I’m not a tax professional or expert in any way. This is just a personal experience story. If you try to use this as professional guidance, you’re an idiot…especially since we are out more than $6000 even though we only really owed less than $100! This is just to see that yet someone else got screwed by the system. DON’T USE ME FOR GUIDANCE. Thanks. 😉 Our 2013 IRS Tax Battle For anybody who has been following along, here is a synopsis of the crap we have been dealing with since March 2015: Mid-March 2015 – Received an official letter from the IRS saying that we didn’t disclose all of our Paypal income for 2013…and owed them $67,000!!! We responded with all of our documentation showing what we received and paid out and waited for them to reply. Mid-April 2015 – Received another official letter repeating themselves from March. Made an appointment with a tax lawyer. April 22, 2015 – Tax lawyer suggests calling and working it out with a real person instead of worrying about their automated letter system. May 2015 – Was told to send in an updated Schedule C for our online business that clearly denotes what … Read more
I thought it would be fun to update this post exactly 5 years after I originally wrote it…let’s see what’s changed… Yes, even though blogging was/is officially paying me more than my day job ever did, I budget in self-employment. Specifically, I really dislike the idea of irregular paychecks and we strive to make it less stressful. My Paycheck Plan 5 Years Ago I had been building up a blogging income account at ING (now CapitalOne 360). My hope was to get it to $10,000 by the time I quit my day job so I’d have more than enough padding on months that I don’t bring in enough. I made it to $9200 as of July 15, 2011 and I took it right over the $10,000 mark with the last paycheck I received after giving my 2 weeks’ notice. I was planning on paying myself a biweekly paycheck directly from this accout so we would never experience a budget crunch at all. In order for this plan to have worked, I decided to pay myself $1500 every two weeks. How It Has Worked for the Last 5 Years I’m going to pat myself on the back. This plan has been slightly adjusted as our income fluctuated over the … Read more
I receive occasional comments and emails that lead me to believe that quite a few people believe that all of their taxable income is taxed at the same rate – specifically the rate of their highest tax bracket. Unless you are in the lowest tax bracket, this isn’t how it works. 2016 Tax Brackets Here are the tax brackets for 2016 according to the Internal Revenue Service: Single Taxable Income Tax Rate $0—$9,275 10% $9,276—$37,650 $927.50 plus 15% of the amount over $9,275 $37,651—$91,150 $5,183.75 plus 25% of the amount over $37,650 $91,151—$190,150 $18,558.75 plus 28% of the amount over $91,150 $190,151—$ 413,350 $46,278.75 plus 33% of the amount over $190,150 $413,351—$415,050 $119,934.75 plus 35% of the amount over $413,350 $415,051 or more $120,529.75 plus 39.6% of the amount over $415,050 Married Filing Jointly or Qualifying Widow(er) Taxable Income Tax Rate $0—$18,550 10% $18,551—$75,300 $1,855 plus 15% of the amount over $18,550 $75,301—$151,900 $10,367.50 plus 25% of the amount over $75,300 $151,901—$231,450 $29,517.50 plus 28% of the amount over $151,900 $231,451—$413,350 $51,791.50 plus 33% of the amount over $231,450 $413,351—$466,950 $111,818.50 plus 35% of the amount over $413,350 $466,951 or more $130,578.50 plus 39.6% of the amount over $466,950 … Read more
I started this site to be frank about money. I like having give-and-take conversations about actual, specific dollar amounts of all sorts of stuff. So let’s talk taxes in specifics since we got to read all the general stuff all over the dang place over the last few months. Our 2015 Numbers So, 2015 was technically a lower income year than “normal” for us even though we sailed along great and still saved for our future. We brought in about $86,000 in overall earnings. But I cracked up laughing as my eyes took in our 21 pages of taxes – deductions flowing like freaking water. Expenses like mileage for pet sitting and sports officiating and the business expenses like our dedicated office and whatnot just kept hacking into the $86,000 we made. Then the $11,000 contribution to the SEP IRA took a chunk out too. Then our itemized deductions took out a $16,000 chunk. In the end, we paid taxes on $22,000 (about $2500) plus our self-employment taxes (about $8900). $10,900 total. We paid in $18,000 over the year. So, we ended up with a $7100 refund that we chose to let them keep for this year’s taxes. We won’t … Read more
My Dad doesn’t email me much in general, so when I got an email with a post suggestion from him yesterday, I tuned in. Crystal, I received the email in the photo which is obviously a scam, and I already knew not to open any attached links. Anyway, as I wanted to report this to the IRS, I looked at their website: http://www.irs.gov/uac/Report-Phishing Basically, the IRS requests these type of emails be forwarded to [email protected] As indicated, do NOT open any of the links in these emails. Once you forward them to the IRS, delete them and also from your trash bin. Take care, Dad PS Also, you might let your readers know that in many of these types of scam emails, the wording, grammar, punctuation, etc. appear peculiar which should definitely be another red flag. Thanks, Dad! This is a great time to remind everyone to be careful with their data. Don’t fall for any IRS email or phone scams and keep in mind that you can always contact an organization yourself through searchable contact info instead of trusting where an email or call is really coming from…harder to scam you if you call the organization directly.
I just sent out all of our property taxes for both homes and our current home’s home owner’s association dues. Poopers. Total Property Taxes Total hit to our property tax savings account? $11,221. OUCH. Expected but hurts anyway. Our 1750 square foot rental home is appraised for taxes at around $125,000. Our 3750 square foot current home is appraised at around $290,000 for taxes since they couldn’t go all the way up to its $306,000 in one 10% leap. To pay more than $11,000 means our property taxes are right around 2.9% with more than half of that going to our public school district. With this on top of the upcoming $570 a month health insurance and the January quarterly tax payment, I feel like money is just pouring away like water. But that is how it is every December and January. It’s the price to be paid for not escrowing. I rather have a set mortgage payment and see the pain in writing every year for property taxes. This is why I am a cheap-ass ginger every February-March, LOL. Not Worried, Just Tired I’ll admit that in years past, I actually felt like we were taking huge hits and … Read more
Getting a tax break for the mortgage interest you pay on your home loan IS NOT BETTER than NOT HAVING A HOME LOAN!!! Let me do a little simple math here (probably over-simplified but it makes the point): Mortgage Interest Tax Break I’m at a tax rate around 30%. So that’s like saying I get a 30% discount on my mortgage tax interest and other write-offs. If I pay $5000 a year in mortgage interest, the tax break will net me $1500 off on my taxes. I still paid $3500 a year in mortgage interest. No Tax Break Now let’s say I paid off the mortgage. I don’t get tax breaks on my mortgage interest because I don’t have any. That’s better than being lucky enough to get back $1500 from $5000 of my own money. AND, what if your mortgage interest and other write-offs aren’t larger than the standard deduction for you? Then keeping a mortgage only has the benefit of having more cash on hand for other investments. I am NOT saying everyone should pay off their homes. I am keeping my 4% mortgage right now so we can invest our cash elsewhere at a hopefully higher return. I am just … Read more