Income Taxes

Our W-2's, 1099's, 1098's, and all the other tax forms have been arriving in the mailbox. We've finally received all of the major items, I think, and are just waiting on smaller stuff (like 1099 from last year's state refund & bank interest statements).

The good news, we made $110k last year.

The bad news, not all of that was actual income. Some of it was taxable fringe benefits, like tuition reimbursements. Some of it was from self-employment, which means that we have to pay an additional 15.3% tax PLUS our normal tax bracket.

I ran though some very rough numbers, and I think we will end up owing money this year. The State of Michigan has some pretty hefty penalties and interest, so we always deliberately over-pay them... I think we will get around $400 back from them. We will almost certainly end up owing the IRS though. I've been doing our taxes for several years now, so I have a pretty good handle on what our expenses & deductions are, and I'm estimating we will owe around $700. So much for getting a few hundred dollars back.

In all my estimating, I also realized that our charitable contributions are way less than we should probably be giving. Last year we gave only $100 in cash donations (with receipts). That's less than 1/10th of 1%. We've never tithed, and neither of us grew up in households that tithed... so we've discussed it and both don't feel comfortable giving away 10% of our income. Especially not now, when we have so much in debt (and such a lengthy & expensive wish list for things we'd eventually like to do, like buy a larger house with a basement, travel, save for kids' college). But I think we need to try a little harder... maybe get it up to at least 0.5% or 1%.