Taxes

It’s almost time to pay Uncle Sam for the privilege of living in the US.

Tax

Tax (Photo credit: Images_of_Money)

Since my business partner and I just finished our corporate taxes last week, I thought it would be a good time to finish my personal taxes.   I’ve got a relatively complicated tax situation.   I’ve got personal taxes, my side-hustle taxes, and our side-hustle taxes.   I had my side hustle taxes done and my personal taxes were just waiting for the final numbers from our corporate filing.   We’re an LLC, run as a partnership, filing as an S-Corp.

I was all set to get about $100 back from my personal and side-hustle #1 taxes.  That’s a perfect tax year.   No more money out-of-pocket and no free large loans to the government.

Side-hustle #2 ruined that.   It started taking off in September, so we’d never paid any estimated taxes.   When I added those numbers in, I owed a bit under $2000.

Ick.  I hate owing.

Thankfully, I set aside 25% of all of my side-hustle income just to cover this.

It was still too much.   What could I do to lower my tax bill?

My IRA!

I’d only contributed $100 to my traditional IRA last year.   Contributions are tax deductible and you can make them until April 15th of the following year.

That’s great.  I had money sitting in a savings account, earmarked to get wasted by the government, and I had an unused tax deduction that I could still contribute to.

That got it down to a $1000 tax liability.

Was there more?  What could I do?

When I paid off my car last year, I started sending half of my car payment to an account earmarked for the next car.   I had $1700 sitting there, so I sent $1200 of it to my IRA, leaving $500 to hopefully cover any car repairs that come up.    Hope isn’t a good financial strategy, but I’ve also got a straight brokerage account that’d doing pretty well, so I can cash that out, if necessary.

Down to $800.

Contributing a bit over $3000 to my retirement saved me more than $1000 right now.   That’s sweet, but I still owed money.

Did I miss something on my first side hustle?

$67 to oDesk?  How did I manage to keep my annual oDesk bill down to $67?   I had a full-time guy in the Philippines for a while last year, and I regularly hire writers for my niche sites.

So I hit oDesk and ran some reports.   I was off in that deduction.   By $2400.  I have no idea where that $67 came from.   Including it dropped my side-hustle profit considerably, and brought my total tax bill to a net $7 refund.

There is a reason I never file my taxes as soon as I finish with Turbo Tax.  I always wait a week or two, and I always come up with something I missed.   This time, the wait saved me nearly $2000.

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  • 4 comments

    Comments

    1. It started taking off in September, so we’d never paid any estimated taxes. When I added those numbers in, I owed a bit under $2000.

    2. Good job on getting your tax bill turned into a small refund. I’m dreading seeing how much I owe this year — hopefully I’ll be able to do the same as you.

    3. Way to work the tax code! I usually wait a few days before filing with Turbotax too. I usually forget something and need to rework the return.

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