Tax Talk - My 2006 Taxes
I know it’s only the second week in January, but I am always so anxious about my taxes that I feel the need to talk about them. A lot.
For years, my husband and I always owed the IRS. We had no kids, no property, both worked and didn’t contribute to any pre-tax retirement accounts. We were quadruple whammied. We claimed no deductions and yet one year even owed the IRS $6,000. It was insane. This year will be the first year we have all four of those bases covered, interestingly enough.
After getting a good-sized refund for our 2005 taxes, I decided to take a stab at re-evaluating our allowances to see if we could loan the IRS a little less of our money this year. From playing with a few online calculators, I determined that I should claim two allowances on my W4. You’d think that would be the intuitive answer but when you are in a two-income family like I am, you get pushed into a new, exciting and higher tax bracket. Hooray.
A bonus for this year is that we’ll probably be claiming my step-daughter, which we never have in the past. When this idea was first suggested (by me), I took our 2005 taxes and added her to see the difference it would have made. About $800. Since we wouldn’t have that money without the extra deduction, we offered to put that money into an HSBC savings account that we have for her. That seemed like a fair concession.
Last night, I started plugging in all of my numbers based on our final paystubs in 2006, mortgage interest, real estate taxes, savings account interest, etc. The only things I haven’t calculated yet are our student loan interest, which is a relatively small number since we paid them all off finally earlier in the year, and our charitable contributions.
My result? A refund amount of $797. Not too bad, considering the bonus deduction for the step-daughter was a surprise. Actually, I’m rather impressed with the accuracy of it all.
Once I verify this some more for my accuracy and we get our official W2s from our companies, I’m going to come back and post about some online calculators and resources that helped me figure this all out.
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