Whew! I e-filed our taxes on Monday night and got the acceptance confirmation on Tuesday. That was close. Our taxes were very complicated this year due to the various passive income sources we had in 2011. We ended up sending the IRS a big $6,000 check! I was expecting to owe some money so we saved up a tax payment fund in our checking account so it wasn’t a huge hit to our finance. I thought we would owe less because we had baby RB40 in 2011, but it turned out we couldn’t take advantage of the child credit tax since we made too much money. That bites.
Rental properties – We had a lot of repair and maintenance expenses in 2011. That along with depreciation means we had a loss and didn’t have to pay any tax here.
Online income – I made some money on the side last year and this income is taxed at a high rate on top of my earned income. This is part of why we owe so much this year.
Dividend and stock sales – I sold quite a few stocks in 2011 and had some gains that caused a tax liability. I channeled most of that money into dividend stocks and hopefully won’t have much turnover in the future. Beefing up the dividend portfolio also caused more tax liability…
2012 tax – I’ll probably have to send in some quarterly payment this year to avoid owing the IRS so much next year.
This year we chose to e-file because it is much easier than going to the post office and we don’t have to mail the tax forms (Ahem: Mrs. RB40 had to go to the post office anyway to send off that check). Those tax forms contain so much information and if they got lost, we could have a bad case of identity theft on our hands.
It’s funny how much the social security number’s (SSN) importance has changed since when we were kids. Mrs. RB40’s dad used to engrave her SSN on all her “more expensive” toys, like her bike and boombox, when she was young. I guess if the boombox was stolen and by chance the police recovered it, then they can track down Mrs. RB40. Mrs. RB40’s dad got that habit from his dad, who engraved the family’s silver trays with an SSN…rendering everything worthless.
Today it’s the opposite. We would rather have any of our possessions stolen rather than the SSN. A thief can apply for a new credit card under your name and totally mess up your credit. We have not had the experience of having our identity stolen, nor would we want to. Mrs. RB40 is careful about shredding extraneous address labels and credit card offers that inhabit our mailbox.
Anyway, I am so glad we finished out taxes. It was a huge load off my shoulders. I vow to keep better records this year and plan to owe the IRS much less next April. How was your taxes? Did you filed at the last minute or did you get it done a while ago like a regular sane person would?
photo credit: flickr by 401K
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.