Wednesday, April 15, 2015

Taxes

I usually file my taxes in the summer or later since we don't get a refund.  By managing my withholding and estimated tax payments, I usually am pretty close to owing just a little on April 15th.   This year, however, we have large refunds coming from both the federal and state returns, since I am unable to adjust the withholding from my income.

If the past is a predictor, my state refunds will come first, in about 2-4 weeks.   My federal refund will come later, in about 6-8 weeks.

I still do my taxes by pen and paper, with the help of an excel spreadsheet, which gives me an in depth understanding of how and why I pay the amount of tax that I do.   My conclusion is that federal taxes are going up and getting more complicated, mainly due to the Obamacare tax changes that were implemented in 2014.   Our resident state taxes are going down, and keeping the same complexity.   Our non-resident state taxes are stable, with complexity increasing slightly.  

Although, I am still competent at doing our taxes by hand, I expect I will need to use tax software if the complexity or the amount of tax law changes continues to increase.  This has caused me to consider simplifying our retirement finances, which should simplify our income tax filing.   For example, going from 7 part time jobs to no part time jobs has already been a simplifying event.  There are probably several more that I can do over the next few years.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial advice. Please consult a professional advisor.

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