This is a sponsored post in partnership with TaxAct, and is provided for a general audience. It is not intended to act as professional financial advice. All views expressed are solely my own and based on my own experience.
Financial True Confession Time! Those are always fun. Y’all know how I did my taxes up until two years ago, the year of our lord 2015? By hand. That’s right.
There was one year when I paid an accountant, but every other year of my adult life I did what my dad’s always done: got the forms — which, kids, used to involve going to a public library or post office to collect them, then sometimes going back when you forgot to get everything you needed, back before you could print them off the internet — then sat down with a pen and filled them out. Continue reading “How I’m Filing My Taxes This Year”
[I’m traveling for work this week, so this post is pre-scheduled. Responses to comments might be a bit slow. Hopefully by the time you read this, I will be enjoying good weather and not inventing new ways to spend money.]
I got oddly fascinated by the breakdown of my paystub the other day. Sometimes I feel like no sooner do I get paid, than it’s all gone, you know? So, I decided to do a little math. In a standard half-month period (I get paid twice a month), here’s what happens to my paycheck:
- 10% goes to income taxes (6.6% federal, 2.3% state, and 1.2% county — state/local taxes are way lower here than they were in my previous two jobs)
- 7.4% goes to FICA (6% Social Security and 1.4% Medicare — interesting, I would have guessed Medicare ate up more of my paycheck than that.)
- 2.6% goes to health insurance premiums (medical, dental, eyesight).
- 25% goes to retirement savings
At this point we are up to 45% that disappears from my paycheck before I ever see it! No wonder I feel like it all goes so fast!
The other 55% gets direct-deposited, and that’s what I work with for my actual budget, so at this point I moved away from the paystub and looked at my budget and did more math.
- 22% goes to various savings accounts (emergency, travel, down payment) — now I’m down to only 33%.
- 10.7% goes to rent and utilities
- 7.5% goes to cash for groceries and so on
- 2.5% goes to transportation (car insurance, gas)
That’s a total of 20.7% for essential monthly expenses, so after all’s said and done I have just 12.3% of my paycheck for spending money and things like medical care, car repairs, clothing and so on. I usually put 2.5% in my slush/free spending account, so there’s just under 10% available for the other stuff.
I actually can’t tell whether that’s a lot, or a little. If anyone feels like doing some similar math, I’d love to know where you’re at.
This is kind of a long story, but be patient and you will be rewarded with (what appears to be) a happy tax ending for me. 🙂
OK, to begin with: most Americans are familiar with having three sets of income taxes withheld from their paychecks: federal, state, and local (either city or county.) In general, this has only meant two sets of tax forms because two of the three states I’ve lived in include the local tax on the state forms.
Continue reading “Why I’m glad my new employer withheld way too much tax”
I’ve been dying for January because I thought I had a decent chance at a real refund this year, for the first time in ages. (Generally I’ve ended up either owing a small amount, or getting a small refund.) As of yesterday I finally had enough documents in that I could start working on them, and even though I’m not totally done yet, because I’m still waiting for one official W2 and one official 1099 to make an appearance, I think, based on my preliminary calculations, that I was right and I should be able to put a healthy chunk of cash towards my Roth IRA. [Can I take one second to be mildly depressed about this, though, because I’d rather blow it on some new clothes. OK, better now.]
Continue reading “Tax Time”