Income Tax Thread

[simpsongal]

Feel free to include your observations, questions, etc.

I'm almost done w/our tax return and annoyed (largely at ourselves) b/c we underestimated how much an income fluctuation in 2022 would impact our taxes.  I had a bonus that ran out and the overwithholding had helped ensure we paid enough in federal tax.  Well, despite losing that extra bonus money and the benefit of the overwithholding, we made a little more money but ended up withholding a lot less.  Plus I *think* we lost some benefits that ran out in 2022 since our DD turned 6 - the child tax credit was lower in 2022 and even more so for that age range .  And once again we're getting a nice check back from the State (perhaps $2K), which seems stupid b/c we can't adjust those withholdings. We were already both withholding extra federal, we adjusted our withholdings yet again.  I'll put a reminder on my calendar to check the numbers mid year.

We're also getting close to no longer itemizing - anyone else there? Or cross that line?  I need to run the math on how much HELOC & mortgage interest we anticipate paying along w/charitable giving.  But the 2023 deduction for married filing jointly is $27,700.  I think one of the main TCJA purposes was to get as many folks filing std. deduction as possible.  We'd easily hit that itemized threshold if not for the SALT cap (our property taxes alone are over $11K)....but we're paying less in mortgage interest thanks to our low interest rate.  I have to imagine we're in a position similar to others on this board, yeah? 

ETA - spin off, if you're no longer itemizing, anyone stop using tax preparation software?  Feels sort of pointless once we're filing std.....

TLDR - tax lessons learned.....I need to pay better attention.  At least our underwithholding penalties are not far off from the interest we would have earned on that money.

[jinkies]

I am still missing a 1099 so haven't started my return yet. I am hoping we will be pretty close to even this year. Last year we owed 5 figures due to a huge miscalculation in my quarterlies (I'm self-employed), and we made major adjustments this year. I also just got paid for 2 months of 2022 in January of this year, so my 2022 income was lower than expected. If we end up actually getting some money back, that would be amazing.

I made 3 of the 4 quarterly payments late, by anywhere from 2 days to 3 months. (I made payment 2 and 3 at the same time, so 2 was 3 months late, 3 was late by maybe a week). Payment 4 was late by 2 days. Do I *really* need to calculate penalties? My income isn't *that* much. It feels like it will add a lot of work, for what will end up being like $5 in penalties.

We have used an accountant the last two years as I got myself established with self-employment. But now I feel like I can just use the last couple years as a template and do it myself. Of course it would be helpful to ask the accountant about the penalty issue.

[chpmnk1015]

ugh that stinks.

Almost ready to file... have all stuff in except for 1 1099 that better be here today or tomorrow..
WE just use software still..

[sadlebred]

It will be close for me if my CPS itemizes or takes the standard deduction for me. I had more in charity donations this year, which may help.

I have most of the paperwork for my CPA and meet with her in a few weeks.

[chilerellanos]

I filed asap because I didn’t want my ex to claim our daughter.

Last year I basically broke even, but this year I got 4K back federal and 2k back for state.

I did make quite a bit less this year than last year. But last year was not a typical year for me. I doubt I’ll ever make as much as I did last year.

[trissie18]

Started over the weekend to get an idea of where we stand as I was afraid we were going to owe quite a bit with DH's promotion and huge multi-step raise in 2022 that resulted in a ~$20k increase in income. Thankfully I chose to have the full tax amount taken out of my bonus so looks like we will owe a little under $1k this year. Waiting on a couple more 1099s from my side hustle to come in to get final number. Have a meeting with our financial advisor in February to discuss ways to reduce our taxable income as I anticipate our 2023 income increasing another $30-40k.

[ohgillian]

For your question about itemizing - I’ve said this before on this board but we "deduction bunch" and itemize every other year. We come out ahead that way - I have around $10k of annual charitable giving and so we do around $20k one year and itemize, none the next and take the standard.

If TCJA sunsets which I doubt, then we’ll reassess in I think it’s TY26.

[plutosmoon]

I'm waiting for my stock account 1099 to confirm my estimates, but I ran the numbers and should get some small refunds, ~700 from the feds and ~200 from state.

I haven't itemized in years, not sure my deductions will ever be high enough for that again, even if the standard deduction drops, it could be close depending on what I find for a house. Even before the increased standard deduction, when I still owned a house, I broke pretty close to even on my schedule A vs. the standard.

It's my official year to claim DD, but I'm a bit worried exh may think this is an odd year since he did not claim DD last year. I filed around April 10th last year after I knew he had submitted his, and claimed DD without issue. Exh moved to Europelast year and I'm not entirely sure he even had a job, so I'm thinking he either doesn't file at all for 2022 or he'll file really late.

I qualify to use free file programs for the feds, but I may need to do my state by hand, it seems MA has dropped off a lot of the free file software and I don't want to pay $50 to file electronically. I don't find paper filing all that hard, MA has a million forms, so that's irritating to complete, but I check my taxes by hand anyway and really only efile because it's free for me and to confirm exh didn't claim DD.

[clairebear]

I do property managment and just finished sending out my 1099s to my clients. Coming in just under the deadline, whew!! 

I won't even look at my taxes for another two months. I own my own real estate business and will owe something in the 5 figures. I'll just close my eyes and pretending its not tax season yet. 

[k3am]

2022 is the first year we've made estimated quarterly tax payments, so hopefully we come close to breaking even. I got a one off comp bonus in the range of the mid-five figures, so I'm not confident how things will play out. We've got until April until we get our taxes prepared.

I also have to handle my mom's taxes, and I'm so over it. I really hate the income tax process in general. It seems like there has to be a better/easier way.

[mae0111]

We make quarterly payments, and I'm still concerned that we're going to owe. DH is usually really conservative and pays way more than he should, just because there always seem to be last-minute tax law changes that wind up favorable to his business (he owns a small business and I'm self-employed). But this year DH and I both underestimated our income. Mine is low enough that it doesn't make a difference, but DH's will. We also own MIL's house and do our best to break even there, but I don't know how that worked out this year.

I think we are pretty close to having everything together. We met with our accountant late last year to make sure we had all of our ducks in a row (and still screwed up lol). So I guess we will see what the final numbers look like...

[tealblue]

DH’s business taxes probably won’t be final until the last possible day again so I haven’t started. Just got our w2’s this week.

We take the standard deduction because we have a low mortgage rate and relatively low mortgage balance compared to others on here.

We over withhold on DH’s W2 and broke about even last year. Which is annoying because his business made a lot of $ but we didn’t take any distributions - I have finally talked the other family members into taking at least quarterly distributions to “cover” the taxes we pay for the income…. Not exactly enough but better than nothing.

I’ll probably owe state. I had been funding the kids 529 plans with a chunk of $ the last few years so the state credit offset what I owed. But we started renovations last year and I didn’t throw any extra money in them.

[cherry1111]

We no longer itemize. The last 2 years I’ve run our numbers in Turbo Tax and Cash App Taxes(formerly Credit Karma Tax) online. Since the numbers matched I then used the Credit Karma to file because it was completely free.

[Susie]

Since the SALT cap we haven't itemized and I don't expect we will itemize this year either.  I still gather up the documentation every year just in case of a surprise, but it's a lot of futile effort.

I still use a preparer since I receive a K-1 rather than W-2 and it's more complicated than I am up for dealing with.  Plus he advises me on quarterly estimated payments for the coming year.

[Poppy]

I always have Amazon digital rewards so I buy HR Block federal software there. Colorado income tax is easy and their DOR website is really good (and free) so I don't pay for state filing.

I don't have all my forms yet but it will be interesting because I stopped working this year. Curious to see where we land.

[egeiger]

I BROKE EVEN! I have never broken even. We owe $35 federal and get a $92 state refund. I am overjoyed!

[hbomdiggity]

Despite additional withholding I think we will still owe. Our appt with tax preparer isn’t until early March though.

And we have some newish local taxes that are not insignificant but our employers will not withhold for that are further complicating matters. It has to be paid to the city directly so it’s not we can even up the state withholding to cover.

The salt cap is killing us.

[midwestmama]

We haven't started ours yet, maybe will start this weekend. We still need HSA forms. I think with the higher standard deduction, we'll just take that and won't itemize this year. Crossing our fingers that with the additional fed tax withholding DH and I both had deducted this year that we won't have to pay in. (The last 2 years we had to pay in 3-5k for Federal. Before that, we typically got at least 1k Fed refund.)

What absolutely drives me nuts is having to claim a tax refund as income. It's like double jeopardy. I got it back because I paid too much in taxes, but now you're taxing it again.

[sadlebred]

Jan 31, 2023 17:55:05 GMT -5 mofongo said:

I made a thread on ML, but I do have an additional question.

We went from always getting a refund, in recent years around 5k, to owing 3k owing yr. H did get a big raise, so that is likely it. We have a HHI, my income is insignificant.

We upped H’s contributions to his 403b, 401 is already maxed out. I looked at my options, and I had a Roth available to contribute to. Does it matter if our household income is over the limit, or can I contribute without issue?

Are you talking about a ROTH IRA or a ROTH within a 401K?

[sadlebred]

Jan 31, 2023 21:06:13 GMT -5 mofongo said:

Jan 31, 2023 20:48:20 GMT -5 sadlebred said:

Are you talking about a ROTH IRA or a ROTH within a 401K?

Didn’t even know that was a thing! Ha, I’m guessing it is within a 401k? This is the first year I’ve ever seen it as a possibility, in many years at the same company. H also works there, and it’s not an option on his.

Within a ROTH 401K you can contribute up to the 401K limit regardless of your income even if it's above the ROTH IRA limit. You would withdraw it tax free at retirement like you do a "regular" ROTH IRA. You can also do part in a traditional 401K and part into the ROTH 401K-amounts/percentages of your choosing.

[gretchenindisguise]

We bought an electric car this year and way overwithheld. We got smacked with a huge bill a few years ago and it scarred us. We need to change our withholds though because it’s too much.

Eta: but we can’t file yet because the forms for the electric car forms aren’t updated yet.

[jwright]

Same story as always for me, we owe a huge amount because we don't pay estimates; the business that generates the income would rather keep the cash for new opportunities that may arise; we get a one time distribution in April that more than covers it.

I always extend (with a payment) because I feel too rushed in the small amount of time between receiving those funds and the deadline, I like to triple check everything.

[mommin]

We made quite a bit less this year due to a sign on bonus and relocation package in 2021. Overall, we were pretty on par with 2019 and prior years. I have decided that I really like not having state income tax and not having to file a state return.

We still itemize because of mortgage interest and charitable donations. There are a few other things we add on there but those two alone are significant.

This year DS1 turns 17 so we will no longer be eligible for the child tax credit for him, which is lame. He won’t turn 18 until after he graduates in 2024. He’s clearly still a dependent and he’s very expensive. That’s my only real gripe. Everything else should be pretty much the same going forward.

[simpsongal]

jwright, don't you incur underpayment penalties?

[madringal]

I took a job in 2021 that is 100% commission and I am taxed to high heavens on my checks. Our entire married life we would get back small refunds 2-3k, and now they are like 6-7k. I have got to work some numbers to get smaller refunds.

[jwright]

Feb 1, 2023 13:56:50 GMT -5 simpsongal said:

jwright , don't you incur underpayment penalties?

Yes, $2500 last year which isn't enough to overcome the business uses of the funds during the year, and until recently interest rates were very low.  

[icedcoffee]

I’m waiting on one last tax form from Fidelity.

I started early because we bought a beach rental this year. We didn’t have any rental income in 2022 but I need to get it set up and stuff. I spent a lot of time reading through the requirements and pulling info from our closing documents. Hopefully I understand properly. LOL (I’m a CPA but have no tax experience. I work in non profits). I hope turbo tax doesn’t fuck this up.

Anyway I want to file soon because I have a TurboTax coupon that expires mid Feb and we needed to upgrade to a fancier version to allow us to file the proper rental forms.

[noodleoo]

I used to file my own taxes before we got married, but H has a business so now he has to do it. And he *always* waits until the last minute to do it. Like he starts in April. Drives me nuts!!! We've owed the last few years so it doesn't really matter but it is not how I'd do it.

We take the standard deduction now too but we still use TurboTax for the business stuff.

[icedcoffee]

I filed on Monday. I had a 30% off turbo tax coupon that expired that day so I wanted to take advantage. It was our first year with a rental property so I started early so I could figure out all the depreciation and stuff. We got a small refund. hooray!!

[chpmnk1015]

Our return is already pending for tomorrow..yay