Tax Mess Update

Tax Mess Update

This past weekend I did our taxes and it turns out they weren’t as bad as I thought they were gong to be. Don’t get me wrong it is still bad, like we owe more than last year, but I thought it was going to be a couple of thousands dollars more than what we paid overall. A few things saved us that I didn’t realize.

1) Charitable deductions. Before we moved into our new house Mrs. ROB and I donated a lot of stuff to the Salvation Army. Not only clothes, but accessories, bedding, and books, lots of books. Close to a thousand books. I got rid of a ton of books and guess what? The IRS let’s you put a value on paperbacks and hardcovers (a lot of hardcovers). We got a multi-thousand deduction from all of those books. Then when you factor in the amount of clothes, bedding, shoes, and accessories we donated, it was quite a big tax deduction.

Additionally, I realized that I could deduct the mileage I put on my car and some of the money I spend as a big brother. I didn’t realize it but I guess my volunteering as part of the Big Brother, Big Sister organization has financial benefits as well.

Side Note: If you are looking for a worthwhile charity to donate to I strongly encourage you to donate your time to BBBS. They are a fantastic organization. I have been a Big for five years and I love it. I have had the privilege of watching a great young man grow up before my eyes. It is an honor to be part of that organization. The tax deduction helps. 

2) The Home Office Deduction: This year we were able to take the home office deduction. Because Mrs. ROB teaches at multiple places she doesn’t have an office. So we created one at home. Along with that Mrs. ROB is allowed to deduct some mileage when she visits multiple campuses. Going to sometimes three campuses in one day adds up mileage wise. While we cannot deduct the commute, each campus she visits we can deduct that mileage. And at 53 cents a mile that adds up quick.

3) Travel Expenses: While I get a generous amount of travel money from my institution I often have to eat a lot of the costs for transportation, some hotel stays, and food. That can add up quick and it did again this year. I had forgotten about a bunch of receipts I had in my bag that contributed to a little bit bigger travel expense to write off.

4) Home Mortgage Deduction: While we only had a fairly small mortgage deduction this year. This will grow in the coming year or so. And it helps increase our itemized deductions.

5) Small little things: We were able to deduct some small little things that led to a reduced tax burden including: Union Dues, a little tuition, student loan interest, and a couple of other items. Any kind of business expense that I had (e.g. parking) also helped. It wasn’t a lot of but add it all up and it was a couple of thousand dollars in small items.

Tax Plans for 2015

Unfortunately, some of the deductions that we received this year we won’t get as much next year. For example, our charitable contributions will go down considerably because we don’t have much to donate. I don’t have many books left and the ones I do have I want to keep. so here are some steps I am taking to reduce our tax burden in 2015.

1) I have increased my retirement contributions to the max. That should knock a few thousand dollars off of our adjusted gross income.

2) I am going to open additional IRA accounts for Mrs. ROB and I. While Mrs. ROB has some small retirement at one of her jobs, it isn’t much. And it is time that we get her started on a traditional IRA that will reduce our tax burden if we can contribute the maximum.

3) A full-year of mortgage interest and property taxes will allow us to write off more monies.

4) Continue taking the home office deduction. Mrs. ROB is continuing to teach at multiple places, many times on the same day. Thus, we can continue to take the mileage deduction and the home office deduction as she uses our home as her office.

5) Some travel expenses. I will blog about this later, but there will be some major travel that Mrs. ROB and I will be doing for work. We are quite excited about it, but it will most likely come with some out of pocket cost. That cost can be tax deductible.

6) Increasing tax payments. Not only do Mrs. ROB and I both claim zero exemptions, but I have taken the additional step of actually taking out more taxes to make sure we don’t have this happen again. It isn’t much per month (about $100) but it will help offset any problems we might have in the future.

The Bottom Line

I hate paying the government all of that money and I would reduce my tax burden even further if I could by opening up at 457. But I need the money for debt, mortgage, and food. The six steps above should help us reduce our tax bill. Not sure if we won’t have to pay Uncle Sam again, but I hope it won’t be as bad as this year.

2 thoughts on “Tax Mess Update

  1. You might want to consider a Roth IRA instead of an IRA. The tax mess won’t be solved (in fact, Roth is after tax money, so it will exacerbate the situation). However, you have a number of years to go before retirement, and those years will compound the $$$ in the Roth IRA. It grows tax free and there’s no Required Minimum Distribution when you get older.

  2. Hi Tom,
    I actually do have a Roth IRA that is where I actually keep some of our emergency fund. Mrs. ROB doesn’t have one and for tax liabilities, until we get this figured out we might open that for her instead. However, I do agree the Roth is the best way to go. I mean it really is her decision and I wish we could do both. Thanks for reading.

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