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IRS Frustrations

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The IRS is currently working its way to the top of my list of most hated organizations to deal with.

My current Top 3 List of Organizations I Hate Dealing With include:

#3. Social Security (I am the representative payee for my father so I have to deal with them in reference to his disability payments, and it suuuuuucks the life out of me!)

#2. IRS! Read more below.

#1. Navient. Oh Navient, you know how much I hate you.

(Side note: Hmmmm, interesting how 2 of the 3 are government organizations and the third is also backed by the federal government. Inefficiency, much???)

Nothing like calling the IRS, sitting on hold for half an hour, and then having the line disconnected. Only to call again, sit on hold again, and have it disconnected again. I think there might be a 30-minute time hold limit and then the IRS system automatically disconnects??? I’ve been sitting on hold while working at my desk so I’m not out and about with poor cell service or anything like that. Grrrr!!!!! If you can believe it, I’m still trying to set up a payment plan from my 2016 back-taxes!!!! AGH! In April we sent a huge payment and tried to initiate a payment plan at that time. Thought it was all set up, but it turns out it was never accepted. I’ve tried calling multiple times but have been thwarted every time (to clarify, I’ve been able to speak to people, but they can never help me – they have to mail me something to sign, or transfer me to another department. It’s a whole cluster-f over there)! I’ve been making payments online through their online system just so they’re receiving something, but it hasn’t been officially set up yet. I was just able to (fingers crossed) finalize everything today, but they still deal with 1983 technology so the official agreement has to be mailed out, signed, and returned. Sooooo, still not completely set up but at least it’s progress compared to the past 7 months of nonsense. The issue, if you’re curious, is that when we did our 2016 taxes we also had a small amount they claimed we owed from 2015. We had an accountant help us with everything and agree the 2015 charges shouldn’t exist. So everything was on “hold” with 2016 stuff because we’d refused to sign an IRS agreement of taxes owed for 2015. I guess they couldn’t move forward with any payment plans unless and until the discrepancy was resolved, which took a long time and a lot of snail-mail back-and-forth. (Who doesn’t use internet these days??? I mean, I know it’s secure info but there are lots of ways to encrypt email, right???)

Anyway, it’s been a pretty shitty past couple of days. A lot of stress with work drama and some nonsense going on at our kids’ school in addition to the ever-present financial stress we have in our lives currently. I’m glad to have this minor “win” on the IRS front. Not that it’s even been officially completed yet. But I think we’re finally on our last step. Supposedly, the papers will come in the mail, we sign and return, and everything should be set for our first OFFICIAL payment starting in December. We’ll be paying $283/month, which is significantly LESS than what I’d been paying previously through their online system. The reduced payment means we’ll be paying for a much longer period of time (ummmm, approximately forever???) But with our serious budget shortfall going on right now, we really can’t afford to continue making larger payments. So it is what it is. And we keep moving forward.

My motto the past few days has been: Make today better than yesterday and tomorrow better than today. My husband thought it sounded a little pessimistic, but I think it’s optimistic. Looking forward to a better tomorrow! 🙂


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!


Guess What the IRS Sent Me

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Imagine my delight (sarcasm dripping) when I opened some recent mail from the IRS and discovered a bill for …wait for it…$18,000.  Yikes!!!

I didn’t panic as I knew I have the adoption tax credit that can be used over 5 years and this past year was just year two since the adoption was finalized, but YIKES!  That’s a scary feeling.

So I finally took the time to wait an hour on the phone yesterday morning to get to the bottom of the new bill.  Evidently, because the twins’ name change did not happen until this year with the social security administration, the IRS does not believe they are real children.

I understand the confusion as I did put their new legal names with their existing socials on my return.   So I’m not panicked and have a plan to resolve the matter.

They were kind enough to put a hold on my now “late bill” to give me time to resolve this.  I’m sure many people have stories with the IRS.  I’m glad mine was this straightforward.

Public Service Announcement: I shared this information on my Facebook page a while ago when we went to change the twins’ names.  I had hoped to change their social security numbers at the same time due to some unauthorized activity on them right when they were placed with me. (I’ve since put a hold on their credit with all the major agencies.)  So much to my chagrin, that was not an option.  You cannot change an adopted child’s name unless ALL of the following are true: 1) they do not know they are adopted, 2) they do not know their social security numbers and 3) they have never worked with their social security numbers.  Needless to say, changing their numbers was not an option for us so they will have to be super vigilant about maintaining their credit (as all should be these days I suppose.)  But for anyone considering adoption, please be aware of this as I was not nor was the foster care agency here evidently since it was discussed at length with them upon placement when I started getting all sorts of bills, etc.

 


Paycheck Blunder

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I was oh-so-excited for my very first 2-week paycheck that was direct deposited into my account on Friday. I was giddy as a child on Christmas morning opening up my bank account information online only to discover…

I got paid nearly the same for my TWO weeks of work as I did on my last check for ONE week of work (in full honesty, this check was about $80 more than last time’s check…but for a full extra WEEK of work!!!)

My jaw dropped when I saw the deposit.

IMMEDIATELY I logged into my school account to view my paycheck and find out what happened.

And, as it turns out, it’s a combination of things.

First, I hadn’t elected my benefits yet in time to have them withdrawn from my last check. The only withholding it contained was the mandatory 401(a) contribution and my taxes. In contrast, this check had OVER A THOUSAND DOLLARS of deductions (not even including taxes)!!! Ouch! I elected for a LOT of things to be withheld, including: my mandatory 7% 401(a) contribution plus an additional contribution to bring me up to 10% withheld; all our medical, dental, and vision insurances, taxes, and the BIG one is the FSA for dependent child care to the tune of $500/paycheck. That one will serve me in the long-run because it allows me to pay for childcare with pre-tax money. But it still hurts to have that all added up to be over half my paycheck!!! (also, side note: the max I can contribute to the FSA is $5,000/year. So this level of withholding allows me to use $5,000 pre-tax toward childcare in 2015, then I’ll start over again in 2016. Once I hit the $5,000 max limit these withholdings will disappear and I’ll have to pay remaining childcare costs with after-tax money)

Only…those deductions shouldn’t equate to half my paycheck!

After a more careful inspection of my paycheck I realized I’m getting paid the wrong amount!!!

I’d been hired at ($X) over a 9-month contract. That way I can either take summers off or, if there’s additional work, I can get paid extra to work over the summer (essentially securing a 25% “raise” by working over the summer). When I was hired the business manager said that most faculty members prefer to have their pay spread over a full 12 months so they don’t go without pay over the summer. She could show me how to do that. I said thanks, but never pursued it. In my own mind, I’d rather get my money up front within the 9 months. Hubs still gets paid over summer, we could set up some type of “savings” to set aside some money for summer, or I could just hustle and try to teach over the summer for additional income. But, no, I was not a huge fan of just letting them keep my money and divvy it up over 12 months. I want as much as I can get now, thank you very much.

So when I calculated what was going on it was easy to see. Apparently I’d somehow been opted into the 12-month pay cycle instead of getting paid over 9 months as I’d intended. That essentially makes my income drop 25% (since it’s being spread over an additional 3 months).

Soooo, what would you do?

My knee-jerk reaction is to go to the business office and ask them to correct it. I want to get paid over 9 months, not 12. But are there any great reasons to keep my pay over 12 months? Anything I’m overlooking?

One additional piece of information is that if I opt for 9 months of pay, then I get double-dinged for insurance payments in the Spring semester (in order to cover the unpaid summer months). If I stick with the 12-month cycle then the payments stay the same year-round.

Thoughts?


Disappointing Debt Payment

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First, thank you so much for all of your kind comments regarding our family health situation. I’ll try to keep you updated (especially in terms of finances) as I get more information.

In the meantime I wanted to tell you about how this situation, coupled with the no-income May, are going to affect debt payments this month.

It kills me to do this….but I’m going to have to pay only minimums.

We live on last month’s income, so having such a low income for the month of May is really hurting us in June. Hubs’ business drew no income last month (thankfully it didn’t cost us anything so he had enough income to cover his expenses, but no profits were earned). Also, remember how we owe the IRS money? Yeah. We already have some of the money set aside but I was going to use my May paycheck to cover the rest of the bill. BUT, since my paycheck was our only source of income for the month, I’ve put some aside for IRS bill, but I’ve kept some to help cover part of our expenses this month. And we’re raiding our EF hard-core. I’m trying to minimize the amount we have to withdraw from the EF (we’re trying to sell everything possible), but it could come close to being wiped out this month. A very scary feeling.

Given all this (and uncertain future spending) I think that it’s better to keep some money in the bank, pay minimums on current debt, and try to build some reserves this month. Debt payments will be as follows:

  •       PenFed (car payment) = $0 (I’m prepaid ‘till next April so no fees incurred)
  •       Student Loan Payments = $433 (minimum payments:  $77 to ACS ; $356 to Navient)
  •       Medical Bill = $25 (minimum)
  •       Balance transfer = $0 (no interest currently, but this means later payments will need to be higher to cover this month’s deficit)

That’s only $458 in debt payments this month!

I hate it! This is my lowest monthly debt payment in the 15 months I’ve been blogging here.

To compensate I’ve also taken away all monthly savings in their entirety. That means nothing toward:

  •       Cruise 2016 fund
  •       EF (in fact, we’re raiding the EF)
  •       Car repair fund
  •       Health/Dental/Vision fund
  •      Semi-annual fees fund

Usually I put several hundred toward savings each month (up to $1,000), but all savings is being suspended until we can get the financial bleeding to end.

So…minimum debt payments, no savings. Pretty much sums it up.

I’ve got to get back to work – Mondays are always a busy work day for me because assignments are due on Sundays. : ) Still thankful for my job!


April ’15- Month in Review

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I hope everyone is having a fantastic week thus far!

I want to start doing a “month in review” here on BAD to clue everyone in on what’s occurred during the previous month. I think this will help summarize what’s going on in my life as we move forward on my debt reduction journey and allow people to quickly get up to speed that didn’t catch my weekly updates.

To summarize, A LOT occurred in April:

  • I began the month (technically it was March 31st, but let’s call it April) by telling you what’s been bothering me even since I started my hardcore paydown (read it here). This was the hardest to write but most heart felt post to date. Update: I’m starting to realize time is more important than money and or gifts, and spending time with people and giving them a minute or two every couple of days is priceless.
  • I vowed to help my sister by contributing to a 529 in my nephew’s name (read it here). Update: I officially opened up an ESA (not 529) account in my nephew’s name over the weekend. The first contribution will be this Wednesday.
  • In the same post, I decided to re-contribute into my company’s 401K plan (read it here). Update: All the paperwork has been filed and I’m set to start contributing 4% (giving me the max. 2% company match, as well) of my paycheck this Wednesday.
  • I also decided to start budgeting for $50 of “fun” money per month to use to go out with friends (read it here). Update: I’m going to set the $50 aside on the 2nd Wednesday of every month for the following 4 weeks. I don’t have any other bills, except my electric due at this time.
  • I came across a roof leak in our house and freaked out! (read it here) Update: I haven’t opened any ceilings yet (mostly out of fear) but it’s been dry now since the day I ventured upon it. We’ve had some pretty good rainstorms already this year, so if it was from rainwater, I feel it would still be wet. My hunch is still ice dams.
  • I got a work bonus and a raise! (read it here) Update: The bonus was quickly put into my savings account. The raise has amounted to $17 a paycheck, but every additional penny helps.
  • We (GF and I) finally got around to celebrating Valentine’s Day, while also doing a fun little getaway up in Buffalo, NY (read it here).
  • Lastly, I got around to putting  our summer plans down on paper (read it here). It may not seem like much but I have a feeling it’s going to be a busy one this year!

For those interested in where my budget shook out:

April '15

I had some major expenses this month: 1) a tax bill close to $200. Since my I didn’t pay enough taxes last year to match my income (which was greatly increased due to pulling out my retirement fund), I owe the state of PA estimated quarterly taxes this year. 2) Our get-away cost nearly $400 in total 3) I spent more for groceries and dinner than I normally do. After my post to kick-off the month, I’m not too upset about this.

In debt reduction notes:

I reduced it by OVER $2,500!!

Pretty exciting stuff.

However, all good news aside, I had thoughts last week of stopping my debt reduction pay down altogether (obviously I’d still pay the minimums), which would have also meant writing for BAD, too. As I was sitting my car thinking about everything, I couldn’t help but wonder if instead of throwing every extra cent at debt, if I threw every extra cent into my savings. It would build quickly, giving me a large enough windfall to get through any obstacle, and when the balance was big enough, I could use it to pay off all the debt at once, alleviating my stress while giving me comfort that I won’t be in debt forever. After talking it over with GF, the feeling came to pass. With savings interest rates so low, it wouldn’t make a ton of sense mathematically, but, as I’ve always said, being in debt is a psychological, as well as, financial burden.

But what do you think? Do you ever get feelings like this? If so, did you suddenly change course, or did you let it pass? Let me know in the comments!

Have a fantastic week!


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