QuestForAMillion.net

Tax time! For most people this time of year is a time to be dreaded. But for some, those foolish among us, this is a time of “free” money. I was talking to a co-worker the other day. He’s expecting a tax refund of about $7000 this year. It’s usually in the $7000 - $8000 range. My mouth literally fell open. I was shocked. And appalled. Who in their right mind gives the government an interest free loan of that size? I proceeded to explain to him how much money he was giving up by doing this every year. Apparently he had never thought of it that way before and nobody had ever explained it to him before. By the end of the day a new W4 was on it’s way to the payroll department. His paychecks will be bigger than planned this year.

We aim to get the smallest refund or owe the least amount possible. For 2006 we did very well, getting $25 more back from Federal than we owed the state. We didn’t do quite as well for 2007, despite the fact that I used 10 exemptions. We sold an ETF at a loss during the year to pay off the car and that made a big difference for us. We’ll be getting back $1951 from Uncle Sam and we owe the state $136. So soon we’ll be seeing an unexpected $1800, not to mention the ludicrous $1800 we’re getting from the economic stimulus package our esteemed leaders put into law.

I’ve already filed the Federal return. Once we get the refund we’ll put $136 into the Irregular Expenses account to earn interest until we pay the state taxes in the middle of April. The rest of the money will be split between Savings & Debt and Irregular Expenses. Since we’re going to the wedding this summer and it will be paid for from Irregular Expenses, I’m boosting that account value some. We’re still on track to pay off car #2 and the student loan this year from Savings & Debt so all is looking well.

My next task is to look over estimated taxes for this year and make sure we’re on the right track. I hope to get that done by the end of February and make any needed adjustments. I was hoping to have some stock option income this year but right now it doesn’t look like that will happen so I may be able to bump my exemptions back up a bit.