Taxes 2008

This post is analogous to last year's tax post.

Taxes for 2008 turned out to be much simpler than last year for the following reasons:

• I only lived in one state, and so did not need to split my income.


• I closed one of my accounts to pay for the down payment on my house in 2007, so I no longer have to worry about all those forms and trades. That account had tons of trading activity.


• I was familiar with which sites I needed to log in to in order to get various 1099 forms - mainly Countrywide.


• TurboTax imported last year's return so I didn't have as much data entry on my personal information.

I was actually fairly pleased with TurboTax. It still had a few problems (there was no official way to enter short sales [such as cash-secured puts], so I'm not sure I did that right, but the total profits/losses are correct), but was improved from last year overall.

In addition to TurboTax, I used Kansas' WebFile page to e-file my Kansas return. I basically just entered things in line by line from the form TurboTax generated, but didn't have to print it out or mail it. I think that will be the more environmentally friendly route, plus get me my refund sooner.

Speaking of refunds, I get big refunds! From the federal government, I get $5397 back, and I get $854 from Kansas. Governments, you're welcome for the 0% loans over the last year! Please place money in my savings account soon.

What will I do with all that money? Well, you should read this post on things I want to buy, and this post on mortgage refinancing, all while keeping in mind that a cash reserve is nice to have and build.

Why was my refund so large when I owed so much last year? Another list:

• This was my first full year of paying my mortgage, which means a full year of mortgage interest deducted.


• This year sucked for investments, so I had no realized capital gains. I'd rather pay taxes than not be building wealth, though.


• This was my first full year of paying property taxes, which are deductible.

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?