I’ve done my own taxes since I was first on my own, I think at the age of 19. In the early day’s I was typically exempt, another word for dead broke. Then I started making a bit of money but was still solidly in 1040-EZ territory and generally got refunds. Then came home ownership and with it itemized deductions, and often larger returns. Later as I made a bit more money I often owed a bit at the end of the year.
This year I approached taxes with some trepidation. I knew it was going to be different. Buying a truck and trailer outright takes a sudden influx of money, and that means big lumps of income, and that means taxes galore. So a month before the tax deadline I sat down and got to work. I inputted values and checked the rules and processed papers and when the dust settled I was left staring at the screen with a mix of horror and resignation.
$30,510 is what it said I owed. I took a moment of Zen, then the hard part. “Darling, I’m done, it’s terrifying, are you ready?” Trail took it better than expected, we’ve become somewhat accustomed to sticker shock the last year. It was less than the cost of our Truck for instance. Still, it’s a lot of money to spend and for a tax bill, unprecedented for us.
We went to H&R block to get a second opinion, I took some pride in that they had it a bit higher because they thought I needed to pay an underpayment penalty (for not holding back enough tax through the year). I had found there was a rule that I could skip it if last years taxes were significantly lower, which the pro’s missed. The bad news was they concurred with what I owed in actual tax.
Fortunately, while I had not paid my tax as I took my income, we had saved enough money that I can actually pay for that gigantic bill. Mind you this was not because I was wise enough to plan ahead and know what my tax would be, it was instead because we were wise enough to keep a lot of money in the bank to live off while we worked on our businesses. I’m very grateful we can pay it, incredibly so, but it is still a scary thing and the bill was bigger than I’d imagined.
We went from a years worth of living expenses in the bank to a few months. It’s times like these you have to take a sober look at where you are at, and where you are going. We still own our home and transportation free and clear and have no debts. We’ve got around three months of money in checking, and another month or two in savings. We’ve got a chunk of retirement money but that is last resort money. We have as of yet an inconsequential income from our businesses. Worst case is we have to pause somewhere and work temporary jobs through the late summer. That’s no great hardship and has always been a backup plan if business is slow.
It wouldn’t be an adventure if it didn’t have challenges to overcome. We have more living months of savings and resources available than we did when I was working and had a mortgage to pay. Back then most of my assets were tied up in some way and we didn’t keep all that much in checking and savings. The monthly costs were also massive by comparison. So while we are in a weaker position there is no real threat to our way of life or safety, just more pressure, and for me, that can be a good thing.
I’ve always been one to relax when times are easy and work hardest when times are challenging. I don’t especially enjoy deadlines and challenges but I work very well under them provided there is a realistic means of overcoming them. The sudden departure of 30K has certainly got me working longer hours and focusing more in the time I set aside to work. I think the key to challenges like this are setting aside anything you can’t control, accepting it, and then take action in the areas you do have control over.As to taxes themselves. I’m almost never sorry to pay them. I feel the rate I tend to pay at, even this year, is largely fair given the many benefits I gain from living in America and the good it does for others as well. Not every penny is spent as I would, but compromise is part of living in a society and for all its fault’s it is by and large a good society.
As to taxes themselves. I’m never resentful paying them. I feel the rate I tend to pay at, even this year, is largely fair given the many benefits I gain from living in America and the good it does for others as well. Not every penny is spent as I would, but compromise is part of living in a society and for all its fault’s it is by and large a good society with a history of learning from its mistakes and getting better, sometimes slowly, sometimes quickly. I do think there is a balance, that you can have too much tax, but the 10-20% or so net I end up paying is not too much by my reckoning.
Here’s hoping your day of tax reckoning is less shocking than ours this year, and don’t wait too long, haste makes waste in doing taxes more often than not.