Home > I owe, I owe ... off to the tax man I go

I owe, I owe ... off to the tax man I go

March 8th, 2008 at 05:36 am

Saving log - $7 tip box
Spending log - $1.19 coffee + $9 lunch + $175 tax prep

Got back from the CPA tonight. Now for the downside of saving, not spending, and squirreling inheritance money away instead of whooping it up:

I owe Federal taxes, the first time in about 20 years. Over $1300, and it includes a slight penalty - $38 - for not prepaying quite enough. Both the CPA and I were sanguine about it... its about 1.5 months of ING interest or 13 minutes of CPA time.

I owe because I put taxable money into vehicles that made interest, and moved money into a Roth IRA instead of a traditional one. Unless I do something though, I will run up against the "problem" of making lots of taxable interest every year. Well, it might not be so bad this year with the stock market losses and low interest rates.

This weekend, I'm going to go through scenarios with a couple of paycheck estimators. I'm going to try and hike up the % of my paycheck that goes to 403B. Right now its at 15%...but I can put up to $15000 in a 403B every year. If I try that, it does two things - 1. shelters more of my money in a non-taxable account and 2. makes me spend some of my taxable interest.

Its either that or file my old cheap self.

On the bright side - the Schedule K form was filed, but changed nothing in the tax calculation.

2 Responses to “I owe, I owe ... off to the tax man I go”

  1. fern Says:

    I ran into the same problem this year, shelling out $1100 to the feds.

    Upping your 403 contributions is a good idea. If you're on the borderline between 2 different tax brackets, it could really make an even bigger difference.

    You could also look into rejiggering your investments, including your Roth, to put them into tax-efficient funds or index funds. Or at least make sure that your high dividend growth funds are in your retirement accounts so it doesn't affect you, and keep your taxable savings, if any, in growth stock and index funds, which are more tax-efficient.

  2. terri77 Says:

    Too bad that we can't charge them a penalty when we're overcharged!

Leave a Reply

(Note: If you were logged in, we could automatically fill in these fields for you.)
Will not be published.

* Please spell out the number 4.  [ Why? ]

vB Code: You can use these tags: [b] [i] [u] [url] [email]