Tuesday, April 12, 2011

Tax man, Mr. Wilson

We send our taxes to a preparer because, what with Noel being self-employed as a freelancer by multiple outlets, it's not a simple matter of a couple of W-2s and ample withholding.  If we've got our act together, our information goes off to the preparer in early March, and we get back our returns to sign and file in about a month.

And that's when we find out how well we balanced our income and deductions the previous year.  It's possible as a freelancer to make too much money and to spend too little on your business.  If you do, not only do you owe a lot of income tax (there being no employer to do your withholding and match your Social Security contributions), you end up paying higher estimated taxes throughout the following year.

So it was with great joy that we discovered, upon opening our completed returns this year, that we had overpaid on estimated tax all year long and therefore had gotten way ahead for the coming year.  Not only did we not owe any tax with our returns, but our estimated payments for 2011 were already paid with the overage from 2010, at least until the final installment.

I can't remember the last time I submitted tax forms ahead of time.  Usually I wait until Tax Day to keep from having that big check hit the account as long as possible.  But with nothing owed, we signed and sent everything off within a couple of days of getting the return.  April 15 is the day after the Bear Hug for the Nature Reserve this year, a day of celebration, not a day when we owe the government.  We're paid up.

Next year will be different; it always is.  But for this year, we are thinking of our vacation from estimated tax payments as the closest thing we ever get to a refund.

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