I believe we have all of our W2s and 1099-MISC forms in now, so I started filling in our stuff using TaxCut Online, as I’ve done for the last 2 years. I believe our witholding woes are that even though we both file as 0 dependents for our payroll deductions, the deductions are based on each of our estimated annual income, which is way short of our combined annual income, which clearly bumps us into a whole new league of tax torture. As soon as I added my wife’s income, we went from getting a ton of money back to owing a smidgen of money.
My next tactic was to try to file as Married – Separately. Huh-uh. We were going to owe something in the neighborhood of $4k and I freaked. I started going through all of the questions in the software to find deductions and credits when I came across the First-time Homebuyer’s Credit. Ooohhhh. Much better. With that beautiful improvement, I switched the filing to Married – Filing Joint and we struck gold, and I haven’t even entered anything about using our third bedroom and Internet for office work, since I work remotely for iThemes.
We are estatic; it’s the single biggest windfall we’ve had and places us in the few Americans who have 3 months of living expenses saved for a rainy day… if the numbers hold up when I’m done with all of my calculations.
Next year will be better, though: a full year of mortgage interest, mortgage insurance, COBRA, home office, tithe, and more. Deductions and credits galore! Now I know how homeowners get rich when they are fiscally responsible and remember who their money belongs to.
Quote of the day before I found the homebuyer credit:
We’re too poor to be this rich if they’re going to tax us this much!