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Posts tagged with: irs

Open Enrollment

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First, thanks so much for the many thoughtful (and kind!) comments on my budget post. When I saw the comment count shoot up it made me nervous to read through them, but almost everyone was really very kind and forgiving (and generous in offering support, tips, advice, etc.) THANK YOU!

Speaking to one of the common comment themes I saw – many people asked about my take-home pay. For a $95k salary, my take-home ($2440/biweekly) is pretty low. The reason for this is that I have a LOT of things withheld and/or paid from my check pre-tax. This list includes the following (all numbers from my most recent paycheck):

  • Medical insurance ($125.50/check)
  • Dental insurance ($52.28/check)
  • FSA – Health ($68.37/check)
  • FSA – Dependent Care ($136.75/check)
  • Retirement account (required and already investing at the lowest amount so no chance to reduce – $256.91/check)
  • Parking permit ($38.45/check)

Plus, of course, all my taxes as well ($552.13 from my last check).

If I added this all up correctly, that comes to a whopping $1230.39 taken from my check before it hits my direct deposit! WHOA! That’s a third of my check!

So the question came up – can I change some of these things so I can get back more money per paycheck. And the answer is – YES! Right now is my open enrollment period and I’d LOVE to have some help with figuring things out! Let me address things one at a time.

Taxes

I can likely lower my tax withholdings per check, but have opted not to make any changes right now. Taxes are not part of my open enrollment, so I can change those at any time. Based on what feels best to me (and many comments/advice I’ve received), I’m going to do our 2017 taxes ASAP once the new year hits. That will give us a better feel for how much we really owe and we can make adjustments accordingly. Given our huge tax debt (that we’ll be paying on for what feels like a lifetime), we’ve opted NOT to reduce our withholdings for the time being. We’re likely over-paying a little this year, but we feel okay with that – any extra money can go to help reduce the tax bill and we can re-adjust after the CPA has gone over everything.

Retirement, Dental, Parking

These are all pretty well “set” and cannot be changed. We have limited options for dental – I can decline the insurance, but we use it and need it. So it stays. In terms of parking, I live too far to walk/bike and don’t have anyone living nearby to ride-share with. So unless I switch up my Mom car for a motorcycle (never happening), this bill is pretty much “set” too. Retirement is required by my employer. I used to invest a full 10%, but have reduced down to the minimum (7%) already. No way to make this any lower.

Medical 

So here is where I could REALLY use some advice. Currently, we have a PPO plan and this entire year I’ve been thinking that, come open enrollment, we’d switch to a HSA. But when I started really doing some research to compare the two options, I think we’d end up spending MORE with the HSA. Yes, we’d save on monthly premiums, but the out-of-pocket costs and deductibles are much higher.  Here are some side-by-side comparisons I put together. What do you think?

Health Savings Account PPO 
Per-paycheck Premium $61 $150 (note: this is more than listed above because premiums are going up)
Overall Deductible In-network:

$1300/employee; $2600/family

In-network:

$500/employee; $1,000/family

Other Deductibles Non-preventive prescription coverage:

$1300/employee; $2600/family

None
Out-of-pocket limit In-network:

$2,000/employee; $4,000/family

In-network:

$1,000/employee; $2,000/family

Not included in out-of-pocket limit Premiums and health care not covered by the plan Premiums, drug co-pays, and health care not covered by the plan
Annual limit on what the plan pays None None
Costs for common services with in-network providers.

Primary care to treat illness or injury

Specialist visit

Other practitioner office visit

Preventive care /screening

Diagnostic (x-ray, blood work)

Imaging (CT/PET/MRI)

Mental health

Generic drugs

 

 

10% co-insurance

10% co-insurance

10% co-insurance

No charge

10% co-insurance

10% co-insurance

10% co-insurance

non-preventive: 100% until deductible is met. Preventive: $10 copay

 

 

$15 copay

$30 copay

$10 copay for OB/GYN

$15 copay primary care; $10 OB/GYN

No charge

No charge

$15 copay

$10 copay

 

I receive biweekly pay (26 checks/year). So the HSA annual premium is $1586. The PPO annual premium is $3900 (a difference of $2314). But if we’re having to pay $2600 for our family health deductible + $2600 for the prescription deductible (compared to a $1,000 deductible for the PPO plan), I think it’s just too much money out-of-pocket! (though, caveat, I’m no expert with healthcare – does the out-of-pocket max only apply to healthcare, or would that also include prescription coverage??)

My thought is that we’d be better to stay in the PPO. It also scares me to think of paying 10% of any imaging, diagnostic, etc. We’ve been lucky thus far (knock on wood), but we have young kids – broken bones are a given at some point, right?

Those more experienced than I am – thoughts?

Flex Spending Accounts

The dependent care account contributions will decrease in 2018 and even moreso in 2019. Right now, we still have hefty monthly bills. Our girls are in kindergarten and, though half-day kinder is state-subsidized, the state does not cover the costs of full-day kinder. We pay that. The total was actually right about $1,000/month, but we paid out of our FSA a huge chunk for one of our kids’ entire semester of tuition (for which we received a discount). We’ve been paying the remaining costs out-of-pocket (the dependent care FSA was depleted months ago).  For next year, we’ll only have one semester worth of full-day kinder costs (the second half of the year they’ll advance to first grade – totally free!), plus the costs of care for summer and after-care, as needed. (Note: several people have suggested that hubs take over childcare so I just wanted to address that here:  hubs does handle the bulk of childcare. Where we live, half-day kinder is 8:30-11:30am. Hubs is in classes full-time that extends well beyond that timeframe. The full day kinder program is 8:30-3:00pm. Currently, hubs gets the girls at 3:00pm every day except Wednesday – his long day – so we pay very little in “after care” at the present time. Just one day per week. This arrangement is unlikely to change for the rest of the academic year).

Bottom line, we should be able to lower the amount of FSA money withheld for dependent care for next year, thus increasing the size of my take-home pay.

The health care FSA is entirely dependent upon whichever medical plan we choose. If we get the HSA, we’ll use the health savings account. If we keep the PPO, we’ll keep a flex spending account for medical expenses. This year, we put $1750 in our health FSA and it was not nearly enough. If we keep the PPO, we’ll increase our health FSA contributions probably to about $2250-ish (though I’d need to crunch numbers first).

So the big question is…..HSA or PPO (with a FSA)? Pros and cons? What are your thoughts and why?


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! 🙂


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.

 


Sold Gold

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My grocery store has this cheesy kiosk place that buys gold and silver.  My clean up of jewelry had yielded some completely random (dare I say hideous?!) gold jewelry items that I didn’t think would sell on ebay.  It was a trip down memory lane to even see this stuff as they were gifts from high school boyfriends.  I was definitely not wearing them anymore.  So before flying out on business this afternoon and right before an orthodontist appointment for DD, I ran into the store to see what I could get for this gold.  I had done a little research online but I wasn’t going to kill myself wondering if I could get something better out there with these particular item for a whole host of reasons.  I ended up selling 6 pieces (2 chains, 2 rings, a pair of earrings and a pendant) for $480!  I was hoping for $250 so that was a pleasant surprise!  This money has gone straight to the IRS fund. 

The final for 3 items on Ebay was $534–after fees and postage.  Adding this to my gold sale brings the IRS fund to $1014.  I threw in $1.00 (lol!) and the IRS fund is at $2,165.  I am so proud!!!  I still need to figure out options on selling my wedding rings but this progress feels good.

I also thought of another (hopeful) source of income that I will NOT count before hatching, but my company gives us bonuses at the end of February.  We will find out in mid February what the amount is and then it is paid on February 23.  While I had hoped I could put any bonus dollars toward my regular debt, that was not in the cards I suppose.  I’ll still push forward on “finding” money but at least the bonus is another way to avoid new debt and stay on track.


Ebay items are selling!

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I’m making some sales on ebay for my IRS debt fund!  When I update the numbers later this week I will include separate entries for what I have saved toward the IRS debt and yes…the total amount owed to the IRS.  I don’t want to do it but I know I need to do it.  I’m motivated and I hope to be further motivated by the readers.  I called the IRS earlier this week and must say they are extremely reasonable and easy to deal with–and even if they are faking their sympathy for my situation, I’ll take it!  I’m kidding.  I don’t think they are faking it b/c they can see on their system what I’ve done to right the ship.  Anyway, I got $1700 knocked off due to the extension my ex-husband filed being only linked to his tax return and not mine. Because we filed that extension jointly but then ended up filing taxes separately, I had a late file penalty on my side. Once again it never hurts to ask questions!

Separate quick note…took DD to the orthodontist yesterday.  That’s going to cost $2800 divided by 2 (because her father and I split everything).  That was a slight bummer given my good news on other $ issues, but the orthodontist has no interest great payment options that should result in very manageable monthly payments.  BUT I HATE the idea of yet another monthly payment!  If my kids weren’t dealing with cross bites that if not addressed now could result in surgery down the road, I’d be giving this second thoughts.  It isn’t only a cosmetic issue for them and two dentists that I trust and the orthodontist have confirmed this.  Always looking for a silver lining though I am glad we will be done with orthodontic treatment for each of them by the time they are in 9th grade.  At least we aren’t going to be paying for braces that much closer to college?!  Okay so I’m grasping…work with me!  😉  DS’s second round of braces will start this summer and estimate for his is $3800.  Some of that should be covered by insurance but I asked for worst case scenario from the finance gal at the orthodontist so as to properly prepare.

Have a great Wednesday!


The Tax Man…

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I’m facing my biggest foe this weekend… the IRS. This is the second year we have decided to prepare our taxes ourselves with free tax software. It’s a huge savings from the $200+ we were spending on our accountant but I’m always a little leery about dealing with the government on my own… and I work for the government.

That should tell you something.

We will still have to consult with a friend about some questions we have, but I’m hoping we’ll come out on top again. We got a huge chunk of cash back last year but we didn’t adjust our withholdings since our deductions were changing this year. I know Dave Ramsey yells at people who let the government withhold too much money, but since our deductions are far from predictable, we have to take a safe route.

I’ve cleared my schedule (and the living room floor), chilled a 6-pack of beer to keep hubby interested, and I think we’re ready.

Poll time!

Do you prepare your own taxes or pay an accountant?


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