Written on Wednesday, January 18, 2006 by Jessica
Damn government. We have to pay in nearly $2700. We were both withholding at the zero-exemption level, yet we have to pay in a small fortune. Gee, I guess we should have selected that box on our W-2s that said, "Married, but withholding at the higher single rate."
To make matters worse, we're subject to a $150 underpayment penalty. I really hate the fact that the underpayment penalty exists. I'm not purposely underpaying my taxes! We just seem to make more and more money every year, and so even though I withhold more every year, it's never enough.
In the past, I've managed to reduce or avoid the underpayment penalty by maxing out our traditional IRA contributions, which reduced our tax burden. Well, not this year. We made too much money to be eligible to deduct our traditional IRA contributions. This totally pisses me off. The money would have been better off in my 401(k), but I didn't know it at the time. (The only reason I opened those stupid IRAs to begin with was b/c my 401(k) plan sucked so bad. Now we have a much better 401(k), but I need to make contributions into the IRAs to get them above $5000 so I can get rid of the annual maintenance fees.)
The only other way I can reduce my taxable income, and thus reduce the underpayment penalty, is to itemize deductions and somehow come up with more than $10,000 worth. Gee, we don't have a crushing mortgage debt, so we're not paying anything in interest. To go along with our tiny mortgage, we have a tiny house for which we pay almost no real estate taxes. Charitable giving? What can I say? We don't give enough to get us anywhere near $10,000. How the hell am I supposed to find $10,000 worth of itemized deductions?