Tax Time

If you hadn't already noticed by the TV advertisements, it's tax season. One of my tasks in the next few weeks is to start working on our 2011 tax return.

Last year, knowing that we would lose one of our tax exemptions (our daughter got married) in 2011, I had additional funds taken out of my paycheck, trying to estimate correctly what our tax liability would be for 2011. I didn't want to have to write a check to the IRS on April 15, 2012.

So, now, I need to find out how accurate my estimate was. Will we owe money? If so, how much? And if so, we need to start planning on how we will pay for the taxes.

One of the first tasks is to organize my documents. I have them all together in a file folder, but there is no organization within the folder. I need to sort and categorize them appropriately.

Then, I need to calculate my husband's officiating income. We keep track of his officiating income and expenses in Excel spreadsheets. I need to total the spreadsheets and calculate the net income.

Because we don't have all of our tax documents (W-2's, giving receipts, interest income statements, etc.), we can't file the tax returns yet. But, I usually print out the tax returns and do an estimated return. The estimate usually is sufficient to determine whether we will have a liability or receive a tax refund.

One thing that could determine whether or not we have to pay additional tax is the Making Work Pay tax credit. I had not heard whether Congress reinstated this tax credit so I just checked the IRS.gov website. This credit has expired (and was not reinstated as in 2011). I'm surprised! I figured that Congress would extend this tax credit again for 2011. That makes me a little nervous that we may have to pay something.

On a happy note, the IRS no longer allowing the Making Work Pay tax credit will make my job at work easier. Last year, we had to make a correction to almost every FAFSA record that was selected for verification because the Making Work Pay had not been accounted for by the student in filling out the FAFSA.

I think I'll start the tax filing process next Saturday. Here's hoping for a good result!

WOW -- three blogs in one day on three different topics! I didn't know I had that many musings in me in a day! Not bad, if I say so myself! :) Time for a cliff hanger because I don't know what topic the next blog will address. Thanks for reading!