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CPA Update: 2017 Taxes

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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. ūüėČ

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


2012 Taxes

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I have heard from my CPA friend and I am smiling big with gratitude!¬† Thanks to his guidance upon my ex’s move out, I made major withholding adjustments for the last four months of 2012.¬†¬† As a result, I will owe less than $500.¬† I cannot begin to tell you what a relief this is!¬† And there’s more great news:¬† I can re-adjust my current withholdings because I was on track to get a¬†refund for 2013!¬† ¬†Answered prayers my friends…answered prayers!¬† I was having near $900 PER PAYCHECK withheld!¬† I know I make a good income but losing $1800 per month hurts!¬† AND, let me just throw my shoulder out here patting myself on the back…I was STILL able to make payments toward debt and not incur any new debt.

I am a new person!¬† Truly!¬† I never thought I could do this.¬† Just a year ago I was spiraling out of control.¬† Bouncing checks!¬† Yes, seriously.¬† Only making minimum payments and sometimes scrounging to do even that!¬† I didn’t have money left after pay day and could not figure out why!¬† My debit card was flaming hot with the constant use!¬† And then I started blogging.¬† I slowly, SLOWLY started keeping track of every dime I spent and started downsizing my life in every possible way I could think of.¬† Remember when I went to the hair salon every 6-8 weeks for a $200 cut/color/style?!¬† My last salon visit was in December and I don’t plan to go back until June.¬† The examples are many and for those of you who have been reading since the beginning, you’ll surely remember the changes.¬† Have I hit major bumps in the road?¬† Uh, yea.¬† Like a surprise divorce!¬† And other smaller hiccups too.

I want people who are in debt to see my story!¬† I want to motivate others and, in turn, be motivated!¬† It has not and will not be easy but each of us can make changes to turn our sinking financial ship around.¬† Don’t be afraid and don’t wait another day to start this process.¬† You will find freedom like you’ve never known.


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