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