Frugal Babe

I just finished our taxes.  It’s the culmination of probably 40 hours of work over the last several weeks, and it feels pretty darn good.  I spent $125 to get one hour of consultation from our accountant, but other than that I did it all on my own.  I finished the state and federal corporate returns last night, and our personal state and federal returns today.  I put an additional $1000 into my IRA for 2007, to get our AGI down below $52,000 (it turned out that I didn’t need to make the contribution after all, because our AGI dipped below the $52K mark with some other changes I made along the way, but the money’s in the IRA now anyway, and we did get an additional deduction for it).  So we qualified for a $400 savers credit, which is a nice bonus. 

I had wanted to have the corporate returns mailed today and the personal returns e-filed, but I think I’m going to wait until Monday.  I’ve spent so much time on them over the last few days that I think it might be a good idea to just leave them alone for a couple days and make sure I don’t think of anything I want to change or add before I file them.  The extension I filed for the corporate return gives me 6 more months, and I still have 3 weeks on the personal returns before tax day, so I suppose it’ll be ok to wait a few more days. 

Assuming I don’t think of any changes I need to make, we’re going to be getting a $3800 refund.  Oops.  In the words of our fearless leader, I guess I misunderestimated our taxes last year.  I usually try to pay pretty close to what we owe each year, in order to avoid big free loans to the government.  But I’d still rather be getting a big refund than be in the boat we were in a few years ago when we owed the IRS $7000 at tax time.  Last year was tough, because it was our first year as employees of our corporation, and I wasn’t sure how much our dividends (from which no taxes are withheld, but taxes are still owed) were going to affect things.  Also, we ended up contributing more to our HSA than we had thought we would.  So all in all, I’m happy with the refund (and it will go straight towards our HSA and my husband’s 2008 IRA).  But I’m going to make some changes in our withholdings to make sure that we’re not withholding too much for the rest of this year.

It’s after midnight, and I’ve been working on our taxes since about 11 am, so I’m a bit cross-eyed at the moment.  But I’m nearly finished.  I have a meeting with our accountant on Monday to go over our corporate return, which I need to finalize in order to complete our personal returns.  But it shouldn’t take more than a few hours after my meeting with her to be able to file everything. 

I deposited our paychecks today and was planning to transfer $2600 to our HSA tomorrow, which would have maxxed it out for the year.  But now that I’ve got a rough idea of what’s going on with our taxes, I think I’ll only put $1000 into the HSA, and hold onto the rest for a few days.  When I did our taxes today, I estimated the amount that is going to show up on our K1s from our S-Corp, since I haven’t finished the return for the S-Corp yet.  All my other numbers were exact, but the K1 amounts could be off by a few hundred dollars in either direction.  With the estimate I made, our AGI for 2007 is just over $53,000.  That puts us over the limit to claim the Savers Credit for our IRA contributions (we put $4200 into our IRAs in 2007).  But if I were to put another $1500 into my IRA as a 2007 contribution, it would lower our AGI to under $52,000 (the cut off for the savers credit for a couple filing jointly), and we would get a tax credit of 10% of our IRA contribution.  So by putting $1500 extra into my IRA, we would not be paying taxes on that $1500, and we would also get a credit of $570 on our tax bill. 

So… I’m going to hang onto the money I was going to send to the HSA.  Once I meet with our accountant and get the final numbers for our K1s, I’ll figure out exactly how much I need to put into my IRA for last year in order to get our AGI below $52,000, and send in my contribution.

I’m exhausted right now, but I’m stoked to be so close to finishing our taxes, and I’m really glad I noticed how close we were to qualifying for the savers credit before I drained our checking account to max out our HSA.  The HSA will still be there in April – and I’ll be able to use our tax refund to max it out.