Thursday, April 10, 2014

Live & Learn -- Sometimes the government doesn't suck

Ugh, dreaded Tax Day is almost upon us.
Of course our Type A personalities forced us to file weeks ago, but I still thought the experience was worth sharing. We had prepared ourselves for an absolute nightmare...
Last year we decided, for the first time, to hire an accountant to file our taxes for us, since we had some complicated items like filing jointly for the first time and the sale of a home that Stew and his brothers inherited. This stuff seemed a little too complicated for Turbo Tax to handle, and we didn't want to make a mistake, so we found someone local who helped us file for a small fee.
Last year sucked.
For the first time ever we had to pay, even though for our entire working lives we were both used to getting pretty decent returns. Enough to pay for a vacation or something at least. But last year we had to pay thousands of dollars in back taxes to the IRS due to the sale of the inherited house... something about landlord taxes since it had been a rental for the prior ten years or something. That hurt.
Then our accountant warned us that due to changes by the Obama Administration, we should be prepared to pay that much or more this year as well.
Oh and the kicker... When we bought our condo in 2008, we took a government New-Home Buyer Credit of $7,500 which had to be repaid in equal payments over 15 years. Don't even get me started about the fact that a few months later new homebuyers received the same credit, but were not expected to pay it back. The point is that since we sold our condo, we were expected to pay back the entire credit on our next tax return. So that meant an additional $6,000 added to any other taxes we would owe this year.
But resigning ourselves to what was inevitably coming, for the past year we saved and saved to make sure we could pay all our taxes without going into debt. But in the meantime, Stew did some research...
And this is where I found out that sometimes the government doesn't suck.
Apparently there is a loophole... since we sold our condo at a loss, we were not required to pay back the credit after all! And on top of that, Uncle Sam decided to throw us an additional few thousand dollars back as well!
We still have no idea what that accountant was talking about, but needless to say we didn't use him again, and went back to filing on our own via Turbo Tax. It was a bit of a long, complicated process, but Stew is a smart cookie and he figured it all out. And my only responsibility in the whole thing is to decide how we want to spend all that extra cash!
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This has been another edition of...
Life As Always
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  1. Your tax system sounds soooo complicated! But yay for loopholes and extra cash!! That will be very handy for you over the coming weeks and months I'm sure :)

  2. I love getting money back! I don't care if it's a "free loan" to the government... it's still money that was safe from ME for a while! haha

  3. Ugh, taxes do suck. In 2010, we sold a house, moved, changed jobs, and had a kid. When we finally both got full time jobs in 2011, our joint salary increased but our withholding rates didn't increase, soooo...we also owed thousands come 2012 and I wanted to punch someone in the throat. That was our downpayment money :(. At least lesson learned is to determine how much to withhold on your own. As for you, so happy that your fiance found a loophole. What a smartie pants!!! Yay for extra money money!

  4. Yeah!! Just an FYI you can take all of your tax stuff (printed out) to any H&R Block and they will do a second look FOR FREE!!!!!! That means they will look over your return to see if you missed anything. We did that this year since we were filing for Ellie's adoption. They lady said that we got it all done and if we were going to file through her she was going to charge about $600!!!!!

  5. Whew!! So glad you were able to get a loophole! And got some extra $$!!

  6. I hate tax season! But this time of year always makes me appreciate my hubby because he gets to figure it all out while I dream of what I am going to buy with our return. Glad to hear this year was a win for the Always!

  7. That's an awesome surprise! We usually file ours as soon as we have both of our W2s and other documents. Usually, the only tax we owe is local. It's no more than $20. I would cry if we had to pay a significant amount! Glad things worked out well for you, this year--especially with Baby on the way! :)

  8. YAY for loop holes! I saved so much money last year too because I was expecting to have to pay for the biz, but since I didn't make enough according to Uncle Sam, I got to keep all that money and now I have decision paralysis and literally have no idea how to spend that money haha

  9. What caused you do drop your accountant, though? Was he ineffective? At least you guys were able figure out what to do and did it correctly. Finding loopholes has to be one of those things you'd love to do when reading tax laws, since it saves you money. It can be time-consuming though, and even more time is spent on working it out on a computer. But as long as you were able to file them properly, it's all good. The savings was a good bonus too.

    Sergio Boyd @ Patrice Mills CPA, Inc.

    1. Well basically we paid him to do something that we could have done ourselves on TurboTax... he didn't do anything wrong, we just didn't really need him. He led us to believe that he would get us a lot of extra deductions and a bigger refund, but in the end he came up with the exact same amount we had on our own.


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