Welp, it looks like Congress did what it does best — which is absolutely nothing — and pressed Ctrl-Alt-Del on that whole government thing. If you’re affected, that’s lame and I’m sorry. If you’re not affected, I’d tell you to call your elected representatives and let them know how awesome they are at doing their ONLY JOB (!), but I don’t know if phone lines work in a government shutdown… do traffic lights work? Does time work?? Does air work?!! I can’t breathe!
Nah, I’m good. We’ll all be good. In light of our government siesta, it got me thinking on that one little contribution we all involuntarily cough up that should ensure shutdowns don’t happen: taxes.
I guess I’ve been paying income taxes since I was 16, but my dad did my 1040EZ’s for me and I usually got money back, so that doesn’t really count. It’s only been since Joanna and I graduated from college that we’ve begun to (barely) understand, file, and actually fork money over our own hard-earned cash for taxes. And in that short time, we’ve started looking and thinking about things with tax-focused lenses. Here are a few of them.
- Having a baby on January 6th blows.
$3800. That’s the amount of deductible income that vanished at the stroke of midnight on New Year’s 2013. Despite all my best lectures through my wife’s belly, our little girl decided to stay warm and cozy another week.
- Donating stuff? Get a receipt!
I know, I know. You’re probably not donating your old pajamas and Skip-It toy (wait up, don’t just give that away!) to get anything out of it. You just want to get rid of it and hopefully help someone or some organization in the process. But that doesn’t mean you shouldn’t help yourself, too! Ask for a receipt with your donation to later use as a charitable contribution deduction. Don’t think that charitable tax deductions have to be small, either. You can donate a large vehicle or boat for charity and receive a sizable tax refund. It clears up some space in your yard or garage for a newer boat and, best of all, you’ll know that you are making a significant contribution to the charity of your choice. Just go online and request the paperwork associated with the donation and spend a few moments filling it out at home. After that, you’ll have helped out a great cause and made some money for yourself.
- If you work from home, create a workspace.
Outside of the mostly obvious logistical benefits of having a space set aside in your home for working, it can also help you qualify for a “home office” deduction. There are a lot of rules and requirements, but if you meet the criteria, bust out the tape measure and carve out some prime office square footage in your crib.
- $50k salary ≠ $50k salary
I remember hearing “We’ll start you at $32,000” for my first salaried job offer and wanting to fist pump my way all the way home. I remember excitedly getting home, getting out a piece of paper, and doing the math to figure out my bi-weekly paycheck. You can imagine my punched-in-the-gut expression when I looked at my first paycheck and it wasn’t even close to the $1333 number I had calculated. Now whenever I hear a salary, I immediately slash 25% to 35% for a more realistic take-home pay number.
- Why am I waiting in this DMV line?
Now that I know how much money Uncle Sam pockets from me each month, I can’t help but notice tax-funded waste everywhere. I don’t try to be a grumpy geriatric, but when it takes me three hours to wait for my turn to take a stupid DMV written test, you better believe I’m going to have a few questions about where my money’s going. And while I fully understand the importance of taxes, government spending, and public employment, I’d just like to see my dollar work a little harder sometimes. *NOTE: public employees work just as hard, if not harder, than private sector employees. My grief is with the system that puts them in positions where they’re understaffed and dealing with constant inefficiencies. It’s 2013! We can figure this out, people!
- Cash in on pre-tax savings, y’all.
“Pre-tax” meant absolutely nothing to me a few years ago. I thought it was a period of human time that occurred after the prehistoric age, but before the release of Seal’s “Kiss From a Rose.” What I didn’t realize is that pre-tax programs and investments (like 401k’s, 529 plans, HSA/FSA, transportation programs, etc.) take the money from your gross salary (hence pre-tax) and leave less money on the table for the government to tax. For example, let’s say you earn $30,000/year and put $5,000 toward pre-tax programs. When tax time comes, your adjusted gross income before other deductions and adjustments would only be $25,000, which means less taxes. Awesome.
- Our Congress is awful.
Just in case I wasn’t clear in my introduction, I hate that they’re in charge of my tax dollars.
It’s hard enough for Joanna and me to come to grips with the fact that we’re actually “adults” now with careers and responsibilities and a freaking human being that is ours, so filing and paying taxes has been an interesting coming-of-age. And while we recognize and appreciate our responsibility as citizens to pay our dues, we want to be absolutely certain that we give what’s required — and not a penny more.
What are your thoughts? How have taxes messed with your brain? How badly do you want to punch Congress in the face?
I was one of those babies that listened to her dad when he asked her to arrive before the new year for the nice tax deduction (December 29th!), but my daughter did not. LOL!
Taxes haven’t messed with us too much….yet, but once my husband graduates college in 18 months he’ll most likely be going the freelance/own business route (it’s what the majority of sound designers do), so I’m sure that’s when we’re really in for some tax headaches.
And I really want to punch Congress in the face. We may no longer be in the military (and have thankfully learned my husband’s VA benefits will remain), but we have plenty of friends that still are, and while they are at least going to get paid now, some of their DoD employed spouses will not, and they won’t have access to some of the services they need. I think if they were threatened to lose their paycheck they would learn to compromise really quickly.
Freelance/self-employed taxes are roughhh. Just make sure to put enough aside each month and pay your quarterly taxes. But your husband’s future career sounds awesome! I always enjoy working with sound designers for commercials.
Perhaps the most infuriating aspect of the shutdown is that Congress members will keep getting paid. So tired of our elected officials profiting at their constituents consent.
I was born in December rather than my January due date. People still tell me how my dad referred to me as “my little tax deduction” until January….
Haha. Maybe I’ll start calling our Baby Girl “my little tax burden.” Kidding. She’ll help me out this year, so she’s forgiven.
As a Canadian I can’t believe what your crazy-ass government gets up to. Don’t they know the world is watching and thinks that they look like toddlers at daycare?
Your messed up government will hurt your stock market and investors of the world will look for more stable countries to invest in if this continues. It will continue because the republicans refuse to allow anything to happen because they are still upset at losing the last election. Republicans would rather let the entire country fall apart then let Obama get one win that might help the people of the country.
I have a toddler in daycare. And they are better behaved than Congress is right now.
Drives me batty. Congress, not the toddler.
Haha. Well said.
It certainly is not our proudest moment. Shame on the Republicans for pretending like they can stop Obamacare. Shame on the Democrats for refusing to compromise on anything because they had a 4%-margin of victory in the election. Heaven forbid any of them actually REPRESENT their constituents instead of acting like party lemmings.
Oh but they ARE representing their constituents… too bad money talks and they only speak for ones named KOCH.
I, too, hate that they’re in charge of my tax dollars. I worked hard to earn the money. I am responsible and pay my taxes. I wish they’d be responsible, too, and spend it wisely.
Good tip on the donations!
“How badly do you want to punch Congress in the face?”
As a government employee waiting on my furlough letter this morning, pretty dang bad. It wasn’t enough that we lost six days worth of pay just a few months ago….now this? Frustrating and discouraging doesn’t even begin to cover. Our Congress is made up of a bunch of preschoolers fighting over who gets to play with the dump truck. :/
“Our Congress is made up of a bunch of preschoolers fighting over who gets to play with the dump truck. :/” If you decided to run for Congress, and included this line in your commercial, or even made it your slogan, I guarantee you’d win. You’d definitely have my vote.
Hahaha yes! I will start my campaign next year. 😉
Well, Hubs and I are both federal employees at different Departments, and one of us is working with pay for five more days while the other is off effective today. I will say this is a good, if unwelcome, reminder of how crucial it is to manage your money well and set aside emergency funds. Any one of us can be without income through no real fault or action on our part, and knowing you have a cushion makes it suck less. It still sucks, just a little less. : )
Ugh, bummer. Sorry to hear that.
Great point on emergency funds. It’s a shame that a preventable issue like this would ever trigger needing to tap into it, but so is life when you have idiots running your country.
Here’s hoping for a positive resolution by the weekend.
federal employee here… considered ‘essential’ enough to be forced to come into work, but not essential enough to get paid until this resolves itself. so grateful for the emergency fund that i’ve started~ thanks for all of your savings advice!
Sorry to hear it, Kate. But so glad you’ve got an emergency fund started and can hopefully weather the incompetence. Good luck!
Friends are home taking care of errands and hoping it all resolves fairly quickly. They’re not huge fans of not getting paid, but are tying to look on the bright side of having a random Tuesday off.
These are great tips. I just began doing my own taxes a few years ago and have picked up on a few of these items. It really sucks that you missed out on a $3,800 deductible by one week. As for taxes, it’s pretty incredible how much we give away to taxes and how little it seems like we get back. I know I probably take a lot of things for granted, but I’m sure there are areas where our money could go to better use.
I find taxes intimidating because they seem overly complicated and confuse the crap out of me.
Congress deserves more than a smack in the face. Maybe Lady Liberty’s torch up their a$$es would get them to do their job!
Haha. I’m sure Lady Liberty would be happy to oblige — that is, after she’s reopened.
I live in an Air Force town. The base (where I grew up) is less than a mile away from my current residence. There is a lot of people who aren’t getting paid. I wonder what is going to happen to all the food at the commissary if the government is shutdown for longer than a week. Oh and my dad is on a government contract so…he’s at home. I’m not really worried about the shutdown. I don’t think it’ll last very long. I do think that congress needs to get their sh*t together so to speak. I just hope that everybody remembers this when their representatives are up for reelection (democrats and republicans).
I’ve been inundated with a couple hundred pieces of paper today trying to explain how Obamacare affects me. I’m not even trying to understand it anymore lol.
I’m keeping receipts on all my charitable donations this year. I haven’t in years past, and I feel dumb for not knowing that I could. I always wondered why people got receipts for that.
I know enough about Obamacare to know it doesn’t affect me (yet), but not enough to know if I should be cursing President Obama’s name or praising him for making healthcare more accessible. But I do know one thing — I don’t really care. 🙂
Oy Vay! Speaking as a self-employed person, I’ve just gotta say that I find it beyond infuriating that the Republicans in congress are willing to shut down the government just to prevent people like me from having access to health insurance. I’m not sure who it is that they’re representing, but it sure as heck ain’t me!
Well guys, being a Canadian I don’t envy you folks these days, what with your dysfunctional congress not playing nice together these days. Hopefully, things will quickly get sorted out real soon otherwise the negative economic ripple effects will begin to spill out worldwide due to the massive trade that the US does with the rest of the world, including especially with us Canuks.
Now, relating to tax breaks, you guys sure didn’t get any breaks by having your little one born in January 6. Of course it could have been even more poignant – our granddaughter’s birthday falls on January 1st – she was born at 2 am – (and her mom – our daughter – is a senior executive at a big accounting firm)! Go figure! Murphy’s Law is alive and well !!! 🙂
Haha. January 1st at 2am… I probably would have been yelling at the doctors to make it go faster. Hopefully your daughter had enough on her mind that the two hour difference in a bunch of deductible cash didn’t phase her.
Yeah, well a few hours in the evening prior to that, we got a call from her, prior to her heading over to the hospital, advising that the baby was expected soon and for Dad, ie., me, not to do any New Years Eve drinking since she expected us to drive over to their place. The stone cold soberest News Years Eve that I ever experienced! 🙂
I’m a fed who is going through the shutdown furlough and punching Congress in the face would be letting them off easy. Just saying
Super lame. Sorry you’re caught up in it all. The worst part of it all — they’re still getting paid. Such a messed up system.
I’m a government employee…for one more day. I don’t know if they people who are supposed to help me get all the signatures and info in order to officially leave my job are going to be there tomorrow! If only my last day had been Monday…
Awesome, congrats (right?)! Sounds like you’re getting out of there at a good time.
Best of luck on your next move!
This whole thing is crazy. I don’t know what to say.
Also, remember the thing about getting donations receipts is that if you take the standard deduction, it doesn’t matter. So for renters, unless you’re donating thousands of dollars a year either via charity or giving to your church’s thrift store, your standard deduction will be higher than when you itemize.
Sadly, my loan interest deduction doesn’t matter since I’m still a renter…
Good point on the standard deduction and donations. We’re renters, but we happened to have a lot of freelance business expenses, employment related moving expenses, and church tithes, so we went itemized. We’ll see if this year shakes out the same way.