Taxes

What end of year tax moves do you need to make?

With the end of the year fast approaching, there’s still a lot of things that need to be done. Have you fully maximized that amount that you could possibly get back from taxes? Here are some items often overlooked:

  1. Charitable contributions. We used to always forget about this for the BF. His work automatically takes out charity deductions out of his paycheck every week, and we used to always forget including this. Which was stupid because he pays around $15-$20 a week!
  2. Student loan interest. I don’t know about you, but I ALWAYS remember this, but that’s because I pay so much! Even if your mom or dad pays off your loans for you, you can still claim this if the loan is in your name.
  3. State sales taxes. I would look into this further for information on your own state. But where I live, we cannot claim this, but some others can.
  4. Job hunting costs. If you’re looking for a position in the same line of work that you used to have (cannot be your first job), you can deduct job-hunting costs as miscellaneous expenses if you itemize (only if the total of your miscellaneous itemized deductions exceed 2% of your adjusted gross income). 
  5. State tax paid last tax season. If you owed state taxes for 2010 when you filed in spring of 2011, then don’t forget to include this in your 2011 state tax itemized deduction because you paid it in 2011! I used to never do this, but I finally did this last year.

What do you still have to do? What have I forgotten?

Tax Withholdings and all the good stuff

Sorry for the late post today.  Suprisingly, there’s only wired internet in my room and that doesn’t work with my laptop. You’d think with this being a 4 star hotel that has a golf course, that the hotel would have internet in my room – but I guess not.

I know tax time isn’t for a while, but such a bulk of my paycheck is taken out every two weeks for taxes that I can’t help but constantly think about it.

I’ve been thinking about increasing the number of my personal allowances because I will get a big refund next year.  In the past I have owed a couple thousand overtime, except last year in which I owed nearly $7,000 or something (this is because I owed taxes on the money that my dad left me and I didn’t withhold enough from the inheritance in the first place.

“Payroll pitfalls
Payroll withholding is something you want to get just right. Why?
    •    If you have too little taken out, you’ll owe money when you file your return. That’s not good, obviously — no one likes to write out a big check to Uncle Sam.
    •    If too much is withheld, you’ll get a refund, and that’s not good either. What’s wrong with getting a refund? That means you’ve given Uncle Sam free use of your tax money — money you could have made better use of yourself throughout the year.”

Read more: Adjust withholding so you dont get a big refund every year http://www.bankrate.com/finance/money-guides/how-to-adjust-your-withholding.aspx#ixzz1XxyWSRJh

Anyways, I’ll be getting back around $4,000 to $5,000 next year and the BF will be getting around $1,500 to $2,000.  We are giving the government an interest-free loan, whereas we could be earning interest on it.  However, I do like having a big windfall all at once, and I don’t know if I trust myself not to spend the money if I received the smaller amount of around $400 a month.  I know that last sentence is a horrible thing to say as a personal finance blogger!

Me and the BF usually use a part of our refunds for fun and then save the rest. However, this year we’re getting so much and I’m really excited for it.  BUT, I constantly think that it would also be nice to have the money now.  Should I change my withholding? What does everyone else do?

Also, I remember when I used to manage a clothing store, people would come in and use their whole tax refunds on shopping.  And I’m talking thousands of dollars.  That just never made sense to me!

What do you use your tax refund usually for? Vacation? Emergency fund? Fun? Pay down debt?

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