tag:blogger.com,1999:blog-2980246226076317453.post5410167597665504439..comments2024-03-27T09:17:51.095-07:00Comments on Done by Forty: The Psychology of a Tax ReturnDone By Fortyhttp://www.blogger.com/profile/06246597867355460723noreply@blogger.comBlogger60125tag:blogger.com,1999:blog-2980246226076317453.post-31650684859816254362014-05-14T22:02:57.796-07:002014-05-14T22:02:57.796-07:00That's true! But I've seen some evidence t...That's true! But I've seen some evidence that people will save at a higher rate with that 0% loan.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-60514125113867663432014-05-14T00:09:34.323-07:002014-05-14T00:09:34.323-07:00Tax refund = a loan you gave the govt. at 0% inter...Tax refund = a loan you gave the govt. at 0% interest.DivHuthttp://divhut.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-18091533514393405672014-03-08T00:51:34.384-07:002014-03-08T00:51:34.384-07:00That was supposed to say "MySpace craze"...That was supposed to say "MySpace craze" not "MySpace crazy" - though it was that too!EcoCatLadyhttps://www.blogger.com/profile/15704811319510740473noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-57829828772210406342014-03-07T20:41:45.030-07:002014-03-07T20:41:45.030-07:00Well... I made some money - but not the amount you...Well... I made some money - but not the amount you might think. My adjusted gross income that year was around $55K - I actually made closer to $75K and socked away as much as I legally could in retirement stuff, but while retirement contributions are tax deferred for the sake of federal income taxes, they're not for Medicare/SSI (self-employment taxes). Apparently my brain rounded up the figure because the actual tax bill was more like $18.5K ($10K of which was self-employment tax). Anyhow - being self-employed is great, but you do take a wallop on taxes.<br /><br />At any rate, my business is basically maintaining a handful of websites - most of them are graphic design stuff - I give away free pictures, backgrounds, greeting cards etc, and I make all of my money from ads on the sites. The first few years were a real bonanza even though I really only had one site back then - but it was all tied in with the MySpace crazy so it did really well while that crazy lasted. I don't make anything close to that kind of money now, but I decided that the time was more valuable to me than the money.<br /><br />Anyhow, if you want to read more about it, here's a link to a post I wrote about it:<br />http://ecocatlady.blogspot.com/2012/12/how-my-cat-helped-me-achieve-financial.html <br /><br />EcoCatLadyhttps://www.blogger.com/profile/15704811319510740473noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-65048181507941713962014-03-07T13:31:17.484-07:002014-03-07T13:31:17.484-07:00Whoa! $20k in one year. I guess that's a prett...Whoa! $20k in one year. I guess that's a pretty good problem to have, as it means you are making some good coin. Still, I don't know how happy you can be sending in a check for $20k.<br /><br />I'd love to read more about the business you're in, EcoCatLady. I'll admit that I haven't read through the archives of your blog. Do you share the story of your self-employment there?Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-50555382169916537272014-03-07T13:29:28.346-07:002014-03-07T13:29:28.346-07:00Great name for a site, Thomas! I like getting a re...Great name for a site, Thomas! I like getting a refund too. I may not be as sub-optimal as we think.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-45290012441260531712014-03-07T13:03:21.619-07:002014-03-07T13:03:21.619-07:00True... but I think that it's something that p...True... but I think that it's something that people entering self-employment need to be aware of, and to think about, especially when they're first starting out. I started my business while I was still employed, and it was small enough so that the withholdings from my real job were sufficient to cover any taxes that I owed.<br /><br />But then I quit my job and expanded the business significantly. I did great, and made more money than I'd ever made before... but imagine my shock when I did my taxes that first year and got slammed with a $20,000 tax bill! Fortunately, I had socked most of the money away, frugal soul that I am, so I had the cash on hand to cover the bill. But I suddenly started to understand how it is that self employed people can get themselves into real trouble with the IRS if they're not careful.<br /><br />It got better after that because you have to make quarterly payments that equal at least the total amount that you owed in the previous year - so at least the pain was spread out a bit, but those first few years were a real shocker for me, and if I had been the kind of person who spent every dime that came in the door, I would have been in a serious world of hurt.EcoCatLadyhttps://www.blogger.com/profile/15704811319510740473noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-18980885061278163632014-03-05T17:01:31.139-07:002014-03-05T17:01:31.139-07:00What you say is completely logical but I still enj...What you say is completely logical but I still enjoy getting a large refund. But it probably would be better to get that money throughout the year and invest it earlier.Thomas @ I need money ASAP!http://www.ineedmoneyasap.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-18501662241411132872014-03-03T08:24:49.129-07:002014-03-03T08:24:49.129-07:00Oh, that sounds lovely. Paying in arrears is the v...Oh, that sounds lovely. Paying in arrears is the very best option.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-22371268183891997662014-03-03T08:23:33.936-07:002014-03-03T08:23:33.936-07:00You're absolutely right, 101 Centavos. Proving...You're absolutely right, 101 Centavos. Proving once again that the information on this blog really should not be taken without a grain of salt, or trusted, or probably even read. :)Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-10017191296115461212014-03-03T02:34:25.889-07:002014-03-03T02:34:25.889-07:00Yes! If you're only taxed through salary then ...Yes! If you're only taxed through salary then they take it at source over the year. If you're self employed then you have until a certain date to pay it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-42381449342975389462014-03-02T17:13:11.339-07:002014-03-02T17:13:11.339-07:00Not to get too pedantic, but the income tax got in...Not to get too pedantic, but the income tax got in with the 16th Amendment. The withholding clause was what was introduced in 1943 with the Current Tax Payment Act. Either way, it sucks ass. <br />(yes, I don't like paying taxes either)101 Centavoshttp://www.101centavos.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-64315223183245105252014-03-02T01:22:37.506-07:002014-03-02T01:22:37.506-07:00Yeah! Another Ron Swanson fan!
I've heard of ...Yeah! Another Ron Swanson fan!<br /><br />I've heard of those savings circles, and they seem remarkably effective. Never underestimate the power of social pressure. If I miss my personal, private savings goal for one month, it's no big deal. If I miss it on the month my coworker was going to pay for her vacation...then I have a problem.<br /><br />So as it is, Emily, do you end up not having to pay throughout the year, and just true up early in the following year? That sounds like a fantastic system for the time being.<br /><br />Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-33445923804590258672014-03-02T01:18:03.996-07:002014-03-02T01:18:03.996-07:00That's the rub, Bryce. I'm always a worrie...That's the rub, Bryce. I'm always a worried that I'll mis-estimate some form of taxable income, end up owing a bit too much, and then paying a penalty.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-6149758373682542312014-03-02T01:17:15.166-07:002014-03-02T01:17:15.166-07:00That's really the best way to do it, Stefanie....That's really the best way to do it, Stefanie. It's all income...treat it the same.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-51452678773231658302014-03-02T01:16:45.834-07:002014-03-02T01:16:45.834-07:00I'm envious of the simplicity of that tax syst...I'm envious of the simplicity of that tax system, Reepekg. Did you find that your taxes in Europe were much higher than they are in the US? Even if they were, where would you say you get the most value for your taxes: US or Europe?Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-35200585389205118102014-03-02T01:15:00.714-07:002014-03-02T01:15:00.714-07:00I have the same dilemma, Andrew. I think I'm l...I have the same dilemma, Andrew. I think I'm leaning towards just getting a small refund. If we're talking even $1,000, it's not as though it would make me that much in the markets over one year.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-24610738961457615602014-03-02T01:12:31.054-07:002014-03-02T01:12:31.054-07:00I hear you, Anna. Despite my best efforts I always...I hear you, Anna. Despite my best efforts I always end up with a refund. Our income is a bit variable, and my limited understanding of the tax code isn't a big help...<br /><br />In the end though, I sure do like getting a refund. Like you: I'm used to getting that 'bonus'. I wonder if the opportunity costs are small enough to justify, so I can just keep getting them?Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-55717599018060067542014-03-02T01:10:16.677-07:002014-03-02T01:10:16.677-07:00It's a bit of a catch-22, isn't it, Alicia...It's a bit of a catch-22, isn't it, Alicia? When I hear about behavioral economic stuff, like how we're better off saving money in lump sums after the fact rather than throughout the year, I wonder if it equally applies to personal finance nerds...Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-22496327914349082892014-03-02T01:07:33.091-07:002014-03-02T01:07:33.091-07:00Yeah, that cartoon is a trip, Laurie! There's ...Yeah, that cartoon is a trip, Laurie! There's an ancillary benefit from getting a tax return that I hadn't thought of: it forces you to live on less all year. <br /><br />Tax returns are a way to be more frugal, long term...hmmm, wish I'd thought of that bit before writing a post!Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-38215144358372230462014-03-02T01:06:23.518-07:002014-03-02T01:06:23.518-07:00Must be nice to have a former IRS agent in the fam...Must be nice to have a former IRS agent in the family to help with the taxes! As you're a saver, I can see how getting the money throughout the year should be better off. Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-51894754773422527942014-03-02T01:04:32.591-07:002014-03-02T01:04:32.591-07:00The part about taxes gets left out of posts on the...The part about taxes gets left out of posts on the benefits of being self-employed, doesn't it? The extra SSI and Medicare taxes alone make it pretty rough.<br /><br />At least you're not giving the government a loan though, right?Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-63133916666398179342014-03-02T01:01:48.408-07:002014-03-02T01:01:48.408-07:00That sounds like a cool system, Laura. Do you end ...That sounds like a cool system, Laura. Do you end up paying in arrears (e.g. - in 2014, you pay throughout the year for the amount owed in 2013?)Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-11776951043989010822014-03-01T21:00:06.790-07:002014-03-01T21:00:06.790-07:00My wife and I try to set our tax withholding so th...My wife and I try to set our tax withholding so that we owe a little bit come April. I would rather the government loan us money throughout the year than the other way around. Of course, you have to make sure you pay enough to avoid paying a 10% penalty at tax time.Bryce @ Save and Conquerhttp://www.saveandconquer.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-49110188211156433172014-03-01T10:18:52.681-07:002014-03-01T10:18:52.681-07:00I try to think of the money I get from my tax retu...I try to think of the money I get from my tax return the same way as I do any source of income, delegating some to savings, some to expenses, and some to play.Anonymoushttps://www.blogger.com/profile/11378658961997515035noreply@blogger.com