My $1500 Tax Bill

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I did my taxes last night and I did not like the results. I owe about $1500 on my federal and state income taxes including a $22 penalty on my federal tax for not having enough taxes withheld during the year. I knew I would owe taxes this year but I didn’t think it would be so much.

If you’re self-employed you should pay quarterly taxes. I’ve been able to get away with not doing that until now because my self-employment income was relatively small and my total income was very small so that with credits and deductions I owed very little or got a refund. I thought about paying estimated taxes in 2012 since my online income had increased quite a bit. After the Google hit in spring though I figured my income wouldn’t add up to much and my tax bill wouldn’t be too high. I did claim zero exemptions on the W-2s for my jobs and contributed to a traditional IRA to help reduce my tax bill. That wasn’t enough though and now I’ve got to pay $1500 all at once. It definitely hurts more to make one big payment then to have it taken out gradually over the year. Luckily, I do have a decent paying job so coming up with the money won’t be a problem. I just won’t be able to save any money this month.

This should be a lesson learned that I should pay my taxes quarterly. However, I do expect my online income to be smaller this year and I am having more withheld from my jobs so I once again do not plan on paying estimated taxes. If my online income increases substantially this year then I will reconsider whether I should pay estimated taxes.

February Income – $4499.91

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Here is a breakdown of my income for February.

Online Income

 $889.67

Interest

$0.71

Dividends

$18.56

Cash Back

$106.13

Mystery Shopping

$7.50

Medical Study

$350

Jobs

$3127.34

Total

$4499.91

My income was great in February. That wasn’t surprising since it was the first month that I had two paychecks for complete pay periods for my full time job. My online income was better than I expected, but it seems to vary a lot.  I expect my online income to be much less in March. I had the $350 in medical study income which helped a bit.

It will be difficult to match this total in March. I will have five paychecks this month, since there are five Fridays, which will help some.  My part time job will be the one that pays three times rather than my full time job so the extra paycheck won’t make that big of a difference.  I have been trying harder to work overtime at my full time job, but since I’m already working 65 hours a week between my two jobs I don’t usually feel like working any extra hours.  I’m thinking I  should make close to $4000 in March and be able to keep my expenses under $1000 which will still be a pretty good month.

 

February Expenses – $885.91

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Here is a breakdown of my expenses for February.

Household

$372.00
Entertainment

$70.81

Transportation

 $149.43

Food

$94.22
Debt $5.00
Phone

$26.81
Health

$88.56
Electric

$14.96
Internet

$64.12

Total

 $885.91

My February Expenses were up slightly from my January expenses but I’m still quite happy with the total.

The slight increase was mainly due to having a trip to southern Missouri which increased my gas expense and paying a $50 installation fee for internet. Yes, I have succumbed to lifestyle inflation and gotten internet in my home and will be paying $15.96 a month for that luxury.  Valentine’s Day and my girlfriend’s birthday were both in February too.  Even though my girlfriend knows I’m frugal, it seemed smart to spend at least a little money for those occasions. 🙂

I did manage to bring my food budget under $100.  That probably sounds good to most people, but there is actually room for improvement there.  I barely made a dent in the food in my refrigerator.  Most of my food expense was for fast food, sodas and sweet tea, and junk food.  There were only four days during the month that I didn’t spend any money on fast food/junk food/sodas, sweet tea.  I’m going to start making my own sweet tea and make more of an effort to eat the food I already have rather than buy junk food and fast food.  If I do that I should be able to get my food expenditure down to $50 for the month.

My health category was a little lower in February because I switched health insurance providers and didn’t have any insurance coverage for eight days.  I got away with that but it would have really sucked if I had gotten injured or ill that week. I probably won’t do that again.

I expect the rest of my expenses will be roughly the same in March. Keeping my expenses below the level of a minimum wage income, which is about $1274 a month has been pretty easy so far.  It looks like I should be able to keep my annual expenses below $12,000.  There will be some traveling before the year is over though which could increase my spending a bit. I’m off to a good start for the year and hope to keep it going.

 

Avoiding Burnout

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I’m almost halfway through with my seasonal tax research job. Working this full-time job plus my part-time job for at least 65 hours a week is starting to be a bit of a grind. Neither of my jobs are too hard and the long hours will only be until April 15 so I can handle it. The blogging has been suffering quite a bit though.

This week I should get some overtime at the full-time job as well. So far out of 30 offered hours of overtime I’ve worked about 1.5 overtime hours. I definitely need to do better on working overtime. Since this is only for 3.5 months I should be working all the hours I can get. Most of the available overtime hours are during the weekend which is when I work my part-time job and I feel too tired to go in and work optional overtime hours after working the part-time job. Considering an overtime hour at my full-time job pays over four times as much as an hour at the part-time job it is possible that the part-time job is costing me money. I do like the part-time job and it is very easy and it isn’t temporary like the full-time job so I’ll keep the part-time job for now.

I did get a bit of a break today. Due to the big snowstorm here in Kansas City the phones were off for the day and we had the option of working from home. Since I live close to work I opted to go into the office. It was nice not having to answer the phones and the work environment was quite a bit different since there was hardly anyone there. I might try the work at home option tomorrow. The system isn’t really set up for working at home, making it a bit of pain to work at home but maybe next year they will configure the system to make working at home an option for any day, not just snow days. I would really like that.

For now, I will just keep working. When I start to feel burnt out I will remind myself it is only for a little while more and think about how much I’ve been able to save. I also have a short hiking trip planned after the end of the tax season to give myself a little reward.

Keep Your Monthly Nut Small

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In the movie “This is 40” the main characters are financial disasters. When Paul Rudd’s character is disappointed in the sales of Graham Parker’s new album, Parker states that he has learned to not worry about the sales and to just keep his monthly nut small. That advice is too late for Rudd but it is good advice.

Your monthly nut is the amount of money you have going out for expenses every month. You should know how much that is and you should make enough money to easily cover those expenses every month. It would also be wise to keep the monthly nut small by avoiding debt and unnecessary expenses that can’t

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