A Penny Saved » Taxes

Tax Refund Arrived

JD — Tue, 16 Mar 2010 12:16:08 +0000

My tax refund arrived electronically on Friday. Considering I had to file by paper, it didn’t take as long as I expected (mailed in the middle of February). This year’s return was for $679 which is a lot more than I usually get. I try to keep it very close to around $100 – I want my money and I don’t like “loaning” the government money interest free. But with all the tax changes last year and credits I got a little more back.

I have two plans for the money:

I want to set up a Medical budget and use $100 as seed money. I have a Flexible Spending Account through work, but the payments are usually behind, sometimes a month or two. With this money I will pay the bill (usually credit card), then when I get reimbursed I will put the money back into the account for the next bill, etc. This way I won’t stress about where to temporarily pull money from to cover the expense until the reimbursement arrives.
The rest of the money will go towards a small remodeling/painting project we hope to do this summer. We want to fix up our hallway and do a little work in a small guest bathroom. We estimate it will cost a little over $1000 to do what we want, so we are now half-way there!

If you are getting a return this year, what will you be doing with it? Paying down debt? Investing? Having fun?

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The Great Toy Clean-out is Finished!

JD — Wed, 03 Mar 2010 13:18:56 +0000

The girls rooms are clean! They sparkle! You can find things! It only took two days (this includes going through clothes to see what they have outgrown). There must have been 7 grocery bags of stuff we took out of their rooms – clothes to give away, papers and broken toys to be thown out. Ugh – it is amazing how much they collect in six months.

It’s not like we buy tons of stuff for them. We spend $50 per child at birthday’s, and a little over $100 at Christmas on each girl. Then throughout the year we may buy a couple of things. However there are Grandparents! But still, how do they get so much stuff into their rooms? Things must multiply under the beds!

Some of the toys and clothing we will give to friends, and we may have a bag or two that will go to a Goodwill Store (tax deduction!).

The good news is that now they should be able to find things – like socks which they said they did not have enough of but now their drawers are overflowing since we found the missing pairs.

Now we are good for another 6 months. I wonder what amazing things we will find next time?

Taxes are Done!

JD — Thu, 25 Feb 2010 13:28:31 +0000

I finished doing all my taxes – Federal, State, and Local. I owed on the State ($39) and the Local ($14), but am getting a return on the Federal ($679). I try to keep my return very small – I don’t like “loaning” money to the Federal Government interest free. This year my return was bigger than expected because I forgot about the “Making Work Pay” credit. If it wouldn’t have been for that I would probably have owed a little bit, about $120. I will probably have to adjust my withholding and increase the amount of taxes I pay per paycheck so I don’t get stuck owing next year.

I used H&R Block’s software again this year (Taxcut or Home Edition I guess they call it now). It worked okay – I thought it was a little cumbersome compared to last year, but it did the job. I use it for both my State and Federal Tax. It only took me about 5 hours or so to do my taxes. Since I am organized, it didn’t take long to pull all the documents I needed. I think the longest part was waiting for the printer to spit out all the documents.

This year I had to mail my tax return in because of some extra forms I needed to submit, which is a bummer. I wish I could electronically file. It makes it easier and quicker, and you get your money so much faster. Now I will have to wait weeks instead of days. Yuck. But at least I am done.

Anyone out there also finished with their taxes? How did it go this year?

Time to Get Organized for Tax Season!

JD — Tue, 12 Jan 2010 12:54:40 +0000

By now you have probably started receiving those “Important Tax Documents Enclosed” letters in the mail or in your email inbox. If you haven’t already done so, it’s time to get yourself organized. I have a filing system in place, so for me, it’s just pulling the documents out from the past year, gathering the ones that are coming now in the mail, and putting them all in one folder so I am ready to go when the time comes.

If you haven’t been so organized, maybe this is the year to start! The simplest thing to do is get a folder – it can be any type, or even a shoebox! Then, whenever something comes to you throughout the year that could have tax implications, you stick it in the folder. These documents could be anything from medical bills, to charitable donation receipts, educational expenses, etc. When you do your taxes this year, make a list of the things you needed to do them. Then keep that list attached to the folder you have set aside. When you get something that you’re not sure if you will need, check that list – if you will need it pop it in there.

Organizing yourself doesn’t have to be complex (in fact the more complex the less likely you are to do it!). Keep it simple, and do what works for you. And if you need motivation, just think about all the pennies you will save by having those documents that will help you claim all those deductions!

So where is my Local Tax Payment?

JD — Thu, 26 Feb 2009 00:00:38 +0000

When I refinanced our home mortgage last month, the company insisted that they do a one time escrow for my local real estate tax that will be due in April. They set aside $800. I received my real estate tax bill 2 weeks ago for $618. So I emailed the mortgage company to find out if they wanted me to send a copy of the bill. The reply came back – wrong “division”, they do not handle that, call this number. So I called that number – they said fax info to their tax department. I did that – heard nothing. After a week I called back – I got a really helpful individual this time. At first, she couldn’t find any escrow account! Then she found it and it was $0. Finally, after about 20 minutes on the phone, she discovered that the mortgage company had sent the escrow to an outside servicing company to pay the tax bill.

So after getting the number of the servicing company I called. And I called. And I called. Finally I got someone – they had already sent the payment in – all $800. So I then called our local real estate tax collector. Yes he had received the $800 check; but because it was for $800 and not the $618 owed, he had to send it back (they are only allowed to accept checks for the exact amount he said).

So then I had to call the servicing company again. And again. When I finally got a hold of the correct individual, I went through the whole story. She said they would send the correct tax amount right out, and that I would get the remainder by check in the mail, and that I should have it by Monday (Feb. 23). It is now Wednesday – no check. So tomorrow or Friday I will again hunt down the missing money.

I did not want an escrow account, even a one-time escrow for this very reason. Ugh! Now if it were me having their money, I would be getting “courtesy” calls and emails on a daily basis, plus I would be paying interest. Customer service is such an oxymoron. It’s amazing how attentive everyone was until I signed the deal – then it’s good luck getting help!

Oh well. At least it gives me something to blog about!

Taxes are Done!

JD — Tue, 24 Feb 2009 15:56:48 +0000

Over the weekend I finished preparing our taxes. I paid our local taxes (owed $19), will owe the state $43 (not due until April 15), and will receive a whole $36 back from Uncle Sam. I think I have my Federal Taxes as tight as I can make it and not owe! I was going to increase my Federal withholding a little bit, but with the new stimulus package I probably won’t have to.

For the State and Federal Taxes I used TaxCut by H&R Block (2nd year I have used them). My taxes are not that complicated (being a Pastor there are a few odd things to be aware of but not too hard). I know several reviewers prefer TurboTax, but TaxCut has been fine for me, I have no complaints.

Have you started yet? Any input for our readers on preferred Tax programs?

Plans for your piece of the Stimulus Package?

JD — Wed, 18 Feb 2009 23:56:50 +0000

Whatever your thoughts on the stimulus package, it is now law. Beginning around June (or thereabouts – the details are still being worked on), tax cuts / rebates will start kicking in for many families. What will you do?

For me, it will not have much of an impact. Because I am a pastor, the church doesn’t have to take Federal Taxes out. At the church I am at now, they graciously take out whatever I designate for Federal Tax (this way I don’t have to file quarterly payments). Anyway, I probably won’t change my withholding. Most of what I have taken out goes to pay not my Federal Tax but my Social Security Tax (Pastors are dual status–employees for Federal Tax, etc., but Self-employed for Social Security – and no, it doesn’t make any sense to me either!). So if anything, I might get a little bit more back when I do my taxes next year. We will see.

IRS says I was right!

JD — Tue, 10 Feb 2009 00:15:26 +0000

Several months ago I received a nice little (well not really little and not so nice) letter from the IRS – they were doing a letter audit of my 2006 tax return. They did not like the amount I listed for state taxes (I didn’t either!) and they did not like how much I listed as a deduction for charitable giving. Fortunately, I had copies of everything and was able to send in to them everything they required (and remembering to keep copies of everything I sent). Well, after several months I received a letter stating that I did not owe any more tax.

All the paper work they sent me came 4 times! I received four notices of the letter audit, four letters stating that they were processing the information, and four letters stating that they did not make any changes to my return. Another interesting thing was that the IRS requested that I send them a copy of the tax return that I had originally submitted for the year in question. You definitely need to keep a copy of whatever you submit to the IRS because there is no guarantee they will have it!

I have to admit that until I received confirmation from the IRS I was a little uneasy. Not that I doubted I had filed correctly (and honestly), but just the fact that you are dealing with the IRS is not fun. So thanks to my tax software and my filing system everything was fine. Another good reason to have a good filing system!

Filing

JD — Thu, 05 Feb 2009 00:02:39 +0000

No one likes it. But filing important papers is very necessary. Although I grumble all year, now that I am preparing my taxes I am thankful that I can find what I need. And it will save me money! It seems every year as I pull out my files there is something that I had forgotten, but now can claim as a tax exemption: maybe its a charitable gift that I made at the beginning of the year, or it could be a business expense.

Filing does not have to be complicated, but it does have to be organized. I have about 20 categories that I file things under. Some of the categories I use:

- Auto Expenses

- Insurance (Health, Life)

- Employment (W-2’s, work expenses)

- Home Improvements

- Mortgage

- Charities

- Taxes

Now you could easily make subcategories, and even subcategories of subcategories. But I like less work! For taxes, anything I come across during the year that may impact my taxes I just put under the category taxes. After I do my taxes, some of the information I file with a copy of my tax return. Other items I will file back under the appropriate category. Others I will shred.

I actually have a file cabinet. But if you don’t, you can use an expandable file, or even the proverbial shoebox. The important thing is to have a system that works for you. Each year, I review how my system worked the past year and I make adjustments (sometimes adding, sometimes deleting categories). Overall, the benefits far outweigh the little bit of time it takes to do it. Filing might have helped Daschle or Geithner with their taxes!

Happy filing!

Death and Taxes

JD — Tue, 15 Apr 2008 19:17:14 +0000

Death and Taxes are inevitable. (Thomas Chandler Haliburton–1796-1865)

While most people today are fixated on the latter (it being April 15th), I have been involved in the former. The church is preparing for a funeral tomorrow; I had an older lady and her son in my office earlier grieving – her husband of many years will probably pass away within the next 24 hours; I just received a report about my good friend who was having surgery today – he had a heart attack while having the surgery (the doctors are consulting with his wife now).

I hope you have prepared for your taxes this year. More importantly, I hope you are prepared for when life ends:

That all your important personal relationships are good and you have no unresolved issues (as far as you are able)
That you have a will, and your final wishes laid out (funeral plans, burying spot, etc.)
That you have no regrets
That you enjoy life now

My position as a pastor brings me face to face with death on a regular basis. I guess it is ironic that on a national tax day my day has been so focused on death. And yet it is a good reminder to keep things in the right perspective.

I hope your day has been good. Keep the faith.