Or perhaps more appropriately in this case…
What’s the saying? Only two things in life are certain; death and taxes.
Not exactly uplifting. This will probably not be an inspirational post. I am not currently feeling inspired. It should come as no surprise though. I’ve alluded to this topic here, here and even just yesterday, in a round about way.
You end up with a blurry 2011 and a large tax bill. How large you ask?
$3600 and change.
After mortgage interest, and charitable donations, and 401(k) contributions, and car sales tax. Still, $3600. Wheeee!
As a non-small business owner with relatively uncomplicated taxes this certainly seems huge to me.
Prior to this, I’ve always been firmly in the tax return camp. As in, I receive them, add them to my Emergency Fund, and move on with life. Tax season comes and goes with minimal fanfare. This is certainly more money than I’ve ever owed in taxes. In fact, it’s more money than I’ve ever received as a refund. I’m really trying not to be pissed off about it. Really. However, don’t begrudge me a little rant.
When our going got tough, I didn’t default on my Big Fat Mortgage. I didn’t fall behind on any bills. We didn’t apply for financial assistance (other than The Husband’s unemployment). When our income took a 60% decrease, I went and got myself another job. I worked 50-60 hours a week, 6 days a week, with two 12 hour days for over a year. I cut expenses. I delayed purchases and maintenance. The Husband worked odd jobs for friends and family. We hung on tightly to the Emergency Fund, just in case things got worse. We freaking hustled.
For all that trouble, I get the distinct privilege of paying back $3,600 that shouldn’t have been in my pocket to begin with. That in and of itself is kind of hard to imagine.
I keep trying to comfort myself by saying it’s an interest free loan from the government. Since we were in such dire straights it’s better we had the extra money then, and can pay it back now, when our circumstances are improved.
It still stings.
In my layman’s understanding (confirmed by my new friend The Accountant), what happened is this: Payroll taxes are calculated based on how much you make. When you aren’t making much, they don’t take much. Obviously, employers can’t take into account income earned at other jobs. So, if as in my case, you have 2 low earning jobs, neither employer will deduct very much in taxes. Collectively though, you will earn more at both jobs than you have paid taxes for. Then its really bad, when you return to your previously higher earning ways mid-year, bumping up your total income and tax bracket. Add to that, The Husband’s intermittent employment, which leaves him with lower projected earnings at his employer than they usually draw taxes for.
We should have had additional withholdings.
This is not something I ever, in a million years would have thought of when every penny mattered so much. Yes, please take more of my money. Where do I sign up for that?
Pushing aside my outrage with the system and with myself for not knowing better, what the heck am I going to do about this rather large, unexpected bill? Just because I hate it doesn’t mean I don’t have to pay it. In short order too. April 17th isn’t that far away (56 days if one were counting). I would rather not tap savings for this bill. At least not The Emergency Fund. Some of our slush money may be another story. That would reduce necessary cash to a little less than 2K. Even then, there are competing priorities; car debt, on-going garden projects, and other recent purchases, which have sucked up a fair bit of our ‘disposable’ income. What’s a taxpayer to do?
Budget. I’m working out a spending plan for a those next 56 days. Rather, a lack of spending plan. Like everyone else in the world, we mostly budget for a month at a time. I’m going to make some assumptions and lock in our spending for a bit longer than usual. Even if I throw all our discretionary dollars at this, it may not be enough. The best laid plans and all that.
The Back Burner. As in, what can go there? What am I willing to de-prioritize to protect The Emergency Fund? Certainly there are lots of wants that will fall by the wayside. What else? Car Debt repayment? The Garden? Pork purchases? Vet Funds? I haven’t quite worked that out yet.
Windfalls. Is it still a windfall if you know it’s coming? There is a work bonus looming on the horizon. Another reason to appreciate Corporate Servitude. I have no idea how much it will be, if anything at all. I’m reluctant to count chickens before they are hatched. Even though, it may save my bacon. I could mean both of those things literally, by the way. The only thing certain about this is that I will know sooner than 56 days. That’s something.
The Usual Suspects. Sell stuff, do odd jobs, market research, roll change, et cetera. A general tightening of the belt. A belt that is already rather tight, I might add. We’ve know about this for a little while now, so that process has already begun. Valentines day chocolates and fancy dinners were foregone. I personally, don’t think there is a lot of wiggle room here, but I’m willing to reevaluate as part of the budget creation process.
Will it be enough? I hoping against hope that some combination of the above will scrape together enough to keep me from having do what I’ve so far been able to avoid in any number of circumstances: raiding The Emergency Fund. This isn’t a house on fire emergency, after all. With everything thing we’ve been through – 9 months of unemployment for him, a years worth of 2 jobs for me, burglaries, sick dogs, broken cars, and lots and lots of bad timing – it would seem anti-climactic now to touch that money. Especially when,…however, reluctantly…I have to admit…this might just be… my own damn fault.