The tax man cometh
April 11, 2016
Life, death, and taxes, my friends. But unlike the other two, taxes happen on schedule every year.
And this year, boy o boy am I not so ready.
Life doesn’t discriminate
Between the sinners and the saints
It takes and it takes and it takes
And we keep living anyway
– Wait For It, Hamilton
In 2014, I started using a CPA to put together the return itself. I still compile all our financial documents and a spreadsheet listing everything, including our itemized deductions, so really the CPA just has to plug the numbers in and advise me on the trickier parts like the investment property.
It feels absolutely silly in retrospect to feel guilty over hiring it out but it was hard to fight the feeling that as the Family CFO, I was abrogating my responsibility by doing so. Of course I could do it myself but I don’t have that kind of time to spare, and the headache was getting to be too much. See? Even now I feel like I have to justify the decision.
Never mind. This year, I’m extra grateful for making that decision because what we’re looking at would have been much worse at the butt-end of 20 hours of tax agony.
It’s a long story, and I can’t get into the specifics of it, but we have an on-paper only “income source” from a family thing, from which we don’t derive any true income. This year, there was a huge one-time income bump that we wouldn’t see but, of course, would impact our return. I knew we’d owe something. That part I was braced for.
The other part, the first draft of the return, staggered me. No, let’s be honest, it knocked me on my ass. Might have actually stopped breathing for a few solid minutes.
We would have had a modest tax refund this year from both state and federal. Instead, the bill totals up over $13,000. It’s not that we failed to pay quarterly taxes, this is truly a one-time thing, and it won’t be a problem going forward after this year. That’s cold comfort in a cold spring, but payment is due on April 18th this year, so, yay grace period?
We’ll have to use our long-term savings to pay that sucker, which sucks, but at least we can swing it. Meanwhile, let me sit down and put my head between my knees until the world stops spinning.
Have you filed? Are you likely to get a refund or a bill?
*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and I Am the Future Me
I JUST filed Saturday morning, which is alarmingly late for me and was very stressful–but this was the year I simply couldn’t get to the taxes any sooner. Thankfully our finances are fairly simple, so I’m able to use TurboTax. And we’ll be getting a refund. Too much of a refund, frankly, and that’s consistent, so I’m adjusting my W-4 so that I’m not withholding additional funds (or at least, not as much as I am now–I like a little cushion).
Tapping into savings like that is alarming. I hope the world stops spinning soon.
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If it’s consistent, adjusting the W-4 does make sense. We would have had less than $1000 come back so I’d considered adjusting but maybe not!
I’m gonna need a minute, though.
The family income for which I see no income is why I do not let my father have anything to do with my finances anymore. Even if he wants to give me money. If I have to pay taxes, I need to have the income, period.
We got a refund, but applied it to next year’s estimated taxes. We still need to send about another 3K in for estimated taxes after that.
Also: 13K, OUCH.
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* family income TAX, I mean
nicoleandmaggie recently posted…When economists prefer tossing economic theory to being woke
It stings! And I’m already paying a “family tax” that’s way more than $13K every year. Ugh.
I filed everything last month, now that we are taxed as an Scorp, so our filing deadline is actually March 15th. So I just had our CPA do our personal taxes at the same time. This is our first year using a CPA, and it’s been a breeze!
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Congrats on being squared away! I didn’t know that S-corps are taxed a month earlier.
I have most of the numbers punched into a program, I just have to finish up a couple smaller things and hit send. All going well my husband and I should both receive moderate refunds. Next year’s taxes are going to concern me more than this year’s will.
That sucks about the $13,000, but it’s great that you’re able to handle a tax bill of that size relatively easily. A lot of people couldn’t say the same about a bill 1/10th that size.
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What’s worrisome about next year’s taxes?
I mean, we can pay it. It also means a major setback in our savings plan for a down payment, but I can’t focus on that.
Here our tax year is 6 months out from the US one. The majority of people here use a “tax agent” to do their return, which is an amazing statistic as most must be pretty simple. I do our taxes. They aren’t that complicated and don’t take me very long. I figure that if an economics professor can’t do it, something is wrong 🙂 But if we had a rental property I might well get someone else to do it. But maybe I would just learn what I need to do as I have for the things we already have.
I’ve heard that Australian tax returns are a darn sight more simple than the US process. You had to do US returns in the past, IIRC, is that true?
The instructions for US tax returns are more legalese like and hard to understand and they want a lot of little details like each transaction for reporting capital gains, whereas Australia just wants 2 or 3 summary numbers for capital gains. So, I think the Australian one is simpler at least for people with salary and some different investments etc. Also, we don’t have state income taxes to do as well….
PS, expecting a small refund of about $500 for me and +/- that for Moominmama (used to be Snork Maiden). I have everything set up in a spreadsheet which spits out everything that needs to be on the tax return at the end of the year, so at any time I know what the expected refund is.
That’s a decent refund! Now I’m hankering for a spreadsheet like yours but I suspect it’s not that simple 🙂
I built mine the first time I did my taxes here and then tinker with it each year as things change. I am happy to e-mail it to you so you can see what is involved at least for Australian taxes 🙂 I have old US ones too.
I did my personal taxes back in February and got a decent sized return (just under $5k). I still need to do taxes for my HOA though, which should be $0 anyway, but just have to figure out how filing works.
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Wait, you have to file your HOA taxes separately?
Yes… my husband has some intermittent income that doesn’t get taxed when it comes in… we knew this and have the money in savings, but still owing $6000+ does sting a little bit.
Ouch, thank goodness you had it in savings. What is it about paying in a lump sum that seems to hurt more than throughout the year?
13 grand?!?II That’s gawdawful!
My tax accountant, not to be outdone by the likes of moi, also had a double MX…just as tax season was bearing down on her. She was knocked for a bigger loop than expected… So we took extensions for personal & for the S-corp. She thinks I’ll get a refund and the bidness will owe nothing.
Would like to get the tax forms in, though, since my beloved employer revealed all its employees private information to hackers…FBI found our info on the Dark Web. Concerned that someone else is merrily making off with my tax refund. Ugh. Life in the 21st century is sooo much fun. /s/
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Thank goodness for extensions! And I hope you’re able to file ASAP, one of my previous employers also had a security breach and I had a harrowing time of it trying to file quickly that year.
Oh no, I’m sorry to hear about your tax bill, I can imagine what a shock that was if you didn’t expect it to be such a hefty amount. Tax seems to work a bit differently in the UK, at least for me being self employed. I’ve never had a tax refund ever! I’m sure my tax bill will be higher this time around but I’m sure how much yet. I’ve also recently employed a tax accountant. Although I don’t enjoy paying him for something I’ve effectively done myself before, he does know some loopholes that have saved me money too.
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Now I’m curious about how the UK works, is it at all similar to the AUS taxes, I wonder? Moom, above, was kind enough to share some info on how different those are.
And as much as I hate paying out for something I CAN do, if someone can do it better and yield greater results, it does make sense to go for the professional.
From what I remember/know the UK system much more comprehensively deducts the right amount of tax at source for all kinds of payments, including things like dividends etc. Most people don’t need to submit a tax return. So, Australia is much more like the US in this regard:
https://en.wikipedia.org/wiki/Tax_return_%28United_Kingdom%29
Oh, man, that sounds painful! I am getting a small ish to medium refund after I account for state, federal and state and local, but only because I paid quarterlies even though the IRS worksheet said I didn’t have to. Otherwise we would have owed.
Just a note, I can’t close the SumoMe pop up in mobile, so apologies for any typos! Can’t read my comment and it’s likely I’ve been auto corrected once or twice haha.
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Oh dear, I didn’t know I had a popup in mobile! thanks for telling me, I shall investigate.
Good on you making the call for making quarterly payments. I don’t mind a small bill but this year’s a doozy.
Oh gosh, that would make my world spin too! I’m so sorry and glad it’s a one time thing.
Mel @ brokeGIRLrich recently posted…Financially Savvy Saturdays #138
Thanks, I’m glad too!
$13k is a doozy. We filed our taxes back in February and got a small refund. One of the few (perhaps only?) upsides to having huge medical expenses is getting that deduction.
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That has to be the ONLY upside to those expenses 🙂
I have always done my taxes as soon as possible (no later than mid Feb.) because I was getting a refund and didn’t have many documents to fill out for it. This year was more complicated, near the end of the year I started doing all kinds of side-hustles that I had to pay taxes on, to total amount was around $1200 but it massively lowered my refund as I hadn’t paid any taxes on that money. This year I have already passed that amount of income from side hustles (almost double at this point) and will need help just like you do to get everything done properly. I will probably be doing it much later now that I don’t get a refund as well.
Do you have a system for tracking that income? I found that in the past 3-5 years, I had to track everything in a spreadsheet year-round to make tax time less onerous.