Taxes

When I was at home and through college, my dad did most of the work of doing my taxes. And since as a farmer he had to report employee's earnings and had a tax deadline of something like March 1, my taxes got done along with his relatively early compared to the April 15 deadline.

When I moved out to Virginia and began doing my taxes all on my own, my procrastination abilities kicked in and I've since done them about the week they are due.

Following tradition (of a whole 2 years), JM and I did our taxes the week they were due. We had tried (and been fairly successful) to file all of the relevant W-2's, 1099's, and annual donation receipts in the same place. So once we devoted a Saturday to the task, the majority of time was spent in figuring out the appropriate place to plug in all the numbers. I've always done my taxes using a tax software (which one has changed through the years), so we downloaded what we needed, imported last year's return and started through the interview.

The first return we did together (2006), we had gotten married, JM had a small business, and JM had pulled some money out of a retirement account to pay off a debt (lawyer bill or some such). Those all had an impact on completing our tax forms.

The second return we did together (2007), was probably our simplest. No life changes and JM had done little or nothing with his small business. Tax returns were completed without any complicatinos.

This third return for 2008, we had bought a house and I'd brought in a bit of extra money from a teaching job on the side. Working with software definitely made it easier to review different scenarios. Whether we reported the money from the teaching job as a small business or just as "other income" changed the amount of taxes owed by about $200 and determined whether we had to pay a penalty (of about $3.00) for underpaying in withholdings. As first-time homebuyers, we qualified for the tax credit. As first-time homebuyers in 2008, we would be required to pay back the tax credit over 15 years, no interest added. That news took some of the fun out of the credit (especially knowing that 2009 first-time homebuyers do NOT have to pay back the credit). But being able to apply that amount to the principal of our mortgage looks like it would save us about $20,000 in interest and shorten the length of our loan by 3-4 years, so we went ahead with it.

We've already been paying a few extra dollars each month on our mortgage, so it felt good to look at the number of payments left and realize we'd already shortened our amoritization schedule by most of a year, or maybe a bit more.