Thursday, April 17, 2008

Taxes - What I learned

So, I know I posted a couple entries ago about how I already completed my taxes. Well, that's the first thing I learned.

Always wait until the last day to file your taxes because you never know when your dad will call you up saying that he found one of your tax forms that got delivered to your old permanent address.

Thankfully, I had waited a long time and hadn't actually sent anything off yet. The form in question was a 1099-INT from Bank of America. It took me a minute to realize that my 0% interest checking account did indeed process interest (as opposed to earning it) when I cashed in a bunch of savings bonds my grandfather bought for me in the 80s. In case you were curious, I used it to help pay for the down payment on my house. Anyway, the new final tally (and I really hope it is final, since I sent them off): I owe $3015 to the federal government, and $1416 to Missouri, but get $1117 back from Kansas.

As a side note, the above situation wouldn't have happened if the IRS prepared your taxes and sent the completed forms for you to verify or add addendum forms to.

I also reasoned out a couple of things that always struck me as ridiculously unfair. First, I figured out why state refunds can sometimes be taxed as income the following year. When you itemize your deductions, one of those deductions is the taxes withheld during the year. So, effectively, that refunded money was held by the government for a year, deferring taxes owed on it. It had always seemed to be a double tax on that money, but it does work out to be more fair than I had originally figured. Plus, the same logic applies to deductions: the check to Missouri that I wrote on April 15th will be a deduction on my taxes for 2008.

I actually can't remember what the second thing I reasoned out was. Instead, I'll open it up to comments: Does anyone have any interesting tips, information, or anything else they want to say about taxes?

Saturday, April 5, 2008

Mortgage fun

My mortgage is a standard 30-year fixed. I have the option to pay extra against the principal at any time, and I do so every month. I don't prepay a lot, but I do round my mortgage payment up to the nearest hundred. One of my favorite things is seeing my loan period drop by an extra month. That is, while I have 29 years and 1 month left in the 30-year period, I will have fully paid for my house after 28 years and 11 months. This month's extra payment finished off another month's worth of mortgage interest.

It's a small victory, I know, but it makes me happy. As my income increases, I do hope to increase my monthly prepayment further. As fun as it is to watch my mortgage figures every month, I definitely look forward to not having to make that payment. Maybe I'll finally win the lottery tonight.

Taxes and budget

I'm pretty much officially done with taxes, now. It's quite the good feeling.

What's even better is that taxes were much simpler this year than last. TurboTax got their shit together and improved the importing feature to make it actually useful. I had to manually enter in all my options trades from E*TRADE, though, because those aren't required to be reported to the IRS (by E*TRADE), so it's up to me to do it. Still, things went much smoother this year. I only cursed once or twice!

The final tally is that I owe $1527 to the federal government, and $1416 to Missouri, but get $775 back from Kansas. Unfortunately, this comes at the same time as both my auto and home insurance policies need to be renewed. I'm talking with my insurance agent next week, but it's going to be around $2000 for the year. My server upgrades and some clothing purchases, plus discounted software purchased as part of my Microsoft trip (in addition to all my regular spending) results in an ~$1300 credit card bill this month. Then I have to pay my second half of 2007 property taxes (~$2150) by May 12. It's all hitting at once, and I'm down to my last $1-2000 in cash, which is below my comfort zone. I was so looking forward to buying a new main computer!