Octopus Overlords

Will take a hit on the return this year. Cashed out a life insurance policy, will owe taxes on about 9k. If I am lucky, I will break even, but I expect to owe money. Since I threw it at the mortgage, even if I owe, I will have come out ahead.

A full year of mortgage and insurance payments put me into itemization range. Wife and I both got out W-2s today, had the 5498s from the IRAs, and the student interest form available. So we're all done here. Refund of ~$1200.

Effective Tax Rate
2016 - 10.33%
2015 - 11.65%
2014 - 11.03%
2013 - 13.47%
2012 - 15.81%
2011 - 13.10%
2010 - 12.85%
2009 - 12.87%
2008 - 12.35%
2007 - 9.82%
2006 - 9.42%
2005 - 10.66%

Cautiously optimistic: Wife's commission plan was discontinued last year so she made less money despite a small raise, and her teaching gigs fell through so that extra income didn't happen. My pay fell, too, and Curio City lost money, which is nice. Altogether I think our household income fell by 20%, which is also nice at tax time. Medical bills might be over the threshold for the first time ever. On the bad side, Wife did make some 1099 income from which I withheld nothing because the individual checks were all small. I expect the bottom line will be +/- $500 of breakeven.

As usual, I won't know until April at the earliest.

Thanks to that commission thing, Wife is starting a new job next month. It has no bonus plan, so 2017's income should be more straightforward.

Default wrote:Will take a hit on the return this year. Cashed out a life insurance policy, will owe taxes on about 9k. If I am lucky, I will break even, but I expect to owe money. Since I threw it at the mortgage, even if I owe, I will have come out ahead.

As a reminder, I believe you only owe taxes on the amount that exceeds the premiums that you paid into it. I cashed a couple out a few years ago and both were still less than what I paid in, so no taxes.

RunningMn9 wrote:

Default wrote:Will take a hit on the return this year. Cashed out a life insurance policy, will owe taxes on about 9k. If I am lucky, I will break even, but I expect to owe money. Since I threw it at the mortgage, even if I owe, I will have come out ahead.

As a reminder, I believe you only owe taxes on the amount that exceeds the premiums that you paid into it. I cashed a couple out a few years ago and both were still less than what I paid in, so no taxes.

I cashed one out this year and was informed I might owe taxes on $130 of it.

What are you all using for tax software this year, and where did you get it? I normally use Turbo Tax (normally buy the disc) but the reviews, once again, are mixed. and I'm thinking of just doing the PC download.

I don't have anything too complex; kid, mortgage, wife's HRA (which always balances) and some charitable donations. no investments and I usually itemize, but for some reason last year it was better if we took the standard deduction. weird.

I have almost all my tax documents, and want to get them knocked out early again this year.

Thanks.

I'm planning to do it this weekend and still use TurboTax. It is still the easiest for me and I've never had a problem with it.

Octavious wrote:We have a feeling that my wife's job totally screwed up her witholdings and that we will owe A LOT of money. How they did this I have no idea. I'm hoping I'm wrong, but I haven't had time to look into it very deeply. I just know that her company was bought and when they switched payrolls her check dropped like 140 bucks a month and everything THEY verified it was the correct witholdings and she hasn't changed it. So I'm more than a little worried I own like 2k.

I was right. 2,600. I hate her job.

I still gotta wait for my investment statements. They did well this year, so that's good! But that means I'll owe more taxes on them, so that's bad! And I don't even get a free frogurt out of the deal. Plus I'm almost done with mortgage interest, so again, good and bad. Might need to redo my allowances/withholdings on my W4's.

stessier wrote:I'm planning to do it this weekend and still use TurboTax. It is still the easiest for me and I've never had a problem with it.

I thought the same for many years, but after both Turbo Tax and Tax Cut decided I owed more than $7K last year, at my wife's insistence we saw a tax person and received a $7K refund instead.

Makes me wonder how much I donated to the government all those years that I thought I had "no problem" with the tax software.

I send a lot of money and paperwork to a CPA, who does both our corporate and personal returns.

For the past couple of years, our personal returns have ended up taking standard deductions. If that's true again this year I might do them myself next year. We spend a lot of time compiling all of our deductions every spring, so paying this guy the big bucks to not use them does not sit well with me.

Jeff V wrote:I thought the same for many years, but after both Turbo Tax and Tax Cut decided I owed more than $7K last year, at my wife's insistence we saw a tax person and received a $7K refund instead.

Knowing what I know about taxes, it's almost unimaginable that you would see a $14K swing outside of extreme stupidity when using the software, or extremely questionable shit by the tax person.

Finished mine up last night, and thankfully don't owe thousands this year. Redid my W4 last year to achieve a +/- $100 balance, but getting fisted by my town in property tax has yielded a non-small refund. Not equivalent to the $2000 bump in property taxes, but enough to buy scotch.

RunningMn9 wrote:Knowing what I know about taxes, it's almost unimaginable that you would see a $14K swing outside of extreme stupidity when using the software, or extremely questionable shit by the tax person.

Maybe my dad is doing his taxes too. Every year his first pass has him owing some significant amount. Then he goes back and fixes "mistakes" and magically is closer to the +/- $500 target. $14K? I guess if someone else is signing off on it, go for it. That's also why I pay an accountant. Looking forward to this year's deep donging. It's become a fantastic tradition since I started working again.

RunningMn9 wrote:

Jeff V wrote:I thought the same for many years, but after both Turbo Tax and Tax Cut decided I owed more than $7K last year, at my wife's insistence we saw a tax person and received a $7K refund instead.

Knowing what I know about taxes, it's almost unimaginable that you would see a $14K swing outside of extreme stupidity when using the software, or extremely questionable shit by the tax person.

We've had the IRS send us a letter telling us there was a mistake on our taxes and we own something like $10k. We sent it to our accountant and he sent in some form and said we were good. Nothing owed. *shrug* I don't really know, but I likely will never do my own taxes again.

RunningMn9 wrote:

Jeff V wrote:I thought the same for many years, but after both Turbo Tax and Tax Cut decided I owed more than $7K last year, at my wife's insistence we saw a tax person and received a $7K refund instead.

Knowing what I know about taxes, it's almost unimaginable that you would see a $14K swing outside of extreme stupidity when using the software, or extremely questionable shit by the tax person.

Or, option 3, the tax software just isn't so good. I had a 1099 from an inherited IRA that was partially liquidated. I had 10% taken out of the disbursement, the tax software wasn't smart enough to know the particulars for the disbursement however. Some rule applied that made this non-taxable, and this accounted for the majority of the swing. Another 1099 was neutralized because the proceeds were used for education. The tax software just doesn't do a good job on conditional situations where money may or may not be taxable depending on its use.

On top of that, her interview was far more thorough, and there were write-offs to be had for things such as my wife's Surface for school and her work uniforms.

Yeah, the write offs are the shit that I just don't buy as legit.

In any case, my effective federal tax rate is about 9% without performing any shenanigans. That seems reasonable to me.

Finished. If I did the calculation correctly, I'm at 9.6% effective tax rate. Got a return that was $100 more than last year due to a bunch of clothing donations.

RunningMn9 wrote:Yeah, the write offs are the shit that I just don't buy as legit.

In any case, my effective federal tax rate is about 9% without performing any shenanigans. That seems reasonable to me.

After seeing others effective rates, I decided to look at mine over the last several years. Last year was 17.5% which was down from previous years. I file married with two kids and a mortgage. When I say I pay too much in taxes, that's my reference point.

Wife that only works limited part time, two kids and a colossal mortgage, in NJ with soul crushing property taxes.

I hear Texas is nice this time of year.

It's getting to the point that I don't understand what Turbo Tax is even doing anymore. I think I'm probably contributing more than I should be to Uncle Sam, it's probably been time for a professional for the last two years already.

Jeff V wrote:

stessier wrote:I'm planning to do it this weekend and still use TurboTax. It is still the easiest for me and I've never had a problem with it.

I thought the same for many years, but after both Turbo Tax and Tax Cut decided I owed more than $7K last year, at my wife's insistence we saw a tax person and received a $7K refund instead.

Makes me wonder how much I donated to the government all those years that I thought I had "no problem" with the tax software.

You can file amended returns if your accountant thinks it is worth it. I did that once after switching accountants over a couple hundred dollars.

Tax software is only as good as the info it gives you and the info you put into it. If you are paying $7k it is with a few hundred to pay a tax accountant.

Kraken wrote:I send a lot of money and paperwork to a CPA, who does both our corporate and personal returns.

For the past couple of years, our personal returns have ended up taking standard deductions. If that's true again this year I might do them myself next year. We spend a lot of time compiling all of our deductions every spring, so paying this guy the big bucks to not use them does not sit well with me.

I haven't used a Schedule A in probably 3 of the last 4 years. My mortgage deduction is low enough that without a lot of other expenses the standard deduction is better. If you are in a situation where you are not using the Sch A then you probably could do the return yourself, assuming there is nothing else tricky on it.

The other thing regarding the Sch A is that many "deductions" are limited based on a percentage of your income. Things like medical expenses.

FWIW:
A long time ago, we used an account that my in laws had used for years. Never owed anything, but only got back a couple hundred regularly.
One year I decided to try H&R Block. Nothing had changed on our end. We ended up getting almost 2K back and we did pay extra for their peace of mind thing in case something went wrong..
A few years after that I bought the H&R Block software after I had them do my taxes and I was within $100 of what they were giving me Vs what I did in the software. But they were also charging me about $300 due to my rental property. So the next year and every year since, I do my own and it cost $60. I probably short myself a hundred or so , but it still comes out in my benefit.

I think that if your return stays pretty much the same year after year it is wise to have a tax accountant do it, and then you can always use that as a template for doing it yourself. But some accountants are more aggressive than others.

Finished my tax filings, though haven't yet filed - need to go back and look over everything. For one, I accidentally put in wife's social security wages not regular wages on my first pass, which would've cost us a few thousand in taxes. Oops!

Anyway, looks like we'll wind up with a 15.17% effective tax rate. Going from state to federal employment's been great for the family budget, but it's taken us out of many deduction / credit ranges. Also looks like I need to up our withholding, as we'll owe a significant amount. Question is whether it's worth running this by a professional, Jeff V style. Although I'm not sure what I could be missing that would materially change the result.

I've been anxious about doing my taxes this year fearing I would owe money again this year. After a cross-country relocation and job change, finding out I owed the Feds a couple grand last year was a nasty surprise! But this thread guilted me into facing the music, and I just finished up. Good news! The Feds (and OR) actually owe me a couple grand this year.

Most of my forms are now in but I'm still short two K-1s. Can't finish my taxes without those.

My wife got a W2 from a job she quit in November 2015. It claims she received about $1800 in 2016.

Rather than complain about the errant W2, I told her she ought to complain about the missing $1800.

pr0ner wrote:Most of my forms are now in but I'm still short two K-1s. Can't finish my taxes without those.

I just sent in my company file today so my K-1 is still a month away. Time to start pulling together the personal return.

Just out of curiosity, do those of you who are calculating your percentage use the unadjusted top line or the AGI?

I use what TurboTax tells me it is.

Use the top line.

I divide the amount of tax I owe by the amount of actual income I made (before any pre-tax deductions like 401k). My overall tax burden is probably disgustingly high - but I'm just talking about effective federal income tax rate.

Isgrimnur wrote:I use what TurboTax tells me it is.

It failed to tell me this year - where can I find it again?

I'm choosing not to release my taxes to the IRS this year...even though they sent me a letter requesting the taxes, I believe the majority of the IRS does not care about my return or want to see it anyway. But I will say, they are the best taxes, believe me, I'm the best at taxes.

WINNING! (at taxes)

stessier wrote:

Isgrimnur wrote:I use what TurboTax tells me it is.

It failed to tell me this year - where can I find it again?

First page of the printout Turbotax puts on top of your tax forms.

pr0ner wrote:

stessier wrote:

Isgrimnur wrote:I use what TurboTax tells me it is.

It failed to tell me this year - where can I find it again?

First page of the printout Turbotax puts on top of your tax forms.

Yup. 4th block, "2016 Federal Tax Return Summary", last line.

Looking at those numbers, the Effective Rate is Total Tax against AGI.

AGI won't include pre-tax deductions, which to me is important to figuring out my actual tax burden.

If I go against taxable income, my rate spikes from 10.33% to 13.70%.

I used Turbo Tax as I have done for many years. This time they made a change in the California tax program and didn't tell me. Social security and savings bonds have always been tax exempt and the forms have a place to subtract them from the Fed tax reporting. This time I couldn't find a place to deduct them. I finally saw a small box that said "additional Ca adjustments", so I entered them there. These are the only subtractions I have. Later, when I printed the return out, I noticed that both SS and the bonds were automatically deducted on the state forms, so they had been entered twice. I fixed it, but how about letting us know ahead of time?

My Fed tax was about 8%.