Rats, screwed by the 3rd qualifying rule. Tax code, feh.
April 10, 2007
Hmph. It turns out that, despite my intense denial, the accountant is right and I can’t claim HOH status with both Pa and MaDucky as my dependents. Force of willpower can’t make him wrong, after all.
MaDucky made more than the 3,300/year income limit, and so, despite the fact that I’m pretty much paying for the entire household, I cannot claim an exemption for her. This means I could end up owing money after all. I’d artificially inflated my exemptions for the last quarter of 2006 to compensate for what I thought was overwithholding all year, but forgot to factor in my bonus and the possibility that I might not have 3 exemptions this time ’round.
Drat.
What does this mean? Well, I’ve already reduced my exemptions for this year. But, I have to try to sock away more into my retirement accounts to lower my taxable income some more in case my bonus is the same as last year’s or better.
Phooey phooey and drat. I hate it when well-laid plans go awry. It’s a good thing I never counted on a refund, though.
Taxes, taxes….I still have not done mine because I owe a gigantic sum of money. I will finally sit down this weekend and bite the bullet.
” But, I have to try to sock away more into my retirement accounts to lower my taxable income some more in case my bonus is the same as last year’s or better. “
I’m not sure what the reasoning is here, but I’d only put money into a retirement account if that is what you’d really want to do. Remember it is hard to get it out again or you pay a penalty to do so one way or another. Owing taxes is not such a big deal at all.
~ToBB~ Good luck!
~Moom~ The reasoning is basically this: I’m not maxing out my 403(b) yet. I’m expecting a large, untaxed year-end bonus so long as I stay at this job through the end of the year.
I would rather lower my overall tax liability throughout the year and have invested a greater amount in my retirement funds, than have that extra cash (not really a substantial amount) through the year and have a higher tax liability and probably owe taxes on top of it.
I prefer to “preserve” the lump sum of money I get at the end of the year knowing that I’ve accounted for it with regards to taxes so that I can deposit that whole chunk into a savings goal. It’s more satisfying .. kind of a combination of Wanda’s thing about more easily saving lump sums than steadily saving and actually steadily saving. A two-pronged approach, if you will.