipulations apply, so if you’re curious about it then I’d encourage you to do some research and meet with an accountant or other tax professional. Anywho – that’s where most of our refund is coming from, along with a little overage being returned to us from the federal government for an over-payment of taxes there.

It really puts my mind at ease to know we didn’t have to scramble this month to set up a payment plan or magically pull $3500 from our butts (like we did last year). As our cruise is on the near horizon, I was worried whether we’d have to “borrow” from the cruise fund in order to pay taxes, etc. etc. etc. But, alas, all is well in the world and we continue on with only student loan debts remaining. No “new” tax or IRS-related debts to report. : )

How did tax day go for your and your family this year? Have you filed an extension or working furiously this evening to get taxes wrapped up? Did you get a refund weeks ago? I hope your taxes worked out as well as ours did this year!