I don’t think anybody looks forward to doing their taxes. It can be scary and overwhelming and a lot of the time you have no clue if you are going to owe money or get money back. I think this year is even crazier because there are so many new laws that affect taxes and people have no idea how it will affect things for them. The stories I have been seeing online all talk about how tax refunds are much lower than they usually are or people who normally get money back are owing for the first time.
I know that my situation is a bit different from many others. First, all of my income is 1099 or independent contractor work. I don’t have any taxes taken out of my paychecks and I have to make sure I save money. I also pay estimated taxes 4 times a year to cover what is assumed to be my tax bill for the year. I have only been doing this for a few years, but I am very careful about this and make sure I stay on top of it all. And it has been working out well for me the past few years. If I owe money, it’s less than what I saved up to cover my taxes. And last year, I actually got money back!
I had a pretty good feeling that I would be getting a little money back this time. My estimated taxes were based on the money that I made in 2017, and I made less money in 2018. So my estimated payments actually had me overpaying my taxes. I also knew my health insurance is always a weird thing with my subsidy not being the correct amount. I felt pretty certain that I was paying more than I should for it, but I wasn’t totally sure because again there are so many new rules this time.
Before I had my appointment to get my taxes done, I got a call regarding my appointment. The person who does my taxes had an appointment come up the afternoon I was going to come in and I was given 2 options. First, I could pick another date and I would still be charged the February rate (which is the cheapest rate). Or, I could email in the worksheets we do before the appointment so a majority of the information would be already in the system before I arrived. I picked emailing in my worksheet since I already had done all the work. My appointment was only going to be 30 minutes short (usually they are 90 minutes) and I knew getting all of that information already in the system would easily cut the appointment down by 30 minutes or more.
There was still some work that we had to work on together when I went in for my appointment. There were a few things I wasn’t totally sure I did right and there were a few sections that needed a bit more information. I brought everything in with me and I had everything we needed, I just didn’t do it ahead of time since usually it’s all done at the appointment.
And while everything was getting figured out, I did learn that the new tax rules weren’t going to affect me like they affect a majority of people who get their taxes done. Since I am a sole proprietor/independent contractor, I can still write off my business expenses. If you are an employee, the costs of doing business cannot be deducted (for example, teachers can no longer write off buying supplies as a deduction). But for me, all of my expenses can still be written off like they have in the past. That’s a good thing since I have to pay a decent amount of money in cyber security insurance (required by my job since I take credit card information and put it into our secure online server) and I pay for things like a separate phone line just for work. I didn’t have as many deductions as I have had in the past, but it was still a lot of them.
Every year that I get my taxes done, I learn new things about how to organize and track things. I finally have it down to a system that I am extremely happy with and it made me doing my worksheet much easier this year compared to before. And I know that my tax preparer appreciates all the work I do and knows that I have everything ready for her if she needs to see it. She also mentioned she only allowed me to email in my worksheet ahead of time and have a reduced appointment time because she knew how on top of things and organized I am.
While it’s nice to have my organization appreciated by my tax preparer, it’s even better to see that work pay off. And as I expected, I am getting money back this year! And it’s actually a lot more money than I was expecting. A good chunk of that money is from overpaying for healthcare and that’s only because I tracked my business deductions so well. My taxable income gets reduced by those expenses and my financial responsibility for my insurance is based on taxable income and not the full income I have. That is a difference between being an employee and an independent contractor and I didn’t know that. I assumed it was based on my pre-tax income and that’s why I had my income set the way I did last year. I don’t know if I’ll adjust it for this year since I’d rather overpay and have that money go toward anything I owe in taxes than to underpay and owe a lot of money.
I was so relieved to see that the work I put into tracking and organizing was worth it. It does take time to file everything properly so I have it ready at tax time, but the money I got back easily paid for the time I took to do that. And it will be nice to get a refund this year. I really need the money and a lot of it will be going toward bills. I will also use it to pay off my Disneyland pass since I had to set it to be monthly payments this time. I’d rather just have it paid and not have to have it taken out of my credit card each month. I don’t know if I’ll use it for anything else fun since I should be responsible and put it toward bills, but I’ll see how things go.
You Might Also Like
Not Quite Winning At Taxes This Year (or Owing Money And Seeing Car Accidents)
A Fresh Budget (or Starting Over With YNAB)
Finding New Money Issues (or Looking At Doing A Fresh Budget)
It’s Taxes Time (or Seeing My Hard Work Pay Off)
Tax Time (or Happy To Owe The Government Some Money)
Tax Time Again! (or It’s A Taxes Miracle!)
