It is going to be another snowpacalypse here in New England. Practically, every school is shut down, government offices are as well and the roadways are empty. Because of that and the fact that it needed to get done I decided to do our taxes for 2016.
In my previous post I talked about how everyone can do their taxes and probably save a little money. It is also a good way to get to know your finances.
So I sat down a couple of nights ago, logged into Turbo Tax (which is what I use, but you can use other software and input your numbers). This year seemed to go by a lot quicker. It only took me about 45 minutes to fill all of it out and it cost me $108 to prepare my taxes. Part of the reason for the higher cost (it usually should be less than $100) is because we work in one state, but live in another so technically I prepare two returns.
Tax Results for 2016
Before I do our taxes each year I try to get a sense of what our tax bill might look like. Over the past 6 years I have only got one tax refund from my federal return. The rest of the time we have had to pay the government about $3000 each year (check out earlier post here, here, and here). Part of the reason we owed so much is because we didn’t have enough taxes taken because of the structure of my paychecks.
Up until about March of 2015, when we would teach extra classes and the like I would get my normal paycheck and a separate one for those taxes. Technically, it was like having a 2nd job for me. And because of that, even though I worked or the same employer, I was consistently taxed a lower rate. Additionally, because Mrs. ROB teaches at multiple universities she is also taxed at different rates. Her income isn’t combined altogether to create a larger tax base, which would increase her withholding and increase what we give to the government. So were constantly falling short.
Mrs. ROB still has the same situation with her tax withholding, but last year my employer started to put all I earn on one paycheck, which is great.
Last year our tax bill was about $1700, but we got money back from our state returns so we only owed total about $500 (much better than in years past).
This year’s results are……drum(or eye)roll please….
We owe the government: $1,459 and we will get $1045 back from the states making our net tax burden about $400.
Woo hoo! I mean I don’t like owing the government at all and hopefully we will have another little tax shelter to come along soon (we won’t know this for a few months) but this is a whole lot better than two years ago.
The primary reason is the restructuring of my paycheck creates more tax withholding. So I lose about $200-300 more per month in taxes, but I also don’t have to pay the government as much. Our deductions this year were about the same. We write off our property taxes, mortgage interest, charitable contributions, and business expenses. Because Mrs. ROB teaches at multiple institutions she actually gets to write off some of the mileage she drives between schools. Moreover, we have some business expenses (e.g. going to conferences, meals, transportation) that aren’t fully reimbursed by my university and I write those off as well.
So while I would actually love to have one of these $5000k or $10000 tax refunds you hear about I am just glad our tax burden continues to go down every year. One of the benefits of having a mortgage.
If you are in New England enjoy the snow day.