"Oh, no! My wallet's too small for my fifties, and my diamond shoes are too tight."
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?
OMG!! Don't worry, next year you'll be able to claim the kidney bean. You'll be surprised what a difference it makes to the IRS.
If you can believe it, I plugged K.B. into the equation for this year to see if s/he would have meant a refund for us. We still would have had to pay in $1000! I nearly fell off my diamond-studded chair, and some of the fifty-dollar-bill stuffing came out through a hole in the cashmere upholstry.
Holy cow! I can't believe that! Maybe you should start blowing your nose with 20's instead of 50's? LOL
Seriously, how in the heck do you guys end up owing so much during tax time? Yikes!
We can't itemize, which is a killer. We live well below our means, which means a tiny mortgage (not much interest to deduct) for our tiny house (hardly any property taxes to deduct). When you add mortgage interest and property taxes to our state income taxes, we don't come anywhere near the standard deduction. I even checked to see if we could try deducting state sales tax instead of income tax (you have to choose one or the other), but I guess we don't spend a lot, because we paid less in state sales tax than we did in state income tax.
As for miscellaneous deductions, we just don't qualify for many. First of all, the miscellaneous expenses have to exceed 2% of our adjusted gross income. They don't. The only thing we might be able to deduct are Bob's union dues and maybe some of his clothes, but we simply don't spend that much each year on dues and clothes.
Everyone keeps saying we need to go see an accountant. I guess I'm finally going to do it, but I really don't see where an accountant could help.
Oh, yeah. And we're stingy, greedy bastards who deserve to be milked by the government. Some people tithe their income. If we were generous folks who gave away ten percent, then itemizing wouldn't be a problem. But we don't. We only made $441.50 in charitable donations last year. I'm officially ashamed of myself.
I just used the IRS's 2006 withholding calculator. First, just for kicks, I entered income and everything else based on this year's (2005) information. If we had continued the same course (no baby, Bob kept current job), our estimated tax liability would have been over $11,000. Then, I estimated everything based on having a baby and what our income was likely to be (including Bob's being on unemployment for part of the year and my receiving only partial income during maternity leave). Our actual estimated tax liability for 2006 is less than $3000. Most of the $8000 difference has nothing to do with a having kid. It's because next year we'll only make about 60% as much as we did in 2005. Lower tax bracket and everything.
The fact of the matter is this. Bob and I made a shitload of money in 2005. We owe $10,000 in taxes, and I didn't withhold nearly enough from our checks -- thus, we have to cough up $2700 at tax time. Damn government.
Geez, I just remembered that I didn't include Bob's income from last January and February when he worked the sno-cross races. Damn too-tight diamond shoes. And my butt hurts from the wallet overflowing with fifties.