I finally sat down this weekend and started to seriously look at our taxes. I know, I know! As a personal finance blogger, I should have had them done months ago! Unfortunately, I am still blaming the whole computer backup disaster for my troubles and tardiness. What will my excuse be next year? Probably the same one. Hey, if President Obama can continue to blame the previous president for all of his problems, I can blame a computer backup disaster for the next decade.
I did manage to get my son AJ’s taxes done and filed. I was so proud of my son. I told him I was finally going to get his taxes looked at, maybe even completed and submitted, but first I had to have the W2 from his current job. He had it tucked away in his laptop bag and brought it right to me. He’ll be getting a hefty refund back since we overestimated the amount of hours he would work with Mr. A. In 2009 he made a couple thousand with his father, and we thought it might be the same in 2010, but that all changed when he got his new IT job working forty hours instead of only 24.
At any rate, I don’t foresee him getting another big refund like this next year, which is good since I don’t think the government should hang onto our money all year long, but that’s just my opinion. I can see the temptation to allow the IRS to hold onto your money so that you can’t touch it, if you’re not mature enough to keep your mitts off your savings. If you can’t see it, can’t touch it, you can’t spend it, right? But you could do the same thing with an automatic deduction to a savings account somewhere online and earn a few dollars in the meantime.
Well, I can see I’m preaching to the choir, so let me get on with what I started out to say.
I am going to file an extension this year, just like I did last year. This advice comes from June Walker, an accountant from New Mexico. She says when you own your own business it’s a good idea to file an extension because then you have more time to make certain you’ve found and will be able to take all the deductions for which you are eligible. I found her book: Self-employed Tax Solutions: Quick, Simple, Money-Saving, Audit-Proof Tax and Recordkeeping Basics for the Independent Professional and site to be quite informative when Mr. A was first starting his business and I still refer to it each year as I’m doing our taxes.
I use H&R Block At Home Deluxe Federal + State + eFile, I prefer to use the software on my computer, rather than the online program. I installed the program and let it pull in our data from last year’s return and then I began entering the data that I have gathered so far. It was a little nervewracking at first to see that we might owe $4000 but this was just after I put in Mr. A’s gross income, and right before I entered his business expenses and the estimated payments we made throughout 2010.
After I got all those details entered, it looks like we were maybe about $50 short. I will be making our first estimated payment (I paid the final estimated payment for 2010 in December to prevent any confusion) this week, and will send an extra $50, and hope that covers what we owe. I am not quite ready to submit though since I still need to enter some more data into QuickBooks Pro.
I told Mr. A that it looks like we won’t owe anything… we have this conversation every year… he replies and says that’s good. Then I realize (once again) the way I worded it makes him think that we won’t OWE ANYTHING, as in nothing at all. Then I have to correct what I just said that, and explain that we won’t need to pay anything in addition to what we’ve already paid. Then he says I need to have someone look at our taxes because how come he knows this guy that doesn’t have to pay any taxes and his business makes a quarter million and this relative doesn’t have to pay taxes.
I keep trying to tell him it’s not possible as long as I have an employer. These other people have incorporated businesses and they pay themselves such a small wage that indeed, they do not have to pay income taxes personally. But what they aren’t revealing is the fact that their COMPANY is liable for and does owe taxes. Just because they don’t have to pay taxes personally does not mean their company doesn’t have to pay taxes. Especially if they are netting a quarter million. Unless they’re working the books in some funky way that I don’t want to know anything about.
So my question to you today: have you ever had a similar conversation with your spouse/significant other? Or are you lucky enough to have a personal finance guru as your main squeeze?