Weekend Plans Post: Taxes
There are a handful of philosophies when it comes to tax time but the three main ones are something like this:
- It is best to have a tax refund or tax bill of somewhere between $0 and $100. The government doesn’t pay interest, after all, and if you have a tax refund of more than a hundred bucks, that’s money that you could have used (and maybe even had it make money for you) instead of giving it to the government to hold on to until tax time rolled around.
OH MY GOSH I THOUGHT WE CALIBRATED OUR WITHHOLDINGS PERFECTLY I CAN’T BELIEVE WE OWE THAT MUCH TO THE GOVERNMENT WE’RE GOING TO HAVE TO TIGHTEN OUR BELTS FOR AT LEAST A MONTH TO PAY THIS OFF.
Oh, isn’t it nice to actually get a nice check from the government? Not like that time 4 years ago. Or 5, now. Man, that was a rough couple of months.
When Maribou and I first got married, I couldn’t believe the tax refund I got that first year. (We got married in October but, as far as the government was concerned, I had a dependent all year long.) And so I did my best to calibrate my withholdings and Maribou calibrated hers and, well, we both made some bad assumptions and, wouldn’t you know it, we had a rough tax time that following year. Sure, it was only something around $400 but we didn’t make a whole lot of money at the time and those were Clinton dollars and that was a lot of money for us.
And so, now, we err on the side of caution. The irritation of thinking “we could have used that money” when we get the refund is less irritating than the “how much?!?” sinking feeling when you forget the pain of the late 90’s and wander back toward calibrating toward zero and miscalculate. Like what happened 4 or 5 years ago. Man, that was a rough couple of months.
We’ve reached the part of the year where we think that various financial institutions have stopped sending us tax paperwork and so we can finally sit down with the tax software and type the numbers from the various papers into the matching fields, read the numbers that the software automatically calculates for us, squint at those numbers, discuss itemizing, go down that rabbit trail for 20 minutes, figure out that the standard deduction is good enough and not worrying about being audited is worth the maybe $40 we’d make by itemizing, and then just send it off in a fit of pique. And not think about it for another year.
Jeez. My parents did this sitting at the kitchen table with a legal pad and a box of receipts and a calculator and it took them a couple of evenings. It usually takes us a couple of hours. It’s so much easier now! (Which might even be reason to be paranoid about how easy it is now. Best to not think about that.)
And then, after that, depending on how we did with the whole number crunching thing, we might go out for dinner. Or say “well, I think we will be making meals at home for a month or two.”
So… what’s on your docket?