:::: MENU ::::

Browsing posts in: Income

CPA Update: 2017 Taxes

by

I realize we’re now half-way through 2018, but I never provided a full update of our tax situation from 2017! The news is mostly good…..but a little “mixed,” I guess.

Our Tax History

In 2016 we messed up badly. During that year, hubs was still fully self-employed and although I had a full-time job where taxes were withheld from my employer, I also still worked part-time in a contract position where taxes were not withheld. Long story short, we WAY underestimated our tax payments. Come tax time, we were hit with a MASSIVE (like, felt insurmountable) tax bill. On advice of our CPA, we tried to fight a portion of the tax bill and it took 6 MONTHS of back-and-forth before we were finally able to come to an agreed payment plan. I’ve never revealed the exact amount of back-taxes mostly due to embarrassment. I did say that the payment plan we settled on will have us paying $283/month for….basically forever. A long time, okay?

ANYWHO….. The 2016 tax experience scared the pants off of us and made me extra cautious in 2017. I knew I was withholding more from my paychecks than necessary, but I wanted to err on the side of caution. 2017 had a lot of big changes for us: hubs closed his business and went back to school full-time. I had to leave my part-time job after getting a big raise at my full-time job and having to sign a non-compete agreement. All these changes made it so I wasn’t quite sure what to expect come tax time. Again, we used a CPA. I gave him all our stuff and held my breath, biting my nails, until taxes were complete. For some reason, I was still expecting we’d owe money. I was just hoping it wouldn’t be too much.

2017 taxes

When taxes were done, I couldn’t believe the end result. We were owed a refund! I’m using round numbers here, but we had overpaid our federal taxes by about $400 and had overpaid state taxes by over $800!!! This was a HUGE relief for me! I knew the federal overpayment would be applied to our back-taxes, but I fully expected (naively) that the state refund would still come back to us. I checked online a couple of times to try to verify the refund, but the online system just said that due to the high volume it was taking longer than normal to process tax refunds and to wait 8 weeks before calling to inquire further. So here I am, thinking I’ll get a check in the mail and it’s just going to take awhile.

Spoiler alert: I did not receive a check in the mail. Instead, I received this letter in the mail.

We used some or all of your 2017 refund to pay outstanding liabilities……

By law, we must offset any refunds or overpayments to certain government agencies.

Of course they do. They had to use the refund to pay for our 2016 back-taxes. I should’ve known this would happen. For some reason (false hope), I really thought we’d get the state portion of the overpayment back. But nope. It goes straight toward our past debt. Would’ve been nice to use that money for different, higher-interest debt. But I get it. It is what it is.

Long Story Short

No refunds for 2017. But no additional tax liability either. Now that our work situation has stabilized a bit (hubs now goes to school AND works part-time as a personal trainer where his taxes are withheld & I still just have the one full-time job where taxes are withheld from my paychecks), I feel safer to adjust my withholdings slightly so I will get just a tiny bit more per paycheck. Overall, we’re in a pretty good place. I don’t want to overpay in taxes (especially since I now know for 100% fact that we aren’t getting any overpayments back!!!), but I also don’t want to be short and end up owning money either. We should be in pretty good shape to be right about $0 owed or overpaid for 2018. We’ll check-in with our CPA again in a couple months just to make sure everything looks good and to see whether he suggests or recommends any additional changes to our check withholdings. With any luck, we can come in right about even for 2018 taxes. Fingers crossed!

And the $283 monthly payments to the IRS will continue as-is. For the rest of time. 😉

How did your 2017 tax situation work out? If you received a refund, what did you do with it?


Great News and Advice Needed

by

I found out yesterday that the unemployment audit has been decided in my favor! Win!

I will receive 14 weeks of unemployment benefits. I will also be offered COBRA insurance and anything else that employees receive when they are let go.  Details to come once I know them.

That being said, there are still some processes the Department of Labor must go through to finalize everything. I don’t have a timeline for when I will receive any money, but it will be a bulk payment since my 14 weeks have past.

My closest guess is that I will receive $330 per week x 14 weeks = $4,620.*

Advice Needed

How do I allocate the money? Do I focus on debt? Do I focus on getting ahead on monthly obligations?

My thoughts have run the gamut. But here are what I’m leaning toward as my priorities:

  • Get ahead one month on the monthly obligations.
  • Budget $x toward business expenses, specifically to join the local Chamber of Commerce ($190,) print up some post card sized flyers to hand out as I network and place a couple of ads in the local newspaper ($66 per week.)
  • Put $400 in a slush fund for the summer.
  • Pay down debt?

To be fully informed, I have just under enough to cover the deficit left by my limited income for two more months. I would like to leave it intact. That is the reason why I have not designated any money towards savings in my plan.

So tell me, what are your thoughts? I am listening and wide open. Getting a plan in place before I have the money in hand will make all the difference.

*I have requested that taxes be taken out of the unemployment benefit payout. I’m not sure what rate that will be.

Just a sidenote…I have worked out a barter with Princess’ travel volleyball team for next season. I will be taking over their website and communications in exchange for all fees including tournament, training and uniform costs!  Travel volleyball will only cost us travel costs next season! Woot, woot!


Pages:1234567...32