While filing my taxes a couple of weeks ago, I notices that the EIC or Earned Income Credit was a major factor in reducing the amount of tax that I owed and greatly increasing the amount of my refund. I have usually assumed that the EIC was simply a liberal-socialist attempt at wealth redistribution and even though I benefit from the policy, I generally voiced opposition to this particular idea because I thought it was a handout and undermined free market principles. However, I started to do a little research into the history of the EIC, I began to realize that this policy gets nearly universal support from both sides of the political spectrum.
Our household taxes are always been fairly complicated. This is mostly due to the fact that Mrs. Stew and I have always had multiple streams of income. While God has blessed me with steady, full-time jobs over the course of our marriage, we have always had to supplement our income with part-time, self-employed and contract labor sources of income. So when I go to calculate our gross income every April, I always have to account for a pile of W-2 forms, 1099 forms and other miscellaneous income . . . and then come the deductions . . . Add to that the complexity of the IRS tax code in this country, needless to say, I make a mistake once in a while. Usually the mistakes are pretty minor, although I did have to pay a penalty a couple of years ago when I mistakenly thought that we qualified for the Earned Income Credit.
Last night was the Internal Revenue Service filing deadline – in case you missed it. If you are reading this and have not filed – you are late and need to contact the IRS immediately to file an extension. If you owe money, you are probably better off waiting as long as possible to file, although it might be nice to have the paperwork finished in advance. Some of us filed our taxes back in February or March, but I know at least one person who waited until April 15th to finish his taxes . . .
I have been filing with Turbo Tax since the 2001 tax year. The nice thing about the service is that I can see all of my prior year returns anytime. It is kind of interesting to see summary of the information over the years. Incidentally, 2001 is the year that Mrs. Stew and I were married, so all of this data was filed under the “married, filing jointly” classification. I posted all of this data as percentages with 2001 as our baseline number. For instance, our Adjusted Gross Income in 2005 was 101% of our 2001 AGI. None of the data is adjusted for inflation or cost of living, just the raw amounts or percentages. I also do not know much about formatting tables in WordPress, so please bear with me . . . if I were really good, I would have made bar or line graphs out of all this stuff. :)
The following is a guest post from Manuel Davis. Manuel is a tax accountant and writer for BackTaxesHelp.com and helps individuals with various IRS problems.
How to Properly Prepare for Filing Your Taxes
While April 15th may seem far away, now is the time to start thinking about your taxes to ensure that your tax filing goes smoothly. The main causes of tax filing errors are rushing and not having all necessary tax documents on hand. Even if you plan to use a tax professional, it is important to start working with them early since it is likely they will be rushed towards the end of tax season. Below are some steps to follow to ensure your taxes get done properly and nothing is missed.
A couple of weeks ago, I asked, Should a believer contribute to IRA’s, 401K’s or other retirement accounts? The post generated some interesting comments and discussion. While I still think that some form of retirement savings is a good idea, my financial focus was challenged by that thought: Am I really storing up treasure in heaven? Or am I focused on comfortable life here on earth?
As a general rule, I typically oppose almost all federal government spending on anything other than the responsibilities expressly outlined in our Constitution. I believe that such expenditures result in waste, corruption, debt and a limiting of the right to “life, liberty and the pursuit of happiness”. Much of government sponsored financial aid has really only served to drive up the price of a college education and increase the amount of our national debt. That said, if the government makes such money available, you should probably take advantage.
In one of my first posts here at Gather Little by Little, I revealed that my personal finance history is not perfect. There have been some lessons that we had to learn the hard way . . . and there are certainly more lessons to come. I also said that I hoped to be honest with GLBL readers about our family financial journey. Today’s post is one such time that I thought about obscuring the truth a bit. I mean, it’s kind of embarrassing for a personal finance blogger to have a tax error, isn’t it? Here is the story:
When we purchased our current home, we knew it would require some work and a few upgrades. Namely some new paint, repairs to some of the work the owners did (but didn’t do correctly) and yard work. The big item we knew we would have to address was the upstairs. When the original owners built the house, they left the upstairs unfinished. The middle area of the upstairs was finished off as an office later, but it’s very obvious the work was done by the homeowner, and unfortunately not done well at all. Then, when the owners decided to sell, their real estate agent recommended the remainder be finished off as well. They finished it, but did even a worse job than before and cut corners. For example, the middle office area has drywall ceilings. The two outer rooms have cheap suspended ceilings.