Wednesday, February 27, 2008

Takin' Care of Business --- My Taxes are Complete!

For some reason I’m on a financial takin’ care of business roll (come on sing the song with me), so last night I busted out the taxes.

Previously I had decided I was going to go to a tax professional this year since there was going to be some changes to my taxes this year. The biggest change in my tax situation stems from the fact that 2007 was the first year I was eligible to contribute to my company’s 401k plan. I was very uncertain about how to handle this change even after researching 401k’s on IRS resources. So whenever I’m in doubt, I go ask the experts.

Monday my “duplicate” W-2 arrived – I guess I am going to have to give away my first born to the Payroll Department – I wonder what I can give them to get my paycheck receipt they same week I get paid. And you know what the whole 401k didn’t seem like that big of a concern since its all noted on the W-2 in box 12. Why couldn’t the IRS have just explained that to me rather than swamp me with form upon form that was like reading Italian-o, which I don’t speak!

Based on the new developments I did what all women’s prerogative is - changed my mind. Instead of going to a professional I figured I could handle this on my own, after all it was all contained within my W-2 and seemed like it would be the same slam-bam-thank you ma’am type tax returns that I’ve done in the past. Luckily last week I received my free turbo tax.

Being the somewhat anal retentive person that I am I didn’t want to just plug and chug into turbo tax, after all I’ve never used it before and hadn’t built up the trust of the software yet so first I went online to TaxAct which is free unless you opt to file with them.

I fully admit I was watching John and Kate Plus 8 when I was doing TaxAct so I’m sure I wasn’t fully focused and could have made a few mistakes but I wasn’t really concerned, I just wanted a quick estimate (don’t worry when I did the real taxes with Turbo Tax I sat down at my kitchen table and turned off the TV). TaxAct calculated my Federal Taxes as being a return of $907 and owing $179 for State Taxes. I thought this couldn’t be the case, I’ve never owed anything to the state before, something must be wrong either by the software or my data input, especially since I had deferred income in a 401k. But at least this gave me a baseline.

I go to the table, turn off the John and Kate Plus 8 re-run, grab my pencil and start turbo tax. After taking about 30 minutes to load the software, Turbo Tax figures my Federal taxes as a refund of $905 and my state as owing $179. Okay apparently Tax Act wasn’t so bad, but still the owing the state concerned me, I double checked everything, and as luck would have it before I could pull out my previous returns Mr. Be-Mine called and so of course I complained about owing the tax money to the state. He said he didn’t understand how I’ve ever received a refund as he’s always received a federal refund but owed the state. I explained that I thought it might be my lack of educations deductions this year but I hadn’t had a chance to look back yet at previous year’s returns. Sure enough, after we hung up and I looked back at my 2006, 2005, and 2004 returns to see what changed and it was the educational deducts. RGGGG, oh well. I guess I should be happy that I no longer have those deducts because that means I’m no longer paying tuition on top of living expense. None the less, having to write a check for taxes is a new experience for me.

PS For those of you like me obtaining a refund, Single Ma recently posted a link that allows you to track your refund. Since I only mailed my federal taxes today, I suppose I’ll wait a week or so before starting to check this.

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