I’m dismayed to report that because of taxes, we aren’t going to be paying off big chunks of our credit card debt like we had planned. At least, not as quickly. I made more money than usual last year, so we set aside extra for taxes. (We, here, is really my husband, the brains of the operation.) We were very close, but still had to pay in. The real bitch, though, is not what we owed today, April 15th, but how much more we have to set aside for quarterly payments this year because my income went up — an amount that shoves aside other expenditures, or savings, or both. Meanwhile, we’ve got at least one big purchase that looks like it can no longer be put off — replacing a computer that is getting increasingly flaky. The silver lining is that I’ll probably have a more average year this year, and we’ll get a refund next. And as Ramit don’t-hate-me-because-I’m-beautiful Sethi points out, in the real world, that’s a very good thing.
- Budget 2010: Progress on the Debt Front When I last wrote about our two- or three-year plan...
Tags: Credit card · Debt · Taxes2 Comments
The quarterly payments thing… I loathe the idea.
I moonlight in addition to my 9-5 job, and have had my tax software tell me to make esitmated payments in the past. I never actually did it, and never had to pay a penalty. IANAL, YMMV, etc, but are you going to make quarterly payments because the software told you to or because a real person who understands tax law told you to?
The way I do it, which is kind of like saving or making quarterly payments, is to overwithhold on my regular job. We still take the lifestyle hit of “saving” through overwithholding but don’t have the irritation of thinking about taxes more than once a year. When I estimate pretty well we get some money back and the software doesn’t complain, and when I don’t it tells me to make quarterly payments and I never have. It really makes cash flow easier, because I don’t have to worry about being on top of my billing or getting paid to make a tax payment.
So far, so good, for me. Might be worth talking to an accountant if you don’t like the idea of paying more than once a year.
I agree with you about just saving up throughout the year for taxes so you only have to deal with it once. And typically its important to over compensate for your savings. Even if it makes living day to day a little bit harder, you will ensure your financial safety. ALSO – when it comes to getting your tax returns you will probably have a nice fat check being handed back to you which you can use for a vacation