Hey guess what time of year it is? Tax time! Aren't you excited?? Those in the United States only have a month left to file their tax returns. Remember that if you owe money, you need to file the return even if you can't pay the money right now.
If you are getting money back, though, I have a post for you!
We filed our taxes already and got our refund. It's not as big as last year of course, but we used it to put a sizable chunk towards paying off the car, and the rest is being used for the Great Backyard Landscape of 2011 project. I'm re-posting last year's Tax Refund Debate post, for anyone who might be getting a refund and is trying to figure out what to do with it.
The Tax Refund Debate
Now on to the taxes! Because we are first time home buyers we get the $8000 homebuyer credit. Which means combined with our amount for having three kids and one income, all the other stuff, etc. we are getting a sizable refund. So naturally, we've had to figure out what to do with it all.
BLOW IT ALL ON TOYS! WOOOHOOO! Heh. Yeah right. As much as I would like to get all the "toys" we've been wanting, we have to be responsible adults (damn).
We knew for sure we wanted to build up our savings. Ideally we will have at least 3 months expenses saved so that if the unforeseeable happens (such as a job loss or medical expenses) then we'll be able to float for a period of time. Be realistic for your situation. It usually takes longer than a month to find a new job, and not all medical companies will let you put your bill on a payment schedule. Save up a sizable amount.
Even with saving 3 months of expenses that still left us with quite a bit, and our list of things we would like to do. I'll share with you what I did so that maybe if you're facing the same dilemma (be it tax refund or other windfall) then you can use the same idea. All the following figures are fake.
I had originally just sat down with Ben and said, "OK, this is how much we're getting. What do you want to do with it?" But that... didn't go so well. Poor planning on my part. I forget that I need to spend my time thinking about it and making visual presentations to give him a better idea of what I'm thinking, rather than thinking out loud and not making sense. The next day I pulled out paper, a pencil and calculator as well as our current debts and wish lists and went to work. Then I threw it all into Excel to make it pretty and to be able to change numbers and have it auto-update the rest.
I set up possible scenarios for spending the money. In each scenario I listed certain things to do (like paying off the truck) and the total of them, then subtracted that total from our refund amount. After that I calculated how much one, two, and three months worth of savings would be based on what our monthly expenses would become after paying off certain debts. Once that was done, I then subtracted each amount of possible savings from the amount left from paying off debt. So my worksheet looked like this.
2011 Update: Once we finally got our refund, we used it to pay off the truck, the credit card, put two months of expenses in savings, and start paying off a family loan (that we payed off completely in November!).
Are you getting a refund this year? What do you plan to do with it?
Happy Taxing (unless you have to pay),
Meg
4 comments:
ugh. Not my favorite topic.
BUT....that photo is absolutely incredible!!!!
(But I DID like your outcome and how much you paid off....guess I should be a bit more positive and work toward a goal instead of dreading the entire date;))
Happy Birthday to your boys :-) We're saving our tax refund. We're trying to build up our savings too.
I wrote a post about dealing with the IRS. We had to prove our kids were our kids...two years in a row!
Apparently large families on one income make them suspicious :-)
Blessings,
Marcia
I kept telling myself... "Go back and read through the post about taxes" But the word "rebate" and "taxes" scared me out of my pants! :D Time to do that, by the way, since the US is the ONLY country in the world that taxes its citizens living abroad. Good grief. Guess I'd better get on the ball!
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