As a work-from-home consultant, I try to be very conscience of all the factors affecting our tax bill. I pay quarterly and base those payments on prior years. I'm careful and meticulous about receipt documentation, charity records, travel mileage, home office costs, etc. For five years this has worked well for me, some years I owe, then I adjust my quarterly filings to compensate, occasionally I'll get a minor refund and that is the goal - to pay enough into the system that I don't owe anything.
This new tax code worked out okay on the federal side, I got a very minor return, but something happened with Maryland. They saw the federal government was making big changes so they made their own changes that caused a $1200 increase! I made a mistake last year and didn't carry over one 1K in tax so we ended up with a bill for 2,227.
I must have missed a memo, news article, something - where was the notification to pay 25% more for the same salary?!?
Thankfully I believe in hyper savings so we are able to pay this bill, but it doesn't help that I left taxes to the last minute, filed on the deadline and had to frantically move money around hoping it would enter my account and leave it without causing further mayhem.
I'm thankful tax season is over but I plan to spend more time each quarter updating my chart of deductibles so that I have less work to do next year when tax season rolls around.
Here is a breakdown of the new tax form as I understand it:
We qualified for the standard 24K deduction, this means we can no longer claim mortgage interest and charitable donations. Bummer, I liked writing off tithe, Compassion and other miscellaneous charities but I used to spend a lot of time analyzing the donation value of household items and clothing that we donate to the Hope Center and I'm kinda happy I can just drop off and skip the paper work now.
I can still write off office supplies, 50% business meals, vehicle miles, mobile phone, internet, and business travel expenses. Our IRA's are an adjustment to income and we could start a 401K to drop our tax level further.
I think by next year I might like the new tax code for federal as they did make it simpler and easier to fill out. The 24K deductible covers our charity and mortgage interest so those are just two less things to deal with, although I wonder how many people will cut back on charitable donations now that it's no longer an easy deductible.
I'm still peeved with Maryland for increasing our taxes 25% but I'll get over it. Taxes are inevitable - right?