Thursday, February 26, 2009

My Visit with the Tax Accountant

First off, a big thank you to Frugal Chick, who mentioned my March No Spending Challenge on her blog. Thanks Frugal Chick!

Now, onto M is for Money who has a really thought provoking post about whether us ladies would be willing to buy our own engagement rings. Her beau is high on many wonderful qualities, but money making isn't on the top of the list. She makes more than he and could buy her own "Ring of Her Dreams," but she wonders if that doesn't lose some of the romance. What do you think? Click over, check out her blog and leave a comment, won't you?

As for myself, I just got back from the accountant. It looks like a sizable refund is in the works. On one hand this is good news since hey, I need money, but on the other I hate giving the government a free loan. If it were up to me I'd get a small return (since I don't want to pay either) but the rest of it would be in my paycheck each month, not in Uncle Sam's pocket! M is for Money has a fabulous post called Adjust Your Tax Withholding on just this subject and she explains it perfectly. I couldn't agree with her more.

So, I will have to change my tax withholding soon. I'm going to wait for the final numbers from the accountant before I do though. This was just a rough estimate and I have seen rough estimates from him change fairly dramatically once all the paperwork is completed. I'll wait until then to give you the exact numbers. Unfortunately I do owe quite a bit on my city income tax. Apparently at sometime my office decided I wasn't a resident of the city in which I live?? We did just change accountants not all that long ago, so it might have been something to do with that, I don't know. The accountant didn't seem to think it was that unusual, but did recommend I get that fixed ASAP. I'll take care of it tomorrow.

However, if his numbers are right and you add in the federal + the state - the city - the accountant fee, it still should = a bit of a windfall. So what I am I going to do with it?

Not a darn thing.

In fact, I am not even going to think about it. It will come when it comes, and in whatever amount it ends up being. I am just happy that it will cover the costs of filing and what I owe to the city. Once it gets here I am going to put the whole thing in my emergency savings account. My goal for this year is to have one month's worth of emergency savings stocked away. This could help me meet my goal early!

I know, I know, I am a bad consumer. I am not out helping the economy - first I choose to take a month off of spending, then I decide my tax refund will go to savings. Somehow I don't think I'll be the only one though. Are you getting a refund? What are you planning on doing with it?


Note: My No Spending Challenge starts in just two days!


Photo by: Romanlily

10 comments:

Frugalchick said...

No refund for me--we usually pay a bit each year, but this year is a bit more than I was hoping for: $600. Apparently I didn't adjust correctly. :P

Robin said...

Sock most of it away, for an emergency. Maybe use a little toward some money making venture ;)

Miss M said...

Thanks for the double mention! So how will this affect your $900/mo goal? Presumably adjusting your withholding will mean more money in each paycheck. Do you only need to get an $700 extra a month for example?? That would definitely help lift the burden :)

Kristy @ Master Your Card said...

Actually, I think not spending it is better for you. I realize the big to-do in government is that we spend money, but the reality is that right now people need to be saving. That's one of the biggest reasons I think the stimulus checks were a big mistake. Sure, I liked getting a free $600 and I spent most of mine, but the point is that most people are looking at their financial situations a little differently now. So, I think it's great it's going to your emergency fund, particularly if that's where you want it!

Jennifer said...

I've been going back and forth on what to do with my refund money. Namely, am I going to be doing just a little bit of economy stimulating, or a whole lot of economy stimulating? I've already used part of the money to buy some necessities like new socks and underwear that are a little out of reach of the regular budget. I had originally put most of the money in savings with the intention of buying something larger or going on a vacation. I transferred some of it to my Emergency Fund yesterday and the rest of it to my checking account to put on one of my credit cards. So I guess I'm doing a little bit of everything. I'm an equal opportunity refund spender.

Dawn said...

Frugalchick - I like to keep it pretty close to zero myself. Looks like I will be making a few adjustments this year!

Robin - Ooohh... money making sounds good. If you could leverage some of it, that would be good!

Miss M - I don't know yet how it will effect. My guess is that it will certainly make an impact, the question will be how much? I could certainly mean that I have to get less each month. That would be awfully nice!

Kristy - Thanks! I think so too. I used my stimulus check last year to take a class at the community college, so I don't usually bother one bit about what all the pundits say, I do what is right for me. I agree with you, I think saving is exact what we need to be doing.

Jennifer - that is frequently my modus operandi as well. I like to break windfalls up and put a little here and a little there and save a bit. This time though I think I am going to dump it all into the emergency fund. At least that is the plan right now. There isn't anything I *need* so the only other thing calling me is some home improvement projects on my home.

Dawn said...

Frugalchick - I like to keep it pretty close to zero myself. Looks like I will be making a few adjustments this year!

Robin - Ooohh... money making sounds good. If you could leverage some of it, that would be good!

Miss M - I don't know yet how it will effect. My guess is that it will certainly make an impact, the question will be how much? I could certainly mean that I have to get less each month. That would be awfully nice!

Kristy - Thanks! I think so too. I used my stimulus check last year to take a class at the community college, so I don't usually bother one bit about what all the pundits say, I do what is right for me. I agree with you, I think saving is exact what we need to be doing.

Jennifer - that is frequently my modus operandi as well. I like to break windfalls up and put a little here and a little there and save a bit. This time though I think I am going to dump it all into the emergency fund. At least that is the plan right now. There isn't anything I *need* so the only other thing calling me is some home improvement projects on my home.

Slinky said...

I topped off my emergency fund to my minimum goal there, and put the rest on my car loan. I didn't stimulate the economy either. Of course, I'm not spending any less than normal either.

oceankarma said...

I'm going to Disney World! I really am. It was an unexpected refund (as I had adjusted my withholding to claim the maximum amount of exemptions,) so I am taking the kids on vacation in April.

Anyone know how to adjust withholding for the Earned Income Credit?

Dawn said...

Slinky - Good for you! I am spending quite a bit less, especially this month!

oceankarma - I don't. That's why I am using an accountant this year - there is so much I feel like I don't know. He did give me the scoop on how to change some of my deductions, but it was based on my personal taxes so no help for anyone else, I'm afraid.