Well, our taxes are finally done…and we owe about $3,000 for our Federal return. Granted, this could have been really bad if I had not been setting a lot of money aside from my blogging income, but still – $3,000! There are a few reasons for owing this kind of money this year when normally we just about break even (which is what we always aim for, as I don’t like owing money and I don’t like getting a refund):
1. Blogging income really picked up in the past 3-4 months, and it is not taxed when it is paid out.
2. My wife’s payroll lady screwed up her paychecks. I still cannot fathom how this happened, but for some reason even though her paychecks say that she has 0 exemptions, the amount of taxes withheld from her check makes it seem like she had 2 exemptions all year. The W-4 she filled out asked for 0 exemptions, the checks say 0 exemptions, but yet the effective tax rate comes out to her having 2 exemptions. I am not happy about this and it is something that has to be discussed asap with the woman at her work that handles this. Am I supposed to do the math every week on her checks now? Ugh.
Oh wait, did I mention that the $3,000 was for Federal only? Yep, that’s right – we owe about $600 for California state taxes as well. Yippee! $3,600 in due taxes! I expected to owe money on my blogging income, for sure – and that’s why I set the money aside and continue to do so, so I can pay my quarterly estimated taxes this year. No biggie – that’s what happens when income does not get taxed through the year. But the screwup on the paycheck withholdings really irks me and if that had not happened, I would not have had to shell out $3,600 today to the IRS.
You live and you learn.
Other bloggers paying their owed taxes this week are Patrick from Cash Money Life($1100) and Lynnae from Being Frugal ($5300). Have you had any tax issues this year that you were prepared for? Did any of them come as a big surprise? Let me know!
Photo by Mat Honan