Taxes done - very pleased with the outcome

[disneysteve]

I've been dreading getting our taxes done this year. We had some substantial capital gains in a couple of our taxable investment accounts this year which I figured was going to cost us a bundle at tax time. I was anticipating possibly owing several thousand dollars.

I finally sent everything to our accountant on Monday. We traded a bunch of emails today while he was working on our returns. One of the first ones he sent me was, "Did you realize that you had $ xx,xxx.xx in capital gain distributions from the funds???" to which I replied, "Yes, unfortunately."

Around noon, he emailed and said, "please call me. better news than expected, at least for Federal." I grabbed the phone because I was ready for some good news. It turns out that despite the big capital gains, we're actually getting a small refund on our Federal return (about $750). We will owe about $1,100 on our state return but to walk away owing under $400 when I was expecting to owe 10 times that much was a huge relief.

Two things saved us. First, I had increased my withholding last year. Second, with our daughter now in college, we qualified for the education tax credit. Between those things and some other stuff (charitable donations, wife not working so lower household income) it balanced out those big gains.

Now I can actually start funding our Roths for 2015. I've been sitting on a pile of cash in case I needed it for taxes.

[creditcardfree]

Glad to hear it wasn't as bad as you expected! Which education credit did you take and how much was it...curious for next year for us.

[disneysteve]

Glad to hear it wasn't as bad as you expected! Which education credit did you take and how much was it...curious for next year for us.

I believe it was the $2,500 one, the American Opportunity credit.

[feh]

After owing large amounts the last 2 years, I got serious about estimating how much our 2014 taxes would be, and changed my W-4 accordingly. We need to have extra withheld because of taxable investment accounts (dividends only; I didn't sell anything last year) and income I receive from an LLC.

Instead of owing 5 figures, we got $1200 refund from federal. We owed $2 for state.

[kv968]

I've been dreading getting our taxes done this year. We had some substantial capital gains in a couple of our taxable investment accounts this year which I figured was going to cost us a bundle at tax time. I was anticipating possibly owing several thousand dollars.

One of the first ones he sent me was, "Did you realize that you had $ xx,xxx.xx in capital gain distributions from the funds???" to which I replied, "Yes, unfortunately."

Unfortunately one of the major downsides to mutual funds...Never really know when you're going to get a capital gains distribution. ETF's, as you know, would eliminate that "surprise" but if the mutual fund is doing good that just might have to be the price you pay (no pun intended)

[97guns]

this will be my 4th consecutive year that im not paying any income tax on around 65K of rental income

[disneysteve]

I got the final numbers back today and did even better than the original estimate.

State: Owe $651
Federal: Refund $746

Net: Refund $95

That worked out darn close to perfect.

[corn18]

Perplecto. Well done, sir.

[JoeP]

It has been difficult for us to dial it in over the past couple years: conditions and income change enough to make it difficult. In any case, we've always ended up with a small to medium net refund every year.

[creditcardfree]

I would say that was near perfect Steve!

[creditcardfree]

I believe it was the $2,500 one, the American Opportunity credit.

Thanks for the reply! My daughter is getting quite a few scholarships, but we will still pay some, so I would like to have this figured into to our tax scenario.

[disneysteve]

Thanks for the reply! My daughter is getting quite a few scholarships, but we will still pay some, so I would like to have this figured into to our tax scenario.

Same here. DD has a scholarship but it only covers about 60% of the cost. The rest is coming from the 529 plan for the first couple of years and then hopefully from the money tree I planted in the backyard for the last 2 years . Either that or she'll be needing some loans which is probably more likely.

[Singuy]

My federal return for my wife was a LOT better than expected to the point that I'm afraid of an audit right now..lol

It was our first year paying taxes via S-corp LLC so our estimated tax payments were based on 0 deductions.

After returning from Liberty Tax, our federal return is 26k, and this was from us thinking we had to owe money and pay a penalty.

We'll see, I'm not a huge fan of this Liberty Tax..they are a little bit too liberal.