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Some good tax news, but questions raised

April 6th, 2011 at 09:30 pm

I got my tax packet already! I just need to look it over and send back my signature so they can file. So far they look good to me, although there are some forms I'm not familiar with that I might try to read up on tomorrow before I drop my consent in the mail.

I wasn't sure how much I was going to owe, but I assumed it would be at least $600 for the prep fee, plus a few hundred each for federal and state.

Instead, the tax bill was $325, state tax payment due is $481, and NT and I are actually getting a $315 federal refund!

Also, I saw that we'd gotten a $800 Making Work Pay credit. I'd completely forgotten that was valid in 2010 as well, so that means I need to revise AS's federal before I send them out. $400 less, so her federal tax bill is down to $1217. Luckily it doesn't affect her state return, because I already sent that off.

So here's the breakdown:
We have $1600 saved to pay for this.
AS is getting $28 from the state.
NT and I are getting $315 from the IRS.
total: $1943

AS owes $1217 to the IRS.
NT and I owe the state $481.
We also owe the tax guy $325.
total: $2023

So we're short $80.

We're also getting about $800 from a freelance job AS did, so we're up $720.

Then, I want to send a $400 estimated payment for AS's 2011 taxes. So we're down to $320.

The question I now have though is what to do about previous years. The tax guy did report our UK income, straight up, no deductions or tax breaks. So I now know I should have been including that in '08 and '09.

I made a rough guess what the extra income would be and looked at old tax tables. I think we'd owe about $180 for 2008 and $620 for 2009.

$800 isn't too bad. But then I think about all the interest and penalties and get unsure whether we should pursue this, or wait and only deal with it if we get audited down the road.

I'm putting that thought aside for now; but I may return to it if it's bothering me, and pay that tax and try to figure out what the penalties are.

3 Responses to “Some good tax news, but questions raised”

  1. SnoopyCool Says:

    If you can deal with it now, it will be less interest accrued than if you wait until you're audited.

  2. ndchic Says:

    I probably wouldn't redo the old taxes. You might owe more but I would probably just wait and hope that I'm not audited. Sorry, might not be the advice you wanted to hear.

  3. SicilyYoder Says:

    I hate tax time..I always owe thousands. I did an extension last year and just did one for this year.

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