I confess that I was really nervous about our taxes this year. I think I’m pretty smart. I went to school for a long time and have lots of diplomas and certificates hanging on my wall, but I honestly never have a clue about our taxes. Added to that is another of my irrational fears (along with birds and foods that turn from liquids to solids at room temperature) of being the subject of an IRS audit. I’m not being lazy about learning to use do it yourself software like Turbo Tax. Our taxes are really hard! We have income and expenses from all sorts of things, especially this year.
Normal W2 income
Stocks and dividends
Business income and expenses for an 8 employee business that also gets extra credits for certain health care and ADA laws
Commercial and residential rentals
Selling a satellite office as an asset sale and then my main practice as a stock sale
Non 1099 or W2 income from online ventures
Selling our flip house
Taxes suck. I’d rather eat gravy in a bird cage than read IRS regulations. It would take me 5,000 hours to try and understand it all, so that’s why we have an accountant. Although I will admit that all the tax tools and calculators available nowadays make it significantly easier to understand. Because we had a great income year in 2013, he advised us to pay in 110% of our prior year’s taxes before January 15th, with the warning that we were probably going to owe more in April in addition to quarterly estimates. We have been hoarding cash in preparation for the apocalypse.
Well, I got the great news this week that we are going to owe way less than expected. I seriously was thinking it would be 5 figures, but it looks like we are under 4. For about 5 minutes I was totally happy, and then it bummed me out to have to be paying what we owe. Why are taxes so hard? Doesn’t it mean I made money or that I didn’t give it to Uncle Sam in the form of a no interest loan?
Money in Your Account Seems Like It Should Be Yours
When money hits your bank account, you take ownership of it. You see it on your statement. You add it to your net worth. I even considered withdrawing the down payment on my business just so I could hold it, but decided it was probably dirty and germy anyway.
Money taken out of paychecks is not as painful. You get used to your take home pay, which is why everyone should max out their retirement plan. You don’t miss what you never see!
I know intuitively that a percentage of my income has to be put away for the government and it’s really not mine, but it still feels like it belongs to me. Yes, I know I can keep the interest (after taxes), but money sitting in savings makes about $.03 a month, so it’s not like I’m gaining a fortune here.
Don’t even get me started about things like estate tax or small business personal property tax. When I have to pay taxes on things I buy for my business only to pay taxes on those purchases again EVERY YEAR that just feels like bending over without a fight at all.
Owing Taxes is Good
I suppose I’ll try to be happy about owing money for taxes. Thankfully, we didn’t go out and buy a Mercedes with our money, and we’ll have it to pay when the day comes. We are lucky we made money last year. We are thankful that business was good. I enjoy services like roads, schools, libraries, and law enforcement. I’m trying really hard here, but still not feeling it. I don’t think it’s ever possible to be happy about taxes. I know my thinking it totally backwards, but I certainly wouldn’t be complaining about a refund check right about now.
Have you paid your taxes? How do you feel about money that is technically yours but is owed to the government?