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Taxation with Representation Ain’t so Hot Either

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Taxation with Representation Ain't so Hot EitherAre you done with your taxes? If not, we’re in the same boat. I finally received the K-1 forms from RealtyShares earlier this week. Real estate crowdfunding generates great passive income, but their tax documents come in so late. Anyway, I’m trying to wrap it all up and get the taxes filed by Saturday. It’s actually due Tuesday April 17th, but I should get it out a couple of days early. Why Tuesday? That’s because Monday is Emancipation Day. Okay, that’s good. A few extra buffer days won’t hurt.

I was planning to write about something else, but taxes just took over my brain this week and I can’t focus on anything else. So I’ll just share a few interesting (?) bits about my taxes. If you’re thinking about self-employment, this post may change your mind.

What we owe this year

Ugh, we owe a bunch of money this year. Retire by 40 made $65,537 last year. That was more income than expected and I didn’t send in any estimated tax payment. When you’re self-employed, you’re supposed to pay taxes every quarter. I never had to do that before because the blog didn’t generate that much income previously. We rarely owed anything. Last year, we even got a refund.

Here is a list of what we’ll have to send in this year.

  • Federal income tax: owe $9,162. Tax due is actually around $18,500. Mrs. RB40 paid her taxes through the withholdings.
  • State income tax: owe $1,004. The Oregon state tax due is $6,683. Mrs. RB40’s employer withheld most of these already.
  • Portland business license tax: $115. This is just above the minimum ($100). Any business operating in Portland has to pay this tax. This one is interesting. I was able to deduct property depreciation, 401k contribution, and self-employment tax. The taxable income was just $5,226 so we didn’t have to pay much. The tax rate is 2.2%.
  • Multnomah county business income tax: $100. This is the minimum. The tax rate is 1.45%.
  • TriMet tax: $484. This is payroll tax for public transportation. Employer usually pays this one, but I’m self-employed so I have to pay it myself. This one is 0.7% of total earnings. There is no deduction so the tax is higher than other local taxes.
  • Art tax: $70. This one supports the arts. Every adult who makes more than $1,000 should pay $35. From what I read, many people don’t pay this tax. I’m not sure how they enforce this one.
  • Estimated payment: $2,400. This will go toward our 2018 taxes.

The total is $13,335! That’s a lot of money. Fortunately, I knew we owe some money and saved up for this. It’s still painful to send off these checks, but way better than going to jail for tax evasion. Next year should be a lot better.

No Underpayment Penalty

The good news is we don’t have to pay the underpayment penalty. Here is the exception according to the IRS – Penalty for Underpayment of Estimated Tax.

Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year

We paid more than 100% of what we owed the prior year so we’re good. Our tax liability increased tremendously in 2017. The previous year, our federal tax was under $8,500. More income = more tax.

Self-Employment Tax

Self-employment is great, but not when it comes to taxes. When you’re an employee, the employer pays many of these taxes. It’s part of the package. Self-employed individuals have to pay Social Security, Medicare tax, business tax, transportation tax, and more.

The SE tax rate is 15.3%. Social Security takes 12.4% and Medicare takes 2.9%. Usually employer pays half of these, but you pay the whole thing when you’re self-employed.

Retire by 40 made $65,537 last year and my SE tax is $9,260. This is in addition to regular income tax. If I was employed and made the same amount, we wouldn’t have owed any tax (probably…)

Anyway, I still love self-employment. One of the keys to happiness at work is autonomy and I have it in spades. I might as well list those 4 keys while we’re talking about them.

  1. Autonomy. This is the big one. Work is usually good if you can work on what you like with no micromanager lurking about.
  2. Commute. Or lack thereof. Everyone hates rush hour traffic.
  3. Impactful. Your work has an impact on the company/consumer/world.
  4. People. You like your coworkers.

There you go. That’s autonomy for ya – happiness tips in the middle of a tax post. 😉

Dividend income got taxed

We had $12,604 in dividend income last year. Unfortunately, our taxable income was just a little above the 15% tax bracket. This means we had to pay 15% tax on the dividend income. We haven’t had to pay this tax since I quit my job in 2012. Oh well, what can you do? Once Mrs. RB40 quits working full time, we should slip down into the bottom two brackets again. I really can’t complain too much because it means we made more money in 2017.

Credit card reward points!

One of our readers suggested that I sign up for a new credit card and use it to pay the tax. (Thank you!) That’s an easy way to spend money and grab the sign up bonus. I got Mrs. RB40 to sign up for a new card and we’ll use it to pay $5,000 of the taxes owe. The credit card payment fee will be around $100 (around 2%) and will net us 80,000 points. That’s not a bad trade.

I wish I recognized this opportunity earlier so I could have signed up for more cards. Next year, we’ll plan better and try to collect more points. Actually, we have a big property tax payment in November. I’ll try to get some points when I pay that one.

It’s too late now to sign up for a new card to pay tax, but check out my credit card page if you have a big expense coming up. I set up this affiliation earlier in the year and haven’t made any conversion yet. I don’t write about travel enough to plug credit cards often.

2018 Taxes

I think next April will be much better for us. We should benefit from the tax cut. Taxes are lower across all brackets so we’ll pay less tax overall. Also, Retire by 40 is a pass through entity. I’m pretty sure I will be able to deduct 20% of my blog income next year.

I’m also sending in estimated tax payments this year. We shouldn’t have a big bill next April. In theory, it’s good to borrow money from the IRS for free, but it is stressful to owe so much money. Besides, if we underpay again this year, we’ll have to pay a penalty. Anyway, next April should be much better.

Tax season is almost over

Whew, I’m glad tax season is almost over. I’m actually done with our taxes. Now I just need Mrs. RB40 to take a quick look and then we’ll send it off. I’ll close with some funny quotes about taxes. Enjoy!

The only thing that hurts more than paying an income tax is not having to pay an income tax. – Thomas Dewar

Taxation with representation ain’t so hot either. — Gerald Barzan, humorist

I am proud to be paying taxes in the United States. The only thing is – I could be just as proud for half the money.” — Arthur Godfrey, entertainer

Tax day is the day that ordinary Americans send their money to Washington, D.C., and wealthy Americans send their money to the Cayman Islands. – Jimmy Kimmel

Are you done with your taxes? Did you owe the tax man this year? Oh, that’s another reason why I’m filing so late. If I’m getting money back, I’d file it ASAP.

Starting a blog is a great way to build your brand and generate some extra income. You can see my tutorial – How to Start A Blog and Why You Should. Check it out if you’re thinking about blogging. Maybe someday you’ll be griping about self-employment tax too. 🙂

Image credit: Jared Sluyter

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, he hated the corporate BS. He left his engineering career behind to become a stay-at-home dad/blogger at 38. At Retire by 40, Joe focuses on financial independence, early retirement, investing, saving, and passive income.

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.
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{ 70 comments… add one }
  • Michael @ Financially Alert April 12, 2018, 1:00 am

    Still not done either, Joe. We got our final K1 yesterday. I spent another 2 hours tonight with my CPA finalizing. Hopefully it’s done tomorrow! I think this is the latest I’ve ever been. 🙂

    • Chris @ Duke of Dollars April 12, 2018, 5:33 am

      Cutting it close 😀 lol!

    • retirebyforty April 12, 2018, 9:28 am

      Good luck with it. Usually we get it done early and wait until the last minute to file. We never owe the IRS this much, though. That’s a lot of money going out of our bank account.

  • Mr. Tako April 12, 2018, 1:05 am

    I just finished up our taxes too. We owed a ton of money this year, which I wasn’t too happy about. But it also means we made a ton of money! Lots of dividends and capital gains for us.

    After seeing all those extra taxes you have to pay in Portland, I’m sure glad we live up in Washington. Art taxes? No thank you!

    • retirebyforty April 12, 2018, 9:31 am

      Do you have to pay the 15% capital gains tax this year? You probably do because your wife is still working.
      I think Washington is a much easier state to retire in. The OR income tax really bites. TriMet tax seems really high too. I’m not making that much money.

      Can you give me a ballpark of how much you pay in state tax? I think you have property tax, sale tax, vehicle registration, and whatelse? We probably pay more tax in OR. Moving to WA might be a good idea once Mrs. RB40 retires.

  • Accidental FIRE April 12, 2018, 2:34 am

    I’m sending in my payment this weekend. I owe $1300 extra, no underpayment penalty for me either. I’m glad. So I took a nice $1300 loan from Uncle Sam and don’t have to pay any interest 😉

    And if your blog keeps getting any bigger Joe you’re gonna need a staff!

    • retirebyforty April 12, 2018, 9:31 am

      That’s pretty good. Underpayment penalty doesn’t seem that bad actually. For us, it would have been $195. But it’s good we don’t have to pay that.

  • Chris Urbaniak @ deliberatechange.ca April 12, 2018, 3:03 am

    Good morning Joe,

    Interesting to see how taxes are different across the border. For example, you guy pay income tax to the city / municipality. In general, our cities only charge property tax, not income tax, although they also collect fees for all sorts of things like water, pets, rental properties, land transfer tax (if you buy a house in Toronto), etc.

    But you’re right, it IS important to remember as you pointed out that paying tax means you’ve made income, which is a good thing! While I value many of the services that come from our tax dollars (such as roads and Canadian healthcare), I just wish that so much of that money weren’t wasted and squandered away by mismanagement and incompetence. (Google “Phoenix pay system” for a perfect example…)

    • Caroline April 12, 2018, 3:19 am

      I agree Chris. I can’t believe what a fiasco Phoenix still is! Only in the government!!!

    • retirebyforty April 12, 2018, 9:34 am

      We also pay plenty in property tax. Our city also collects water and sewer. I think there is a pet registration fee, but our cat is indoor so we don’t care about that one. At least, we don’t have to pay yearly vehicle registration fee. I think WA and CA have that.
      I like WA much better. They have sales tax instead of income tax.

    • jim April 12, 2018, 9:41 am

      “you guy pay income tax to the city / municipality”

      Joe is actually paying a business tax. Its because he’s self employed and runs a business. Portland does not have an income tax. Income taxes for cities are very rare in the US.
      I only know of New York City having income tax. Oregon has a state income tax which is common in most US states.

      Also note that there is ZERO sales tax in the state of Oregon. I think yours in Toronto is north of 10% right?

      • Chris Urbaniak @ deliberatechange.ca April 13, 2018, 1:03 am

        Good point, Jim. Thanks for the clarification. (And that typo I made is embarrassing – woops!)

        In Canada we have a blanket 5% sales tax paid to the federal government plus whatever each province chooses to levy. For example, Alberta has no additional provincial sales tax, so you only pay 5% total. And yes, here in Ontario the province charges sales tax of 8%, for a combined 13%.

  • Caroline April 12, 2018, 3:22 am

    Haven’t finalized my taxes yet but all ready to go. Like you said when you owe money there is no rush! This year I am doing 6 other returns to help out friends and family but I am getting a little tight on time:)

  • Nicoleandmaggie April 12, 2018, 4:07 am

    Now that you’re no longer getting dividends for free, have you considered moving to more growth stocks and less dividend building in your taxable funds?

    • retirebyforty April 12, 2018, 12:22 pm

      I’m thinking about it, but it’s going to take time to change. If I sell all our dividend stocks now, we’d have to pay a bunch of capital gains tax. Probably going to hold off for a few years to see how it goes with Mrs. RB40. If she really retires in 2020, then we’d be back under the first two brackets again.

  • Pennypincher April 12, 2018, 4:45 am

    Thanks for enlightening us, Joe! Loved Jimmy Kimmel’s quote best.
    Are you sure you are taking absolutely every tax deduction for all your business expenses?
    So relieved when tax season is over. Freedom ain’t free.

    • retirebyforty April 12, 2018, 12:22 pm

      I’m not taking the home office deduction because my office doesn’t qualify. I share the room with RB40Jr. If we ever move to a bigger home…

  • FullTimeFinance April 12, 2018, 4:54 am

    We completed our taxes a few months ago. We didn’t owe much in the end, thanks to my income from w2 being much larger then my wife’s business income and my withholding being way jacked up. It helps I’m in a lower tax state. The tax law is great and all but it does make me nervous whether I will owe estimated taxes for the first time. Sometime mid year I will be calculating the ramifications of he new withholding rates on our money earned to date.

    • retirebyforty April 12, 2018, 12:24 pm

      That’s what we had for the last few years. In 2017, I made too much money blogging. 🙂
      It’s a good thing, but nobody wants to pay more taxes.
      This year is going to be extra difficult to calculate estimated tax. I’d at least pay as much as you owe this year so you can get that exception for the underpayment penalty. That’s what we’ll do this year.

  • Angela @ Tread Lightly Retire Early April 12, 2018, 5:04 am

    K-1’s are notoriously slow, so don’t be surprised if in future years you have to file an extension just because of that one document. And I’d be glad to pay that TRIMET tax if it meant we got Portland’s transit system to go with it! Alas, we are paying boatloads of money now in hopes of great service “some day.”

    • retirebyforty April 12, 2018, 12:26 pm

      I had K1s before and I never liked the timing. At least, I got everything else done already.
      I’m not too happy with the TriMet tax. They should at least give me a discount when I buy tickets. It’s not like I’m making that much.

  • Ms. Frugal Asian Finance April 12, 2018, 5:06 am

    Art taxes? What?! I have never heard of or paid that tax before. Does it mean you and other people in Portland have to support artists in the area? Not sure how I feel about this, but I guess we can’t argue with the government.

    I filed our taxes two weeks ago. I just wanted to get it over with. It was a bit delayed since Mr. FAF wanted to check with a tax accountant to see if we could get more refund. Turns out TurboTax can get us more money back. We already got a direct deposit of our refund, so I’m super happy about it 😀

    • jim April 12, 2018, 9:42 am

      The art tax was passed by popular vote in Portland.

    • retirebyforty April 12, 2018, 12:27 pm

      Yes, the tax goes to art program, public artworks, and more. I think it’s a good thing in general. People with lower income shouldn’t have to pay as much, though. Oh well…
      Nice job with your taxes.

  • Tom @ Dividends Diversify April 12, 2018, 5:11 am

    I’m all done for 2017 Joe. The sad things is my representatives from both state and federal governments have raised my taxes for 2018. Tom

  • DocG April 12, 2018, 5:28 am

    Bummer about the tax…but it also means that retirement has been overly “prosperous”. Not a bad problem to have!

  • Chris @ Duke of Dollars April 12, 2018, 5:35 am

    This year I finished my taxes early because refunds come more quickly the earlier you file since fewer people do it at that time.

    This year, no refund for me due to the same self-employment income + changing my withholding amounts. I was hoping for no refund, and the estimates worked great. No free money loaned to the government and more for me to invest!

    • retirebyforty April 12, 2018, 1:26 pm

      Nice job! I’ll overpay a bit this year to make sure we don’t get the underpayment penalty next year. It’s tough to estimate with all the changes.

  • [email protected] April 12, 2018, 5:49 am

    I was waiting for one document that came in this week. I sat down to start the taxes last nigh. I quickly realized one 1099 is missing from an account we closed a year ago. Back to waiting. There’s nothing like doing this at the very last second. Grrrr.

    • retirebyforty April 12, 2018, 1:28 pm

      You should be able to get it online, right? I got all the 1099 this year so no issue there.
      Good luck..

  • Mrs. Groovy April 12, 2018, 6:03 am

    We did our taxes early. Pretty uncomplicated but we owed a little. This year we’ll do better with estimating. It sucks that you owed but it’s great that it was due to the blog exceeding your expectations. How do you fend this off for next tax season, when you’re maxing out your 401k? Do you have additional expenses you can account for?

    • retirebyforty April 12, 2018, 1:30 pm

      I’ll pay at least 100% of what we owe in 2017. That should stave off the underpayment penalty. 401k is tricky because SE tax is on the amount before SE.
      I don’t think we have anymore legitimate expense to deduct. The only thing that might work is the home office deduction, but that will have to wait until I have a dedicated office. Now, my office is in Jr’s bedroom.

  • Adam April 12, 2018, 6:07 am

    When I see FIRE bloggers write about taxes, it’s the one and only time I have warm thoughts about my traditional workin’-for-the-Man job. We have a mortgage and an HSA and I claim the standard square footage rate for my home office; we owed the feds about $1k, the state owed us about $1k, everything was credited and debited within a week back in mid-February. Easy peasy!

    Incidentally, I’m the third generation of my family to be born in DC, and we’re pretty serious about how much it sucks that 700,000 people living in its borders do not have voting representation in Congress. If you want to boil your blood this morning, here’s a fun read: https://en.wikipedia.org/wiki/District_of_Columbia_home_rule

    • retirebyforty April 12, 2018, 1:33 pm

      I read about DC having no congress representation a long time ago. However, I didn’t know you don’t have much control over the local government either. That sucks. The issue seems complicated..

  • Helen April 12, 2018, 6:23 am

    Yeah, working on tax return is such a hassle. In 2017, I did some Roth IRA conversion, and that added one more form. Finally it was done a couple of days ago. Sick and tired of it, and don’t want to see it until next year.

    • retirebyforty April 12, 2018, 1:33 pm

      I’ll have to do Roth IRA conversion at some point. Hopefully, it’s not too complicated. I’m about ready to say bye bye to taxes for 10 months too. 🙂

  • Lazy Man and Money April 12, 2018, 6:27 am

    I don’t know what it is, but I hate doing taxes more than anything. Even if I know we’re going to get a refund, I just hate it. I even have tax people to make it easier, but that seems like even more work to gather all the information and work with them on their terms.

    With that out of the way, congrats on the credit card points thing. We were able to store up a bunch of points with some condo fee stuff the last year. One problem I have is cycling through so that I can do it again. I’m running out of cards and I don’t want to just keep on getting them forever. It seems that no one ever writes about canceling them for a year or two (or whatever it is), so that you can do it all again.

    • retirebyforty April 12, 2018, 1:35 pm

      Actually, I don’t mind doing taxes. It gives us a good overview of our finance and we can plan next year. All the forms are really annoying, though. Our tax folder grows every year.
      I just started a spreadsheet to track the credit cards. You can call and cancel when you see the annual fee. They’ll let you cancel and refund the fee if you do it with 30 day, usually.

  • Big-D April 12, 2018, 6:32 am

    I owe about $1440 due to larger than expected capital gains in mutual funds ($13k, too bad I didn’t see a higher dividend or much higher than average price for the funds). I owe like $250 to the state of IN. I still can claim my son (last year, he is 23) and had to wait for his stuff before I decided to file. Since I owe, no reason to pay early, and will submit them this weekend.

    • retirebyforty April 12, 2018, 1:37 pm

      The capital gains tax is not a bad problem to have. 🙂

      • Big-D April 12, 2018, 1:48 pm

        Capital gains from a sale, I agree. Capital gains because you owned the fund, and did nothing with it all year, not so much. The unknown capital gains pass through to the owner sucks. My fund goes up 10% in a year, and I have 15% in capital gains to pay taxes on.

        • retirebyforty April 13, 2018, 7:30 am

          Ahh… I see. Those gains. We don’t have that because all our index funds are in tax advantaged account. You’re right. That’s an very unpleasant tax.

  • Laura April 12, 2018, 8:16 am

    Oy. Did NOT know about Trimet tax (but didn’t make blog income, so no worries). And don’t get me started on the arts tax…I am a SAHM w/no earned income, but because my name is listed first on many of our bank accounts, the interest counts as income, so I get to pay the tax as well. Really wish there had been a time limit on that tax so it could get referred back to the voters.

    • retirebyforty April 12, 2018, 1:38 pm

      Ahh.. I feel for you. Maybe you can tell the bank to change the order round. 🙂
      Art tax is okay. I just wish everyone pays.

  • Jonathan April 12, 2018, 8:19 am

    Estimated payment: $2,400. This will go toward our 2018 taxes.
    ——

    Hmmm. Please explain. Why are you paying 2018 taxes in advance?

    • savvy April 12, 2018, 12:31 pm

      This is 2018 so it’s not in advance. Our tax system is pay as you go, which is why your employer withholds from your paycheck. As RB40 does not get a paycheck from an employer, he has to pay his own taxes as he goes (estimated payments).

    • retirebyforty April 12, 2018, 1:38 pm

      I have to pay tax in advance because I have income from blogging. The IRS wants you to pay tax as you go, not as a lump sum at the end of the year.

  • Lily | The Frugal Gene April 12, 2018, 8:25 am

    We’re not done done yet. My husband is down with a cold and he’s on call so I think we’ll be cutting it close. We’re definitely not getting a refund. The IRS loaned us $5k 😉

  • Revanche @ A Gai Shan Life April 12, 2018, 9:07 am

    I did a little dance the year we stopped getting K-1s – I could finally get our taxes done on time! Then I realized that I still couldn’t get it done March 1st because it was taking FOREVER to get some other forms. I don’t recall what the hold up was this year but we did finish filing ahead of the April rush, thankfully. I hate trying to talk to our CPA between April 1-15, she’s always super busy and I don’t get good attention to detail.

    • retirebyforty April 12, 2018, 1:39 pm

      K1s are so late. Oh well, what can you do. At least, they gave us a week to deal with it…
      Yeah, I can imagine trying to get an appointment with your CPA right now.

      • Pennypincher April 14, 2018, 7:59 am

        Joe, I thought by law, all tax forms/documents must be mailed to customers/clients by end of February??
        Vanguard has us spoiled-they are the first to arrive. LUV them.

        • retirebyforty April 15, 2018, 9:10 am

          I think the deadline for K1 is April 1st. They are pretty slow.

  • jim April 12, 2018, 9:52 am

    Our taxes aren’t done yet. No rush in my mind. I’ve never been late but don’t care if its the last minute.

    Interesting that so many people comment on that $35/person Art tax yet you’ve got over $25,000 in federal and state taxes. Relative to the total taxes listed that Art tax is a pittance.

    For me that $484 tri-met tax stings a bit. I don’t know why that one sticks out for me but it does. Probably because it comes as a surprise to me since I didn’t know the transit system taxed businesses that much.

    • retirebyforty April 12, 2018, 11:10 am

      I think people just don’t like the idea of paying yet another tax. The art tax is okay with me.
      The TriMet tax was painful. It felt punitive for self employed individuals because they don’t allow deduction. They just tax off the income. If they allow deduction, it would have been much less for me.

  • Reverse Engineer April 12, 2018, 11:25 am

    One of the bummers with 401k distributions is mandatory minimum 20% withholding, which is over twice what I need, as filling lower two brackets, then topping off with aftertax. At least that provides an incentive to file early!

  • Dave in Sunny FL April 12, 2018, 3:41 pm

    It seems like, if you set up your blog as a C corporation, you could control the timing of distributions, pay a lower tax rate on the earnings, and keep your personal salary to the limit for tax-free dividends. It is very important to have a tax strategy, since it is not about what you earn, but what you keep! “Anyone may so arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury. “ -Judge Learned Hand

    • retirebyforty April 13, 2018, 7:32 am

      I will need to investigate that option. I never made enough for it to be a concern before. This will be temporary until Mrs. RB40 retires in 2-3 years. Once she retires, we’ll be in the lower 2 brackets again.
      C corp sounds like a good idea right now. Thank you. If I could set up an oversea corp., that would be perfect. Not sure if this level of income will hold either. I really doubt it.

  • [email protected] April 12, 2018, 9:31 pm

    Root of good and go curry cracker have some great articles on paying no federal income tax despite incomes over $100,000. No complicated stuff either just smart use of commonly available deductions

    • retirebyforty April 13, 2018, 7:36 am

      GCC doesn’t pay much tax because of they live oversea. Expats doesn’t have to pay tax on the first $100,000, I believe.
      RoG doesn’t make that much money. We’d be able to do almost the same as Justin if Mrs. RB40 doesn’t work.
      Thanks!

  • The Poor Swiss April 13, 2018, 6:17 am

    That is some awesome passive income! Even though it means you have more taxes, it especially means you are making more and more money with both your blog and your dividend income. It’s really great. I wish I could pay my taxes with a credit card to collect some points.

  • GYM April 13, 2018, 9:43 am

    Geez, a self employment tax? There seems to be a lot of taxes in Portland! That’s around 20% of your self employed income going to taxes!

    That’s really great you can pay your tax bill with the credit card, we can’t do that in Canada I don’t think.

  • Mrs. Famnancial April 13, 2018, 11:24 am

    I am also self-employed, I paid my quarterlies, and I still owed 19k on top of that, ouch!!!!! For 2018 taxes, I got smart and incorporated myself. I am now am employee of my own company and no longer will have to pay the SE tax! We shall see how it goes. Probably will make my tax season a little more complicated next year. Definitely taking your advice and started a blog! But I have two little ones at home, so the writing is slow going.

  • FIRECracker April 13, 2018, 4:16 pm

    It’s an interest problem to have, right? Paying taxes in retirement due to unexpected income. The retirement police would probably be all up in arms and say that’s not real retirement, but who cares what they think? It’s a good problem to have 🙂

  • Millionaire Immigrant April 15, 2018, 9:09 am

    We waited until the end of March as well. We got a small return as the withheld amount was only slightly higher than the tax burden. I did not mind waiting as the stock market was falling as that money would go into investing. But it was a lot simpler than yours as we only had to pay for federal, state and city. I think next year will be even simpler with the higher standard deduction.

  • Richard April 15, 2018, 10:39 am

    So good to know this rb40. I was almost ready to pull the trigger on Realtyshares but this was made me reassess and I won’t invest w/ them anymore. I don’t like to fill my taxes on the last weeks and I’ll keep investing thru real estate ETFs instead.

    • retirebyforty April 16, 2018, 9:46 am

      K1 usually come in very late. It’s the same for MLP. If you don’t want to wait until the last minute, then go with REIT. That’s a good option and we have lots invested there too.

  • Allen April 19, 2018, 3:56 pm

    Ahh this is the advantage of living in Arizona. Yes we have state taxes, around 5% of income, but if you don’t want to, you don’t have to pay it. What, how’s that? That is because in AZ you get TAX CREDITS for donating to charities, public schools, even for paying tuition for a private school. So lets say you own $4,377 in state taxes. So you donate $800 to a charitable organization (for couple), $1000 to a foster care organization, $400 for public school extracurricular activities, and $2177 for private school tuition. Then the state credits you for these so for state taxes, you pay zip. There is actually more, like the Arizona Military Family Relief Fund, but this one reaches a limit if you don’t donate early. Plus guess what, you can also use these as a donation on your federal taxes to reduce those taxes. Plus you have up to tax day to make many of these donations. I definitely like donating to charity much more than paying taxes.

    • retirebyforty April 20, 2018, 1:26 pm

      That’s a great system! I didn’t know this. In OR, we just pay. We get tax deduction for donation, but credit is so much better. Thanks for sharing.
      Private school tuition too? That’s amazing.

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